INCOME-TAX OFFICER Vs. BANARSILAL SATYANARAIN

JUDGEMENT

(1.) Per Shri Abdul Razack, Judicial Member - A very interesting question has arisen in this appeal filed by the Revenue for our consideration as to whether extended period of limitation laid down in section 153(1) (c) is available to the Assessing Officer (AO) when a return is filed by the assessee under section 139(5) revising a return which was originally filed in compliance to notice under section 148 of the Act. But before we decide the controversy a quick glance at the facts is necessary.

(2.) The assessment year involved is 1979-80 and the previous year is 31-10-1978. According to the provisions of section 139(1) as it stood then for that assessment year the assessee was obliged to file its return of taxable income on or before 30th June, 1979. No such return was filed. Thereafter, there were search and seizure operations in accordance with the provisions of section 132 of the Act on 21st/22nd March, 1980. This search operation resulted in seizure of account books and another documents/ materials. The assessee filed its return of income for the year under appeal on an estimate basis estimating and declaring the income in a sum of Rs. 1,35,000. The said return purported to be under section 139(4) of the Act was not accompanied by copy of any trading account, profit and loss account, balance sheet or any other paper or documents in support of the return filed. A letter was, therefore, issued to the assessee on 18-12-1980 to support the return by document required as per law. The last date for compliance for removing the deficiency/defects was given till 6th January, 1981. The assessee did not remove the defects/deficiency nor filed any papers or documents supporting the return so filed on 1-12-1980. Therefore, the said return filed on 1-12-1980 was invalid and non est and was lodged by the Assessing Officer. However, the Assessing Officer issued notice dated 28-6-1983 under section 148 of the Act which was served on the assessee on 2-7-1983 in compliance to which a return was filed on 10-3-1986 declaring a taxable income of Rs. 99,300. It appears from the record that the said return was processed. While the enquiry was still going on, the assessee filed another return on 30th March, 1988 revising its income in a sum of Rs. 1,29,730. This revised return was also processed and the subject matter of enquiry for the passing an assessment order. The assessee cooperated and participated with the enquiry in pursuance to the said revised return filed on 30th March, 1988. The assessment was finally completed on 15th March, 1989 computing the total income at Rs. 1,29,773.

(3.) The assessee preferred an appeal before the first appellate authority, viz., the Appellate Commissioner (A/C) challenging the framing of the assessment on 15th March, 1989 claiming it to be barred by limitation in accordance with the provisions of section 153(2) of the Act which stood then prior of its substitution by the Direct Tax Laws (Amendment) Act, 1987 which came into effect from 1-4-1987. The main bone of contention of the assessee before the A/C was that the assessment ought to have been completed by the Assessing Officer on or before 31-3-1988 since the return was filed in compliance with section 148 and the Assessing Officer did not get the extended period of limitation as provided in section 153(1) (c) of the Act as the assessee could not file any revised return in accordance with the provisions of section 139(5) because a revised return under that provision can be only filed where a return has been filed either under section 139(1) or under section 139(2). In short the assessees case has been that no revised return can be filed where a return has been filed in accordance with the provisions of section 153(2) governing the period of limitation for the purpose of making assessment where notice has been issued under section 148 and a return has been filed in compliance thereto by any assessee. The A/C got convinced with this line of argument and annulled the assessment holding that the assessment completed on 15-3-1989 was barred by limitation as per provisions of section 153(2) of the Act. The Revenue is not satisfied with this view taken by the A/C and, therefore, the present appeal has been filed in this Tribunal.