JAGADISH CHANDRA SINHA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) In this reference under Section 256(1) of the I.T. Act, 1961, the following three questions have been referred to this court :

(2.) On question No. 1, the Tribunal has held in favour of the assessee. This question has been referred at the instance of the Revenue. On the other two questions, however, the Tribunal's view was against the assessee and these have been referred at the instance of the assessee. It appears that the facts lie within a short compass and the point involved is also short, We are concerned with two assessment years, viz., the assessment years 1964-65 and 1965-66. For the first year, the last date on which the return could be filed under Section 131(1) of the I.T. Act, 1961, was 30th June, 1964. In this case, no notice under Section 139(2) of the Act had been served so as to enable the assessee to file the return within the time under that sub-section. According to the assessee, 13th August, 1964, was the date for filing the original return, which was indisputably accepted as a return filed under Section 139(4) of the Act, that is, the date on which the original return was filed. On 18th February, 1969, a revised return was filed disclosing a capital loss due to sale of land. It is the case of the assessee that the revised return, in the facts and circumstances of the case, was not warranted by the provisions of law specially in view of Sub-section (5) of Section 139 of the Act. About this date, there is little discrepancy. The date, according to the order of the ITO, was 18th January, 1969. However, according to the order of the AAC as well as the order of the Appellate Tribunal the date was 18th February, 1969, and we shall accordingly proceed on the basis, that is to say, on 18th February, 1969, the so-called return, which has been described as a revised return disclosing the capital loss, was filed. According to the assessee, 31st March, 1969, was the date within which the assessment should have been completed under the law, being the expiry of the four years of the relevant assessment year. But, in this case, the assessment was completed on the basis of the so-called revised return on 15th January, 1970, and on that date the penalty proceedings were initiated. So far as the assessment year 1965-66 is concerned, 30th June, 1965, was the date, according to the assessee, within which the return under Section 139(1) of the I.T. Act, 1961, could be filed. In this case also, no notice under Section 139(2) of the Act had been served so as to enable the assessee to file the return within the time thereunder. 17th December, 1965, was the date for the filing of the original return which was accepted as the return under Section 139(4) of the Act. On 17th July, 1969, the assessee filed another return which he described as the revised return disclosing capital gains due to sale of lands. According to the assessee, in the facts and circumstances of the case, under Sub-section (3) of Section 139 of the Act, this was unwarranted. 31st March, 1970, was the date within which the assessment in the instant case for the relevant year should have been completed. On 3rd July, 1970, there was an initiation of penalty proceedings Under Section 271(1)(c) of the I.T. Act, 1961. On the 6th July, 1970, the assessment was completed on the basis of the so-called "revised return" and on 16th July, 1970, the notice Under Section 271(1)(c) of the I.T. Act, 1961, was issued. In those circumstances, the ITO passed an order on 15th January, 1970, for the assessment year 1964-65. He narrated the facts as we have mentioned before and thereafter dealt with the different heads of income and observed that there were capital gains, taking into consideration the so-called return, which was called a "revised return", and added a sum of Rs. 24,000 on that score. The total income was computed at Rs. 3,17,205. On that date penalty proceedings were initiated.

(3.) Similarly, for the subsequent assessment year, i.e., for the assessment year 1965-66, order in respect of which was passed on 6th July, 1970, the ITO noted the facts regarding the filing of return as we have mentioned before and proceeded to compute the income and added long-term capital gains of Rs. 14,82,387 on account of capital gains on sale of land. Before the Tribunal, these facts were adverted to and assessments were referred to by both sides and, referring to the aspects, the Tribunal observed that the following issues arose for a determination of the controversy in the instant case :