COMMISSIONER OF INCOME TAX Vs. CHITRANJALI

JUDGEMENT

(1.) This is a reference under Section 256(1) of the Income-tax Act, 1961.

(2.) The assessment of the assessee, a firm, for the assessment year J 966-67, was completed by the Income-tax Officer on atotal income of Rs. 1,14,017 on the basis of the return of income filed on July 7, 1966. The said assessment was completed by the Income-tax Officer on March 16, 1971.

(3.) The assessee went on appeal before the Appellate Assistant Commissioner. Before him, an additional ground was allowed to be urged to the effect that before the said assessment was completed by the Income-tax Officer on March 16, 1971, two revised returns were filed by the assessee, one on May 16, 1970, and the other on July 7, 1970, as certain alleged omissions had occurred in the original return filed on July 7, 1966, but the assessment was made by the Income-tax Officer on March 16, 1971, ignoring the said revised returns and as such the said assessment was bad. It was submitted before the Appellate Assistant Commissioner by the assessee that in the first return filed on July 7, 1966, the status of the assessee was not correctly declared and necessary particulars were not furnished in Part III of the return in respect of the names and other particulars of the partners. The above defects were sought to be rectified in the return which was filed on May 16, 1970, by declaring the status of the assessee as a registered firm and furnishing all necessary particulars of the partners of the firm. Along with the said return, an application for continuation of registration was also filed. Another revised return was filed on July 8, 1970, incorporating all the details in the earlier revised return which was submitted on May 16, 1970, giving additional information with regard to the loss of Rs. 25,403 which the appellant claimed for setting off against the business profits of Rs. 96,937. The Appellate Assistant Commissioner accepting the submission of the assessee held that since the Income-tax Officer had before him two revised returns, the Income-tax Officer was not justified in making the assessment on the basis of the return filed on July 7, 1966. The Appellate Assistant Commissioner, therefore, set aside the assessment and directed the Income-tax Officer to frame the assessment afresh on the basis of the revised returns in accordance with law after issuing notices under Sections 142(1) and 143(3) of the Income-tax Act, 1961.