DR. MRS. SATYABHAMA THAKUR VS COMMISSIONER OF INCOME-TAX, 1998 PTD-PATNA-HIGH-COURT-INDIA 3224 (1996)

Income-tax---

----Assessment---Limitation---Return---Revised return---Original return filed under S.139(4)---Assessee not entitled to file revised return---Assessment based on revised return---Not valid---Indian Income Tax Act, 1961 139 & 153.---[CIT v. Dr. N. Shrivastava (1988) 170 ITR 556 (MP); Kumar Jagdish Chandra Sinha v. CIT (1982) 137 ITR 722 (Cal.) and Nanjappa Textiles v. CIT (1985) 153 ITR 109 (Mad.) dissented from].

For the assessment year 1975-76, the assessee filed her return of income on November 4, 1975, under section 139(4) of the Income Tax Act, 1961. She filed a revised return of income on March 21, 1978. Assessment was completed on March 9, 1979, on the revised return of income. The assessee claimed before the 'Tribunal that since the original return was filed under section 139(4) of the Income Tax Act, 1961, she was not entitled to file a revised return and that since the assessment was not completed within one year of November 4, 1975, the date of the original return, the assessment was barred by limitation. The Tribunal held against the assessee. On a reference:

Held, that subsection (5) of section 139 refers to furnishing of a revised return of income if a person has furnished a return under subsection (1) or subsection (2) thereof. When this subsection specifically refers to filing of a revised return only where returns have been furnished either under subsection (1) or subsection (2) of section 139, this provision for filing a revised return cannot be extended to subsection (4) of section 139. Therefore, the revised return filed by the assessee under subsection (5) of section 139 of the Act was non est and no assessment could be based on that.

Eapen Joseph v. CIT (1987) 168 ITR 26 (Ker.); Bhargava (S.B.) (Dr.) v. CIT. (1982) 136 ITR 559 (All.); Malhotra (O. P.) v. CIT (1981) 129 ITR 379 (Delhi) and Vimalchand v. CIT (1985) 155 ITR 593 (Raj.) fol.

CIT v. Dr. N. Shrivastava (1988) 170 ITR 556 (MP); Kumar Jagdish Chandra Sinha v. CIT (1982) 137 ITR 722 (Cal.) and Nanjappa Textiles v. CIT (1985) 153 ITR 109 (Mad.) dissented from.

Rajiv Ranjan Prasad for the Assessee.

L.N. Rastogi, Senior Advocate and S.K. Sharan for the Commissioner.

JUDGMENT

The Income-tax Appellate Tribunal, Patna Bench, Patna, referred to this Court under section 256(1) of the Income Tax Act, 1961 (for short "the Act"), the following two questions of law for its opinion:

"(i)Whether, a revised return can be filed when a return has been filed under section 139(4) of the Income Tax Act, 1961?

(ii)If the answer to the above question is affirmative, whether the assessment made on the basis of the return filed by the assessee on March 21, 1978, was a valid assessment?"

For the assessment year 1975-76, the assessee filed her return of income on November 4, 1975, under section 139(4) of the Act. She filed a revised return of income on March 21, 1978. Assessment was completed on March 9, 1979, on the revised return of income. On appeal, the Appellate Assistant Commissioner set aside the assessment as invalid and directed the Income-tax Officer to complete the assessment de novo. On further appeal before the Tribunal, the only contention raised by the assessee was that when the original return was filed under section 139(4) of the Act she was not entitled under law to file a revised return and the assessment made on March 9, 1979, was time-barred keeping in view the original return filed under section 139(4) of the Act.

Under subsection (5) of section 139, a revised return can be filed if the return had been filed either under subsection (1) or (2) of section 139. We may reproduce subsections (4) and (5) of section 139 as under:

"(4).(a) Any person who has not furnished a return within the time allowed to him under subsection (1) or subsection (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in clause (b), and the provisions of subsection (8) shall apply in every such case;

(b) the period referred to in clause (a) shall be----

(i) where the return relates to a previous year relevant to any assessment year commencing on or before the 1st day of April, 1967, four years from the end of such assessment year;

(ii) where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1968, three years from the end of the assessment year;

(iii) where the return relates to a previous year relevant to any other assessment year, two years from the end of such assessment year."

"(5) If any person having furnished a return under subsection (1) or subsection (2), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before, the assessment is made."

Section 153 provides for time limit for completion of assessments and clause (c) of subsection (1) relevant for the assessment year 1975-76 is as under:

"(1) No order of assessment shall be made under section 143 or section 144 at any time after--- .....

(c) the expiry of one year from the date of the filing of a return or a revised return under subsection (4) or subsection (5) of section 139, whichever is latest."

Thus, the contention of the assessee, in brief, is that since the assessment was not completed within one year on November 4, 1975, the assessment was barred by limitation. The Tribunal did not agree with the contention of the assessee and on an application filed under subsection (1) of section 256 of the Act by the assessee referred the two questions of law to this Court for its opinion.

This question has been considered in various High Courts and there is a divergence of opinion. The High Courts of Allahabad (Dr.S.B. Bhargava, v. CIT (1982) 136 ITR 559; O.P. Malhotra v. CIT (1981) 129 ITR 379 (Delhi); Eapen Joseph v. CIT (1987) 168 ITR 26 (Ker.) and Vimalchand v. CIT (1985) 155 ITR 593 (Raj.) have taken the view canvassed before us by the assessee while the High Courts of Kumar Jagdish Chandra Sinha v. CIT (1982) 137 ITR 722 (Cal.), CIT v. Dr. N. Shrivastava (1988) 170 ITR 556 (MP.) and Nanjappa Textiles v. CIT (1985) 153 ITR 109 (Mad.) have taken the view in favour of the Revenue.

Our attention has been drawn to an instruction (Instruction No.888), issued by the Central Board of Direct Taxes under section 119 of the Act. This instruction was published in C.B.D.T. Bulletin (Technical) Volume XXI of October to December, 1975 (page 233)---(CBDT F. No.243/13/75-A and PAC-II, dated the October 1, 1975). It is under this instruction that the income-tax authorities under the Act have referred to the opinion of the Law Ministry, Government of India, that an assessee who has filed his return of income under section 139(4) of the Act is not entitled to file a revised return under section 139(5) of the Act. There is ample authority for the proposition that the instruction issued under section 119 of the Act is binding on the income-tax authorities. That being the position, the revised return filed by the assessee in the present case under subsection (5) of section 139 of the Act is non est and no such assessment can be based on that. We may reproduce Instruction No.888, and the opinion of the Ministry of Law which formed part of this instruction:--

"Instruction No.888

XX/1/97---Returns or income filed under section 139(4) of the Income Tax Act, 1961---Whether can be revised under sec tion 139(5)---Whether extended time limit under section 153(1)(c) be available in respect of such returns of income---clarification regarding.

A question has been raised as to whether a person who has filed as belated return of income under section 139(4) of the Income Tax Act, 1961, is entitled thereafter to file a revised return of income under section 139(5) of the Act. A related question is whether insuch a case the time limit for completion of assessments laid down in sub-clause (c) of subsection (1) of section 153 of the Act will apply with reference to the belated return filed under section 139(4) or the revised return under section 139(5).

(2)These questions were referred to the Ministry of Law for advice. According to the Ministry of Law, a person who has not filed a return of income within the time allowed to him under sub section (1) or subsection (2) of section 139 of the Act, but files a return of income under section 139(4) is not entitled to file a revised return under section 139(5) of the Act. The Law Ministry has further advised that such a return of income cannot be taken into consideration for the purpose of computing the period of limitation It under section 153(1)(c) of the Act. It may, therefore, be noted that the extended time limit of one year under section 153(1)(c) will not be available in respect of a revised return of income purported to have been filed under section 139(5) where originally the return was filed under section 139(4). A copy of the advice of the Ministry of Law is enclosed.

(3)The above legal position may kindly be brought to the notice of all the officers working in your charge.

Opinion of the Ministry of Law, dated November 22, 1974.

In File No.201/20/74-IT (A.11).

The right to file a revised return arises under subsection (5) of section 139. That subsection expressly gives that concession only to those who have filed a return under subsections (1) and (2). This concession would also be available to those who file returns under subsections (3) and (4-A) because, it is expressly provided therein that the provisions of the Act will be applicable to the returns filed there under, as if they were filed under subsection (1). But, subsection (4) does not contemplate the filing of more than one return. In any case, if it was contemplated that even those who have filed returns under subsection (4) should be able to file a revised return, there was nothing to prevent the Legislature to say so in subsection (5) itself or state in subsection (4) that the provisions of the Act will apply to the return filed there under as if it was a return under subsection (1), as has been done in subsections (3) and (4-A) .

(2)It is true that in section 153(1)(c), the wordsreturn' or 'revised return' have been used. But, in the context, it seems to me that the word 'return' is used with reference to subsection (4) and the expression 'revised return' is used with reference to subsection (5). This seems to be the appropriate way of construing section 153(1)(c) of the Act.

(CBDT. F. No. 243/13/75-A and PAC-II, dated 1st October, 1975). "

We have examined the decisions of the High Courts referred to above in detail and keeping in view the instruction of the Central Board of Direct Taxes mentioned above, we are of the opinion that no revised return can be filed under subsection (5) of section 139, when the return has been filed under subsection (4) of section 139 of the Act.

Subsection (5) of section 139 refers to furnishing of a revised return of income, if a person has furnished a return under subsection (1) or subsection (2) thereof. When this subsection specifically refers to filing of a revised return only where returns have been furnished either under subsection (1) or subsection (2) of section 139, this provision of filing a- revised return cannot be extended to subsection (4) of section 139. Any other interpretation would mean that the person who has filed his return under subsection (4) can go on filing revised returns one after the other and there would be no time limit to complete the assessment. In any case the Court cannot read subsection (4) in subsection (5) of section 139 when reference under subsection (5) for filing of a revised return only pertains to returns filed under subsection (1) or subsection (2) of section 139. Clause (c) of subsection (1) of section 153 refers to the return that is filed under subsection (4) and to the revised return that is filed under subsection (5) of section 139. We will, therefore, agree with the view taken by the High Courts of Allahabad, Delhi, Kerala and Rajasthan.

Accordingly, we answer the first question in the negative and in favour of the assessee. In this view of the matter, the second question becomes redundant. There will be no order as to costs.

M.B.A./1643/FC Order accordingly.