1998 (8) TMI 70 - HC - Income Tax

Court orders reassessment for delayed return filing under section 139(9)

The court directed the second respondent to reconsider the petitioner's application for condonation of delay under section 139(9) and complete the ... Return, Defects, Rectification, Audit Report, Revised Return, Reopening Issues Involved:1. Validity of the return filed by the petitioner for the assessment year 1994-95.2. Power of the Assessing Officer under section 139(9) to condone the delay in curing defects in the return.3. Legality of the orders and communications issued by the second respondent treating the return as invalid.4. Jurisdiction of the notice issued under section 148 of the Income-tax Act, 1961.Issue-wise Detailed Analysis:1. Validity of the Return Filed by the Petitioner:The petitioner, a public sector undertaking, filed its income return for the assessment year 1994-95 on November 28, 1994. The return was found defective as it lacked the audit report mandated by section 44AB and was not signed by the managing director. The petitioner cured the signature defect and requested time for the audit report, explaining that the statutory audit by the Central Government-appointed auditors was pending. Despite this, the Assessing Officer declared the return invalid on October 17, 1995, and reiterated this on September 30, 1996, after the petitioner filed a revised return on September 25, 1996, with all necessary documents.2. Power of the Assessing Officer under Section 139(9):Section 139(9) allows the Assessing Officer to intimate defects in the return to the assessee and provide an opportunity to rectify them. The proviso to this section empowers the Assessing Officer to condone delays in curing defects if rectified before the assessment is made. The petitioner argued that the second respondent had the discretion to condone the delay and treat the return as valid, which was not exercised. The court noted that the proviso to section 139(9) gives ample power to condone delays, and the petitioner's application for extension until May 31, 1996, was pending without a decision.3. Legality of the Orders and Communications Issued by the Second Respondent:The court found that the second respondent failed to exercise the discretionary power under the proviso to section 139(9) objectively. The petitioner's request for time extension and subsequent filing of the revised return were bona fide, and the delay was due to reasons beyond their control, such as the late appointment of statutory auditors by the Central Government. The court quashed the communications dated October 17, 1995, September 30, 1996, and November 1, 1996, as well as the first respondent's order dated March 18, 1997, for not considering the petitioner's request for condonation of delay properly.4. Jurisdiction of the Notice Issued under Section 148:The court did not delve into the scope of the notice issued under section 148 due to the quashing of the previous orders. However, it mentioned that the second respondent could issue a notice under section 148 in accordance with the law in subsequent proceedings if necessary.Conclusion:The court directed the second respondent to reconsider the petitioner's application for condonation of delay under the proviso to section 139(9) and to complete the assessment based on the revised return filed on September 25, 1996. The court emphasized the need for the Assessing Officer to exercise discretion objectively and in accordance with the facts and circumstances of the case. The original petition was allowed, and the impugned orders and communications were quashed.