EAPEN JOSEPH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) As directed by this Court in OP No. 1974 of 1978, the Income Tax Appellate Tribunal has referred the following question of law, for the decision of this Court:

(2.) The applicant is an assessee to income tax. The assessment year in question is 1972-73. The status of the assessee is "individual". He filed a voluntary return on 10th May 1974. It was one under S.139(4) of the Act He filed a revised return on 11th March 1975. The assessment was completed on 6th March 1976 (Annexure A). It is stated that the order was served on the assessee on 28th August, 1976. The order of assessment, dated 6th March 1976 determined the total income assessable at Rs. 83,960 and levied a tax of Rs. 55,772 inclusive of interest. In the appeal, the assessee/applicant contended that the assessment is barred by limitation, in terms of S.153(1)(c) of the Income Tax Act as it should have been completed within the expiry of one year from the date of filing the return, i.e., before 10th May 1975 and the return filed on 11th March, 1975 was an invalid one and should be ignored. The Appellate Tribunal held that the assessee represented before the Income Tax Officer that the return filed on 11th March 1975, is a revised return and received some benefits. Thereafter, it is not possible for the assessee to go back on his earlier representation and contend that what was filed is not a revised return at all and that it should be ignored. He is estopped from contending so. The Appellate Tribunal went further and held that even on the merits, there is no merit in the plea. The voluntary return filed, in this case, under S.139(4) of the Act is really a return filed within the extended time limit and the assessee has really complied with the provisions of either under S.139(1) or under S.139(2) of the Act, and S.139(5) enables a revised return to be filed in cases where the return under S.139(1) or 139(2) is filed. It includes the returns filed in compliance with either of these two sub-sections, under the extended time limit of S.139(4). What the assessee filed was a revised return within the extended time limit and once this is accepted, the extended time of one year from the date of filing of the revised return (revised return filed on 11th March 1975), is available to the department (till 11th March 1976). In this view of the matter, the plea of limitation, urged by the assessee, was overruled. The assessee filed an application under S.256(1) of the Income Tax Act to refer the question of law, mentioned herein above, for the decision of this Court. It was rejected. It is, thereafter, as directed by this Court, the above question of law has been referred by the Appellate Tribunal, for the decision of this Court.

(3.) We heard counsel for the petitioner/applicant, M/s P. G. K. Wariyar and K. B. Menon, as also counsel for the revenue, Mr. P. K. R. Menon. Before us, counsel for the assessee urged that the decision of the Appellate Tribunal, negativing the plea of limitation, is erroneous in law. It was submitted that for the assessment year concerned, 1972-73, the assessee did not file the return in pursuance to S.139(1) or 139(2) of the Income Tax Act. The return filed on 10th May 1974 is admittedly one filed under S.139(4) of the Act. Under S.139(5) of the Act, a revised return can be filed only in cases where the return is filed under S.139(1) or 139(2) of the Act. S.139(5) of the Act does not permit a revised return to be filed in cases where the return is filed under S.139(4) of the Act. So, the return filed on 11th March 1975 cannot be a revised return under S.139(5) of the Act. It is invalid. It has no legal consequences. It should be ignored. So, it cannot be relied on for the purpose of getting the extended period of limitation under S.153(1)(c) of the Act. In this case, the assessment should have been made within two years from the end of the assessment year as provided by S.153(1)(a)(iii) of the Act, i.e., on or before 31st March 1975 or at least within one year from the date of filing the return - within one year from 10th May 1974 under S.153(1)(c) of the Act. The order of assessment, dated 6th March 1976 is patently barred. The assessee's counsel went to the extreme extent of submitting that even if the assessment order is dated 6th March 1976, it is effective and valid only when communicated or served on the assessee. That was done only on 28th August 1976. If that is considered to be the effective date, when the order of assessment is made for the purpose of S.153(1) of the Act, it is more than two years from the end of the assessment year under S.153(1)(a)(iii), of the Act and also one year beyond the date of the return and also the revised return and so even the extended period under S.153(1)(c) of the Act will not be available at all. Counsel for the revenue submitted that second return filed on 11th March 1975 is an additional or the final return and that it will be one filed under S.139(4) of the Act and so the assessment made in this case, within one year from the date of the said final return, is competent and valid under S.153(1)(c) of the Act. In the alternative, it was contended that the Income Tax Officer, while making the assessment, referred the case to the IAC for penalty under S.271(1)(c) of the Act and so the period of 8 years from the end of the assessment year in which the income was first assessable under S.153(1)(b) will be available. In this view of the matter, the assessment is not barred. The plea of limitation is without basis.