VALLEY ESTATES Vs. COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) THE question raised is whether the Tribunal was justified in sustaining the assessment as one completed within time. The agricultural income -tax assessment for the asst. yr. 1991 -92 was completed by the AO vide order dt. 25th Feb., 1995 and a copy of the same was served on the petitioner on 19th Dec, 1995. Relying on the judgment of this Court in Agrl. ITO and Anr. v. K. Joseph N. Jacob (1995) 3 KTR 224, petitioner contended before the Tribunal that the assessment should not only be completed within two years as prescribed under Section 39(6) of the Act, the assessment order should be served within two years as stated therein. We do not think there is any need for us to consider whether the assessment order should be served on the assessee within two years from the date of filing of the return for its validity under Section 39(6) of the Act. This is because the Tribunal has found that the petitioner did not furnish the return within the time prescribed under Section 35(1) of the Act. Even though the return filed was a belated return, the AO completed the assessment under Section 39(3) of the Act, based on the return filed and after hearing the petitioner. Counsel for petitioner contended that once assessment is completed under Section 39(3) of the Act based on the return, time -limit under Section 39(6) is applicable. Learned special Government pleader, on the other hand, contended that Explanation to Section 39(6) makes it clear that if return is not filed under Section 35(1) of the Act, then the time -limit for completion of assessment is as provided under Section 41 of the Act. Explanation to Section 39(6) is as follows: Explanation : The time -limit of two years mentioned in Sub -section (6) shall apply only in the case of assessee who has filed return and it shall run from the date of receipt of the return by the Agrl. ITO. In the case of those who are liable to submit return under Sub -section (1) of Section 35, but have failed to furnish such return, the time limit prescribed under Section 41 shall apply.

(2.) THE latter part of the above Explanation makes it very clear that those assessees who are liable to submit return under Sub -section (1) of Section 35, but who fail to do so, the time -limit prescribed for assessment will be that provided under Section 41 of the Act. Since the petitioner is found not to have filed the return within the time specified under Section 35(1), but was liable to file return under the said section, the limitation for assessment is the one available under Section 41 and not under Section 35(6) of the Act. Even though the Tribunal has not referred to the Explanation, we find that the order of the Tribunal on limitation is sustainable under Explanation to Section 39(6) of the Act. The assessment is, therefore, completed within the time -limit and so far as the dispute on other matters of assessment is concerned, it stands remanded by virtue of the order of the first appellate authority. We, therefore, sustain the order of the Tribunal on limitation and consequently dismiss the ST revision case.