1996 (4) TMI 5 - SC - Income Tax

Court Rules Revised Return Not Allowed for Section 139(4) Filers; Assessments Barred by Time

Kumar Jagdish Chandra Sinha (By Legal Representatives) Versus Commissioner of Income-Tax

The court held that a revised return under Section 139(5) is only permissible for returns filed under Section 139(1) or Section 139(2), denying this right ... Held in case of a return filed under sub-section (4) of section 139, a revised return contemplated by sub-section (5) of section 139 cannot be filed - held that the orders of assessment made in respect of the said two assessment years are barred and are not saved by s. 153(1)(b) - Once we hold that no revised returns could be filed by the assessee for the said two assessment years, the assessments made beyond the prescribed period of 4 years (but within 5 years) are not saved by s. 153(1)(c) Issues Involved:1. Validity of filing a revised return under Section 139(5) when the original return is filed under Section 139(4).2. Time-limit for making assessments under Section 153(1)(b) of the Income-tax Act, 1961.3. Applicability of Section 271(1)(c) for extending the period of assessment.Detailed Analysis:Issue 1: Validity of Filing a Revised Return under Section 139(5)The primary question was whether a person who files a return under Section 139(4) is entitled to file a revised return before the assessment is made. The court held that a revised return under Section 139(5) is permissible only for returns filed under Section 139(1) or Section 139(2). The court emphasized that the right to file a revised return is explicitly given to those who file under Section 139(1) or Section 139(2), thereby implicitly denying this right to those who file under Section 139(4). The court disagreed with the High Court's interpretation that Section 153(1)(c) indirectly allowed for a revised return in cases where the original return was filed under Section 139(4). The court concluded that no revised return could be filed under Section 139(5) if the original return was filed under Section 139(4). Consequently, the revised returns filed by the assessee were not valid, and Section 153(1)(c) was not applicable.Issue 2: Time-limit for Making Assessments under Section 153(1)(b)The second issue was whether the assessments made by the Income-tax Officer for the assessment years 1964-65 and 1965-66 were within the time-limit prescribed by Section 153(1)(b). The court examined the ambiguous language of Section 153(1)(b), which allows for an extended period of eight years for making an assessment in cases falling under Section 271(1)(c). The court noted two streams of thought: one requiring the initiation of proceedings or recording of a finding within the original four-year period, and the other not imposing such a requirement. The court referred to its earlier decision in CIT v. Suraj Pal Singh, which supported the first stream of thought-that the Income-tax Officer must initiate proceedings or record a finding within the four-year period to avail of the extended eight-year period. Applying this understanding, the court held that the assessments were barred by time as the Income-tax Officer had not initiated proceedings under Section 271(1)(c) within the prescribed four-year period, nor had he made any record or note indicating that it was a case falling under Section 271(1)(c).Issue 3: Applicability of Section 271(1)(c) for Extending the Period of AssessmentThe third issue was whether the cases for the assessment years 1964-65 and 1965-66 fell within clause (c) of sub-section (1) of Section 271, thereby allowing for an extended period of assessment. The court reiterated that since no revised returns could be filed under Section 139(5) for returns originally filed under Section 139(4), the assessments made beyond the prescribed period of four years were not saved by Section 153(1)(c). The court upheld the view that the orders of assessment for both assessment years were invalid as they were made beyond the prescribed period and were not justified under Section 153(1)(b) or Section 153(1)(c).Conclusion:The appeals were allowed, and the court answered the questions as follows:1. In the case of a return filed under Section 139(4), a revised return under Section 139(5) cannot be filed.2. The orders of assessment for the said two assessment years were barred by time and not saved by Section 153(1)(b).3. The assessments made beyond the prescribed period of four years were not saved by Section 153(1)(c).There shall be no order as to costs.