TaxTMI 
TaxTMI 
1984 (4) TMI 111
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....e. We find that the facts are discussed in paragraph Nos. 2 to 2.4 of the Commissioner (Appeals)'s order. Briefly, the relevant facts were as follows. 5. The assessee bought imported goods from Hindustan Steel Ltd. (HSL) at prices fixed from time to time by the Joint Plant Committee (JPC). A notification was issued on15-10-1973(Announcement No. 116 of JPC) raising the price of steel goods including imported goods sold by HSL with effect from15-10-1973. It was explained before us that imported steel was sold through HSL to registered exporters under a scheme announced by public notice on18-6-1972(Notice No. 56) by the Central Government. As noted above, the supply price of the imported steel was also increased under the said notification of15-10-1973. The Export Engineering Promotion Council consisting of the members of the trade affected by the said increase represented to the authorities concerned against the increase. The matter was still under discussion with the authorities when the assessee's relevant previous year here ended on31-3-1974. 6. In the meantime, there was a second JPC notification, effective from1-8-1974(No. 137). This date fell in the next accounting year o....
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.... undertaking, would not forego such a huge amount or even fail to intimate its intention to recover the said amount even after a lapse of more than four years. (e) The above position would clearly show that the deduction claimed by the assessee did not represent a settled liability. It was a ' liability ' that was not enforced even after four years, due to reasons known to the assessee only. Perhaps, the whole matter had been in dispute either on a representation from the assessee or from the industry concerned. In appeal, the Commissioner (Appeals) allowed the assessee's claim and, hence, the revenue is aggrieved. 8. Shri Dave relied on the above reasoning of the ITO. In his view, so far as the accounting year before us was concerned, there was neither a statutory nor a contractual liability that came to lie on the assessee with regard to the above alleged increase in the price of steel consumed and, hence, the claim was rightly disallowed. 9. Shri G.C. Sharma, the learned counsel for the assessee, emphasized that when JPC increased the prices with effect from15-10-1973, the assessee's method of accounting being mercantile, a liability stood foisted on the assessee. The s....
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....o be recovered. (b) Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC) is of help in considering a claim of this nature. No doubt, that case concerned a statutory liability. It should, however, equally apply to any other specific and ascertainable trade liability. (c) When did the liability accrue ? This was the crucial point. The assessee's relation with HSL was that of a buyer vis-a-vis seller. It was a contractual relationship arising in the course of business. HSL acted as an agent of JPC, in enforcing the decision of JPC. This decision itself was based on the Government policy and announcements. Resistance to such increase in JPC prices by the assessee could result either in the cancellation of the contract or delisting from the list of buyers or for civil proceedings for recovery. The buyer had no option but to submit to the price increase and could refuse only at the peril of forfeiting supplies. This might result in closure of business. (d) It was certainly not a contingent liability as taken by the ITO. The assessee no doubt did not provide for such a liability in its accounts for this year. However, it provided for it in its accounts for the assessment ye....
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....se as to why it should not be disallowed following the prior assessment orders. The assessee pointed out that the Tribunal had, for the assessment years 1970-71 to 1972-73 upheld the assessee's claim for deduction of such selling agency commission as allowable business expenditure. The ITO was not inclined to accept the Tribunal's decision as reference proceedings had been taken out for these years. He looked into the details of the claim for this year and disallowed it. The disallowance is based on the following reasons briefly : (a) Raunaq was approved as sole selling agents by the Government for the period7-11-1970to6-11-1975. This was by the Government's letter dated 24-7-1975 (this letter was issued by the Deputy Secretary to the Company Law Board, Department of Company Affairs, Ministry of Law, Justice and Company Affairs). In paragraph No. 2 of the said letter, it was clearly stated that the sole selling agents shall not receive any remuneration on sales made directly by the assessee including sales to the Government and corporations or bodies controlled by the Government. (b) In the subsequent letter of24-12-1976of the same Ministry, this condition was relaxed in resp....
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.... I am directed to say that on a careful reconsideration of the case in the light of submissions made by you in your letter referred to above, the Company Law Board has been pleased to decide in partial modification of para 2 of this Board's letter of even number dated 22-6-1976 that the commission may be paid to the sole selling agents on direct sales from 24-7-1975 to 6-11-1975 provided you are satisfied that such sales are attributable to the efforts of the sole selling agents. This is without prejudice to the view the Company Law Board may take in regard to the continuation of sole selling agency for any subsequent period." 15. On a reading of the above two letters, the Commissioner (Appeals) found that the ITO's interpretation of the letters was not correct. He observed as under : " It is not disputed by the ITO that condition (a) was satisfied. The letter dated24-12-1976relaxed condition (b) in respect of direct sales by the company. Such relaxation was given for the specific period from24-7-1975to6-11-1975because the approval of the agreement by the Ministry was given on 24-7- 1975 giving effect from7-11-1970. The use of the word ' shall ' in para 2 of the letter dated ....
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....cial reason given by the ITO for this year, we find ourselves in agreement with the interpretation recorded by the Commissioner (Appeals). The Commissioner (Appeals) is right in holding that the prohibition and subsequent relaxation were only for the period24-7-1975to6-11-1975. We decline to interfere. 18. The next objection relates to the deletion of an addition of Rs. 1,01,231 on account of value of work-in-progress. The assessee values the work-in-progress in respect of an incomplete contract (excess of receipts over expenditure) by the close of the accounting year. Two-third of the said surplus is the value taken, if the contract is fairly advanced, i.e., more than 50 per cent. If the contract has been executed to the extent of less than 50 per cent, then one-third of such surplus is taken into account for valuation of work-in-progress. This method was approved by the Tribunal for the assessment year 1972-73. However, this year there was a deficit in a contract, i.e., expenditure on an incomplete contract was more than the value of bills tendered. The ITO noticed this contract (Job No. 10003) where expenditure was Rs. 13,42,744 and the value of the bills raised was Rs. 10,39....
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....1. We find that there is no dispute about the method of valuation regularly followed by the assessee where there is a surplus in an incomplete contract. In our view, it would not fit in with settled accountancy principles to apply the same method in a reverse case also, i.e., where the expenditure is more than the receipts, as held by the Commissioner (Appeals) the assessee has the option of valuing the stock at cost or market value, whichever is lower, and we, therefore, do not see any strong reason for interfering with the method of valuation adopted by the assessee in this regard. The method is not seen to be unreasonable. The objection for the revenue is rejected. 22. The next objection is that the Commissioner (Appeals) erred in allowing weighted deduction under section 35B of the Act to the extent of Rs. 6,66,742 as against Rs. 85,179 allowed by the ITO. Shri Dave submits that for the reasons stated by the ITO in his order, the relief given by him under section 35B should be upheld as correct and the order of the Commissioner (Appeals) should be reversed in this regard. The assessee's counsel, on the other hand, pointed out that the assessee was not satisfied with even the....
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....B(1)(b), where the accounts are kept in composite manner, the expenses being bifurcated according to the ratio of the domestic turnover and exports. Where expenses cannot be segregated, an estimate has to be made on the facts of each case. (b) The assessee was unable to segregate the total expenses on exports from the total expenses incurred at the head office, as well as at the branch it was also not able to segregate expenses on activities relating to export promotion covered by section 35B from the expenses of other activities relating to exports. The first claim put up was based on weight of products sold inIndiaand abroad and in the revised claim the basis adopted was with reference to the proportionate value of domestic sales and exports. The total value of exports was Rs. 4.02 crores and that of domestic sales was Rs. 7.54 crores making a total turnover of Rs. 11.56 crores. The proportion worked out to 35 per cent (exports) and 65 per cent (domestic sales). The entire exports were routed through theBombaybranch. This branch also looked after total domestic sales to the extent of Rs. 3.26 crores out of Rs. 7.54 crores of total domestic sales, i.e., 55 per cent. In view of ....
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....e expenses : The local conveyance and travelling expenses (Rs. 2,00,347 of which details were not available (to show that they were incurred for purposes covered by the various sub-clauses) are inadmissible, in view of the decision of the Special Bench in J.H. & Co.'s case. That Bench held that expenditure incurred on journeys within the country for export sales and export buying or supplies was not allowable vide para 37 of its order. The entire claim would be disallowed. (e) Finance charges (Rs. 5,90,760) : The nature of such expenses was clarified neither by the ITO nor by the assessee. The Special Bench has clearly held that bank commission (which would include bank charges) in connection with the realisation of sale proceeds or for discounting facilities are inadmissible vide para 36 of its order. Hence, the assessee's claim would be disallowed fully. (f) Salaries and rent (head office and branch office) : The assessee has claimed 75 per cent of the total expenditure on export activities to be promotional and development expenses. They include salaries and rent paid in respect of head office andBombaybranch. The entire exports are routed through theBombaybranch. It also ....
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....allowed by the ITO Rs. 1,70,358 Less : expenses allowed in respect of stationery, etc. (Rs. 5,000), postage, etc. (Rs. 15,000), salaries (Rs. 10,000) Rs. 30,000 Rs. 1,40,358 2. Commission to foreign agents Rs. 6,16,763 3. Commission to Indian agents Rs. 54,154 4. Printing and stationery, etc. Rs. 46,327 5. Postage/telegrams, etc. Rs. 61,134 6. Salaries and rent (head office and branch) Rs. 4,14,748 --------------------- Total Rs. 13,33,484 --------------------- Relief under section 35B at the rate of 50 per cent Rs. 6,66,742 --------------------- The allowance of Rs. 85,179 by the ITO in his order as reported to be rectified shall be substituted by Rs. 6,66,742. The relief works out to Rs. 5,81,563." 27. The revenue's objection is that the relief given by the ITO was correct and should be restored. For the assessee, a chart was filed (pages 112 and 113) and the claim was pressed in full. We heard the parties also. It was common ground that relief should be granted on the basis of the guidelines laid down by the Special Bench in J.H. & Co.'s case. (This decision has been accepted by the CBDT also). The revenue has not made it clear in its gr....
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....--------------------------------------------------------------------------------------------------------------------- Sl. No. particulars Total expenditure Considered as incurred for export ------------------------------------------------------------------------------------------------------------------------------------------------- Amount (%) (Rs.) ------------------------------------------------------------------------------------------------------------------------------------------------ 1 2 3 4(a) 4(b) ------------------------------------------------------------------------------------------------------------------------------------------------ 1. Postage, telegrams, telephones and telex 3,49,340 35 1,22,269 2. Salaries Bombay office 2,35,678 57 1,34,336 Head office 16,84,521 35 5,89,582 3. RentBombayoffice 1,53,703 57 87,611 Head office 3,79,528 35 1,32,835 ------------------------------------------------------------------------------------------------------------------------------------------------ -------------------------------------------------------------------------------------------------------------------------------------------....
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....e the following disallowance : " Total payment including value of perquisites as per Rs. Rs. statement 1,41,133 Add : Expenditure incurred on provision of services of servants as held in his individual assessment 10,000 Expenditure on maintenance of car as held in his individual assessment after deducting recovery of Rs. 1,800 from him (Rs. 15,000-1,800) 13,200 23, 200 --------------------- Total 1,64,333 Less : Statutory deduction allowable 72,000 --------------------- 92,333 " --------------------- 29. Before the Commissioner (Appeals) it was submitted that the servants and the car's expenditure on which loan was paid for by the company were not used by the directors for their personal purposes. Reference was made to the assessment and appellate orders in the case of one of the directors wherein it was held that the company's car and servants were not proved to have been used for personal purposes by the director. The addition of Rs. 23,200 was, therefore, deleted by the Commissioner (Appeals) and this has become final. The revenue is, therefore, in appeal. 30. It was not in dispute before us that the very basis of the ITO's addition d....
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....e facts of the case for this year. 33. While the departmental representative supported the ITO's order, for the assessee reliance was placed on the Commissioner (Appeals)'s order. It was also pointed out that this claim was accepted in the subsequent assessment. After hearing the parties and on the facts on record, we find ourselves in agreement with the reasoning and conclusion recorded by the Commissioner (Appeals). In our view, a tractor, as in the instant case, and on the facts on record for this year, cannot be denied development rebate on the ground that it was a road transport vehicle. We decline to interfere. 34. The next objection relates to the deletion of a sum of Rs. 2,16,25,470 added by the ITO as ' on money ' received by the assessee on its sales, in the assessment for this year. It was pointed out before us that this ground of objection was linked with the next and last ground of objection of the revenue, which is to the effect that the Commissioner (Appeals) erred in deleting an addition of Rs. 53,070 made by the ITO on account of under valuation of stock. We, therefore, proceed to consider both the objections together. 35. Shri Dave referred to para 7 of t....
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....le of goods purchased by them from others as well as" the assessee. The ITO also relied on the evidence relating to Jindal Industries (P.) Ltd. engaged in similar business, indicating charging of ' on money ' on their products. The books and records of Surekhas and Jindals which were seized in the course of a search, confirmed according to the ITO the general practice of charging ' on money ' on sales of all types of pipes and tubes as noted above. The ITO also relied on the seized records of the Surekha group of firms. Some of these firms were distributors of BST goods. Their records also indicated that they had charged ' on money ' on goods purchased from the assessee directly as well as on goods purchased from other dealers which included BST goods and other brand of goods. The ITO further took note of the seized records (of Surekhas) particularly registers marked B-5 and A-7. These registers gave details of dates of transactions, specification of goods, price billed, price actually charged on Surekhas, the resultant ' on money ' particulars regarding rates and types of goods purchased from DST and others during the period 2-4-1973 to 21-10-1973. Purchase of goods from the asses....
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....which were the only goods purchased by Surekhas from the assessee. Perfect pipes, zinc ash, etc., were never sold to Surekhas as found by the Tribunal. The Commissioner (Appeals) further noted that the Tribunal dismissed the departmental appeal in this regard confirming the deletion of the addition. 40. The Commissioner (Appeals) then took note or the following specific submissions made before him for the assessee, vide, paragraph 19.01 of his order : " (i) The appellant-company has 400 to 500 dealers throughout the country to whom goods are sold. Details in this respect had been filed but the department did not examine any dealer, not only in the proceedings for the assessment year 1974-75 but also in the proceedings for the assessment year 1972-73 when ' on money ' was alleged and additions were made for the first time. (ii) The total turnover of the appellant was Rs. 12.28 crores including exports while Surekhas had purchased only rejected pipes worth Rs. 6,57,121 and scrap worth Rs. 4,48,952. No other types of goods were sold to Surekhas. There is no evidence of any sort for having charged ' on money ' on goods other than those sold to Surekhas and whatever evidence wa....
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....ant has submitted a statement showing the comparative prices charged by Jindals and BST for ten different varieties of goods picked up as samples. The assessee's prices in 8 items were higher by about 40 per cent to 50 per cent than the prices charged for identical goods sold by Jindals. In one item, the price was higher by 22.5 per cent and only one item, the price charged was lower than the price charged by Jindals by about 4 per cent. The department has not contradicted these facts nor brought any material to the contrary. (vii) Referring to the point made at (vi) above, it was submitted that the prices charged by the assessee were the real market prices and there was no scope for charging ' on money '. Such scope to charge ' on money ', if at all may be when the prices are charged at less than market rate, as Jindals are stated by the department to have done. (viii) The fact that Jindals and Surekhas have made disclosure after search has no bearing on the appellant's case. The appellant has not been confronted with the details of disclosures, as such, this evidence cannot be used against the appellant. In any case the appellant cannot be asked to explain the entries in th....
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...., after the assessment for the assessment year 1972-73 was made). The ITO has made no mention thereof in his order as he did not find it useful for the department's case. His deposition was obviously unhelpful to the department and did not contradict the stand of the assessee. This statement was also not relied on even in the arguments at the Tribunal stage although it was recorded before the appeal for the assessment year 1972-73 was heard by the Tribunal." 41. It was also contended before the Commissioner (Appeals) that there being no new evidence brought on record and the evidence relied on being exactly the same for this year as for the assessment year 1972-73, there was no case for addition this year also. For this, the reply of the ITO who was present before the Commissioner (Appeals) in the appeal proceedings, was that so far as this year was concerned, there was evidence of specific entries in the books of Surekhas clearly indicating the payment of ' on money ' to the assessee on transactions which fell within the relevant previous year. It was pointed out that Surekhas had made a disclosure after the search in respect of ' on money ' received by them. The facts of dupli....
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....n money ' for payment to the assessee. In fact, all these aspects were considered in first appeal for the assessment year 1972-73 and also by the Tribunal for that year. It was also seen from the evidence on record that certain entries did not find place in the seized books. There were transactions where no names were given. Pages were torn partly with the result that debit entries regarding payments to various parties were not available. All these show that the seized books were not complete in themselves and it would not be correct to give so much credence to them as done by the ITO. (d) In the instant case, there was no witness who admitted having paid the ' on money ' personally to the assessee. On the other hand, Shri Surekha admitted having received ' on money ' and denied having paid ' on money ' to the assessee personally himself. One Jagdish Prasad was stated to have passed on the ' on money ' to Yograj, an employee of the sole selling agent of the assessee-company. That Jagdish Prasad was not alive for being examined and Yograj denied having received any such amount from Jagdish Prasad or anyone else. It had to be reiterated that the entire evidence had been considered....
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....onsequently, the additions to the value of the closing stock do not survive." 45. Shri Dave took us through the orders of the authorities below. He relied strongly on the ITO's order. We, however, asked him to show in what way the evidence considered by the ITO this year was qualitatively different from that considered by him for the assessment year 1972-73 and evaluated by the Tribunal in the appeal for that year. Shri Dave submitted that the material considered this year related to this year. The learned counsel for the assessee, however, referred to the detailed analysis of the Commissioner (Appeals) in his order on this point and contended that there was no difference in the evidence of this year and of the assessment year 1972-73 already looked into by the Tribunal. 46. After hearing the parties and on looking into the material on record we find that the Commissioner (Appeals) is correct in concluding that the ITO has acted on the same evidence this year as considered by him for the assessment year 1972-73. In this view of the matter, we find ourselves in respectful agreement with the conclusion reached by the Tribunal for the assessment year 1972-73. We would, therefore....
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....y wrong statement therein, he may furnish a revised return at any time before the assessment is made." According to the counsel, there could be only one return in law under section 139(5). In this case, the first revised return was filed on29-8-1975. In terms of section 153(1)(c) limitation started running from that day. The assessment should, therefore, have been completed by or before28-8-1976. The assessment having been completed on1-3-1978has to be struck down as a nullity, being barred by limitation. 51. According to the learned counsel, there are four classes of returns. These are : (a) Return under section 139(1). (d) Return under section 139(2). (c) Return under section 139(4)(a). (d) Return under section 139(5). The return under section 139(5) can only be pursuant to a return already furnished under section 139(1) or under section 139(2). So far as the return under section 139(5) is concerned, filing of such a return can be done only once. This is obvious from the word ' therein ' occurring in section 139(5), i.e., when an assessee discovers any omission or any wrong statement either in the return filed under section 139(1) or in the return filed under....
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...., the consequences were different. If indeed there was substitution as claimed for the revenue, the counsel submitted, then no penalty under section 271(1)(c) of the Act can be levied with regard to the concealment detected in the original return. The revised return may make good the concealment detected by the ITO in the first return. On the other hand, the accepted position in law is that the first return is relevant for the purposes of deciding concealment and, hence, it cannot be claimed that the first return gets obliterated for all purposes. When section 139(5) uses the phrase ' a revised return ' it clearly refers only to a single return and not to a series of returns. 53. Various authorities were cited before us by both the revenue as well as by the learned counsel for the assessee. One particular decision was against the assessee on the very point in dispute here. This was in the case of Niranjan Lal Ram Chandra v. CIT [1982] 134 ITR 352 (All.). The facts here were : the assessee filed a return under section 139(1) for the assessment year 1966-67 showing a business income of Rs. 55,489. Thereafter, on2-3-1971he filed a revised return under section 139(5) showing an inco....
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....s case is directly in point. The only question is whether we are free to take a different view for the reasons stated by the assessee's learned counsel. In the absence of any other ruling of the Supreme Court or of any High Court directly on this point, we are of the view that we are bound to follow the ruling of the Allahabad High Court in this case. Judicial discipline requires us to do this. No doubt law develops on dissent and free discussion. But every dissent does not lead to enlightenment. We would, therefore, following the ruling in Niranjan Lal Ram Chandra's case, hold that the charge of the assessment being a nullity on grounds of limitation is not shown to be valid in law. The assessment cannot be quashed on that ground. This objection of the assessee is, therefore, rejected. 56. The next objection relates to partial disallowance of the assessee's claim for relief under section 35B by the Commissioner (Appeals). As regards this objection, the revenue in its appeal has also taken a corresponding ground. We have considered the entire order of the Commissioner (Appeals) in this regard and have recorded our findings also thereon in paragraph No. 27. The findings there wou....
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..... Here the assessee incurred certain expenditure with a view to starting a new project, i.e., manufacturing of hand tools. This project never took off the ground. There is, therefore, no question of this preliminary expenditure being classed as expenditure of a business activity which was part of the business in manufacture of steel pipes and tubes being carried on the assessee. We decline to interfere. 61. The next objection relates to disallowance of a sum of Rs. 12,000 claimed as business expenditure. The ITO disallowed the claim as it represented penalties imposed by the Excise and Taxation Officer (Enforcement-cum-Assessing Authority) for non-payment of passenger tax on the vehicles owned by the assessee for the purpose of business. The submission for the assessee before the Commissioner (Appeals) was that such penalties were part of passenger tax and, hence, allowable as business expenditure. The facts noted by the Commissioner (Appeals) are : There was some dispute about the payment of passenger tax for the assessment years 1966-67 to 1973-74. The liability for the said tax arose in the year under appeal and was also paid. The authority concerned, however, imposed a total....
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....ued before us that there was no separate provision for the levy of such penalty in the relevant statute. A penalty cannot be looked upon as a mere accretion to the tax liability in question. We, therefore, decline to interfere. 65. The next objection is to the disallowance of Rs. 2,25,000 being expenditure incurred for exploring the possibility of manufacture of raw material, i.e., steel/strips for captive use of the existing plant. Under the head ' General expenses ', the assessee claimed a deduction of Rs. 1,50,000 paid to M.M. Dastur & Co., industrial consultants and Rs. 75,000 to Industrial Development Services for exploring the possibility of manufacturing steel strips for captive use of the tube and for acquiring scrap. It was claimed that the project was for procuring raw material for the existing units and hence it was a revenue expenditure. The ITO, however, disallowed it. The Commissioner (Appeals) noted the following in this regard : (a) The new project was meant for manufacturing or acquiring raw material. The ITO did not go into the question whether steel strips were actually required as raw material for manufacturing the existing products (tubes and pipes). Nor ....
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.... Ltd. [1981] 127 ITR 218 (Mad.) was cited before us. That was a case of a managing agency company. It had been investigating several projects and wherever feasible, promoting new industrial undertakings. If the new undertaking materialised the expenses were transferred and recovered from the new unit and the assessee secured the office of managing agents or technical consultancy or the like and earned profits. If, however, the project was unsuccessful, the assessee wrote off the expenses. For the assessment years 1966-67 and 1967-68 the assessee claimed deduction of Rs. 9,865 and Rs. 10,785 respectively being project expenses incurred in a newsprint paper mill project which did not materialise. The Tribunal held that such expenses to be of revenue nature as the assessee's business was promotion of new ventures [Emphasis supplied]. The Madras High Court upheld the decision of the Tribunal. It held that the expenses were incurred by the assessee in the course of business as promoter of companies or as managing agents and with a view to augmenting their income. On the facts before us, if we apply the ratio of this case, we have to uphold the orders of the authorities below, no doubt, ....
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....es, we see no room for interference. This is because such a disallowance is supported by an order of the Special Bench of the Tribunal in the case of Amar Dye-Chem. Ltd. v. ITO [1983] 3 SOT (Bom.) [IT Appeal No. 3643 (Bom.) of 1974-75, dated1-12-1977]. This objection of the assessee is, therefore, rejected. 74. In the result, both the appeals are allowed in part. Per Shri U.S. Dhusia, Judicial Member --- I am in full agreement with the finding of my learned brother except for those contained in paras 47 to 55. The assessee has raised a plea that the assessment was time barred. His learned counsel had raised several pleas which we would shortly notice. But my learned brother, relying on the decision of the Allahabad High Court in the case of Niranjan Lal Ram Chandra, sought to reject the pleas raised on behalf of the assessee with the observation that judicial discipline required that if a Supreme Court decision was not available on the subject, the Tribunal must follow the decision of a High Court because, in his view, dissent would not lead to enlightenment in the case in hand. I am unable to see the light which my learned brother has seen from the Allahabad High Court decis....
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....) permits a return or a revised return, respectively, to be filed before the assessment is made. In both these sub-sections the same expression ' before the assessment is made ' is used. The expression places a limitation on the right of the taxpayer to file a return or a revised one to be filed and that is indicated by the expression ' before the assessment is made '. Can one have any doubt about the time indicated by this expression ? If no return is filed under sub-section (5) of section 139, no one will dispute that assessment would fall to be made within the time indicated by clause (a) or (b) of sub-section (1) of section 153. For the time being I rule out that it is a case falling within clause (c) of sub-section (1) of section 271, i.e., involving penalty for concealment which is also the case before us as neither parties contended otherwise. In normal non-penalty assessment time will be set by the limit provided in clause (a) only. To be precise, in the case in hand, it will be31-3-1977. Therefore, as the assessment will be required to be made on or before31-3-1977, a return under section 139(4) could not be filed after this date, i.e., after31-3-1977. Similarly, it follow....
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....t has to be considered invalid and not of any legal consequence. 4. Both the parties have erroneously assumed that revised return which extended the time limit for making the assessment extended also the time for filing another revised return to be subsequently filed in my view, the assumption proceeds from a fallacy and a misconstruction of section 139, as has been illustrated above. When a second return is filed the first revised return has been admitted by both parties to lapse or to lose its operation and effect. It is the subsequently revised return which is to be looked upon as the one revising the original return and it is this return alone which has the effect of extending the time limit as provided in clause (c) of sub-section (1) of section 153. An earlier revised return which being supplanted by a subsequent return and having lost its legal effect cannot be still considered to be extending the time limit, as provided in the aforesaid clause (c). There is no authority or support available from any provision of law in favour of this view, nor does it affect the validity or otherwise of the later revised return. The later revised return has to stand upon its own validity....
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....filed by the assessee has to be examined. The first return was flied on31-7-1974. If no revision had taken place, the assessment was to proceed on the basis of this return only. The time limit for making the assessment on the basis of this return would have ended on31-3-1977. A revised return had to be filed on or before the ' assessment could be made ' on this date. A revised return filed after this date would be undoubtedly considered an invalid return. Therefore, the revised return filed on29-8-1975being one filed before the prescribed date of assessment, i.e.,31-3-1977was a valid revised return but this revised return, followed by a second revised return filed on10-2-1977lost its effect and operation. The second revised return filed before the prescribed date of assessment, i.e.,31-3-1977was also to be considered a valid revised return. This extended the period of assessment by twelve months following the date of filing the return on10-2-1977that is up to10-2-1977. An assessment up to this date could not be considered barred by time. The assessment was, however, made on 1-3-1978-a date which fell beyond the period of twelve months from the date of filing of the second revised r....
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....e year would have been barred by limitation if not completed on or before31-3-1977. However, if the second and/or the third revised returns are treated as valid revised returns, the assessment would be barred by limitation only if not completed before10-2-1978and/or23-1-1979, as the case may be. 4. The assessee's case is that the third revised return filed by it on23-1-1978is not a valid return, that the assessment on the basis of the second revised return should have been completed on or before10-2-1978and that the same having been completed on1-3-1978is barred by limitation. The department's case, on the other hand, is that the third revised return is as valid a return as the first and/or the second revised returns and so the assessment would have been in time if completed on or before23-1-1979. The learned Accountant Member has dealt with this issue in paragraphs 47 to 55 of his consolidated order while the learned Judicial Member's entire order running into seven paragraphs deals with this issue only. 5. Besides, strongly relying on the order of the learned Judicial Member, Shri Sharma, the learned counsel for the assessee, has reiterated that section 139(5) contemplates ....
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....In this context, it is pointed out on behalf of the revenue that section 139(4) supports the order of the learned Accountant Member rather than that of the learned Judicial Member. There the Legislature felt or wanted to provide separate time limits for filing returns, and has taken care to mention ' before the assessment is made ' or ' before the end of the period specified ', etc. Such a provision having not been made in section 139(5) it will be too much to assume that the expression ' assessment is made ' in section 139(5), should have a different meaning from what it has in section 139(4). According to the revenue, the interpretation sought to be given by the learned Accountant Member does not lead to any absurdity at all. On the other hand, the interpretation given to the provisions by the learned Judicial Member leads to absurdities. For instance, in this very case, the assessee has filed not one but three revised returns. The ITO has accepted the stand taken by the assessee, namely, all the returns filed by the assessee are valid returns. Now, when the assessee finds that such an argument does not suit its convenience, it turns round and argues that the third revised return....