Sethuraman, J.
1. In this reference under s. 256(1) of the I.T. Act, 1961, the following question of law has been referred to :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the return filed on October 5, 1968, could be construed as a return under section 139(5) and the assessment made on September 22, 1969, for the assessment year 1964-65 is not barred by limitation ?'
2. The relevant facts are in a very short or narrow compass. The assessee is a firm, which was served with a notice under s. 139(2) of the Act on July 20, 1964, in relation to the assessment year 1964-65, calling for the submission of the return of its income. The return should have been filed on or before August 19, 1964. The assessee filed the return on December 14, 1964, disclosing an income of Rs. 26,593. On October 5, 1968, it filed a revised return admitting an income of Rs. 27,900. The assessment was completed on September 22, 1969.
3. In the appeal filed by the assessee before the AAC, it was contended that the return filed on December 14, 1964, having been filed beyond the time permitted under s. 139(2), it could only be treated as a return under s. 139(4), that the second return filed on October 5, 1968, could not be considered as a return under s. 139(5) since s. 139(5) is applicable only when the original return was filed within the time allowed under s. 139(1) or s. 139(2) and that the assessment made on September 22, 1969, was, therefore, barred by limitation under ss. 153(1)(a) and 153(1)(b). The AAC did not accept these submissions and, on further appeal, the Tribunal held that the return filed on December 14, 1964, could only be treated as a belated return under s. 139(1) or s. 139(2), that the revised return filed on October 5, 1968, furnished a starting point of limitation and that the assessment is required to be completed only within a period of one year from the revised return and was, therefore, valid. Thus, the assessee having failed before the Tribunal, the matter has been brought before this court under reference on the question set out above.
4. It is necessary to bear in mind the provisions of the Act as they were in force on 1st April at the commencement of the assessment year. Section 139(1) provides for every person filing a return if his total income exceeded the maximum amount which is not chargeable to income-tax. The return should be in the prescribed form and verified in the prescribed manner. Clause (a) and (b) provide the time-limit within which such a return is to be filed. In the case of an assessee whose total income includes any income from business which is the case here, then the return has to be filed before the expiry of six months from the end of the previous year or before 30th day of June of the assessment year, whichever is later. In the present case, the relevant year ended on April 10, 1964, and, therefore, the assessee had time for furnishing the return under s. 139(1) till October 10, 1964. The ITO had also power to extend the time for submission of the return on an application being made by the assessee in the prescribed manner. It is common ground that in this case the assessee had not filed any such application.
5. Section 139(2) provides for cases where the ITO is of opinion that any person is assessable under Act. In such case, the ITO may, before the end of the relevant assessment year, serve a notice on the assessee requiring him to furnish, within thirty days from the date of the service of the notice, a return of his income in the prescribed form and verified in the prescribed manner. The proviso to sub-ss. (1) and (2) contemplate extension of the time being granted on an application made in the prescribed manner to the ITO. Sub-ss. (4) and (5) of s. 139 are material and, therefore, they are reproduced here :
'(4) Any person who has not furnished a return within the time allowed to him under sub-section (1) of sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of four assessment years from the end of the assessment year to which the return relates, and the provisions of sub-clause (iii) of the proviso to sub-section (1) shall apply in every such case.
(5) If any person having furnished a return under sub-section (1) or sub-section (2), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made.'
6. It is now necessary only to refer to s. 153(1), which provides the time-limits for making assessments, which runs as follows :
'No order of assessment shall be made under section 143 or section 144 at any time after -
(a) the expiry of four years from the end of the assessment year in which the income was first assessable; or
(b) the expiry of eight years from the end of the assessment year in which the income was first assessable, in a case of falling within clause (c) of sub-section (1) of section 271; or
(c) the expiry of one year from the date of the filing of a return or a revised return under sub-section (4) of sub-section (5) of section 139, whichever is latest.'
7. The contention of Mr. Srinivasan (Bangalore Bar) for the assessee was that the return filed on December 14, 1964, being itself a belated return could only be treated as a return under s. 139(4) and that the subsequent return filed on October 5, 1968, could not revise such a return, as a revised return is contemplated only in cases where a return is filed under sub-section (1) or sub-s. (2) of s. 139. In other words, his point was that the return filed under. 139(4) cannot be equated to a return under sub-s. (1) or sub-s. (2) of s. 139 and that it had an independent existence. The assessment made on September 22, 1969, being beyond the period of four years contemplated by s. 153(1)(a), the assessment would be valid only if the return filed on October 5, 1968, is treated to be a proper return under s. 139(5). If the return dated October 5, 1968, is not a valid return as contended by him, then it is not disputable that the assessment would be clearly time barred. We have, therefore, to find out whether the return dated October 5, 1968, is a valid return or not.
8. An assessee submitting a return would fall under one of two provision, viz.,. s 139(1) or s. 139(2), as the case may be. As could be seen from the provision, s. 139(1) requires a voluntary return being submitted, and s. 139(2) requires a return being submitted in pursuance of a notice from the ITO in case the ITO was of the opinion that an assessee had income assessable under the Act. Section 139(4) is an enabling provision in a case where the assessee had not applied for an extension of time either under sb-s. (1) or sub-s. (2) but submitted, a return after the due date. There would be no scope for the assessee to furnish a return after expiry of the time-limits contemplated by the two sub-sections. Such a return would not answer the requirements of the statute. In consequence, the assessment would have to be to the best of judgment of the ITO as envisaged in s. 144. In order to avoid this consequence s. 139(4) was enacted. It may be pointed out here that the ITO cannot make a best judgment assessment merely on the basis of the assessee's failure to submit a return within the time provided in s. 139(1), without requiring him to furnish a return under sub-s. (2). The return under s. 139(4) really takes the character of a return under sub-s. (2) wherever the assessee had been required to submit a return and had only delayed filing it. The return under sub-s. (4) cannot thus have any existence independent of sub-s. (1) or sub-s. (2), as the case may be. If the language of sub-s. (4) is carefully looked into, it would be clear that it does not apply to any category other than those falling within sub-ss. (1) and (2). It specifies that it applies to a case where an assessee 'has not furnished a return within the time allowed under sub-section (1) or sub-section (2)', thereby emphasising that these are the only categories in which s. 139 is addressed. Even where the errant assessee avails himself of the provision, how or in what form the return has to be furnished has to be gathered only from sub-s. (1) or sub-s. (2), as the case may be. Sub-s. (4) is not an independent provision by itself and cannot be taken to have any existence separate from sub-ss. (1) and (2). Thus, the form in which the return is to be filed and the proscribed particulars have all to be ascertained only from sub-s. (1) and sub-s. (2). It is not, therefore, possible to accept the contention that a return under sub-s. (4) falls into a separate category. In this view, it would follow as a consequence that sub-s. (5) of s. 139 would enable an assessee to furnish a revised return if he discovered any omission or any wrong statement in the return filed under sub-s. (1) or sub-s. (2), as the case may be, read with sub-s. (4).
9. In CIT v. Kulu Valley Transport Co. P. Ltd. : [1970]77ITR518(SC) , to be referred to in more detail later, the Supreme Court construed s. 22(3) of the 1922 Act corresponding to s. 139(4) of the 1961 Act to be in the nature of a proviso to s. 22(1) or s. 22(2), as the case may be. The need for enacting it as a separate sub-section is obvious. It would otherwise have to be placed as a proviso under both cub-ss. (1) and (2) in identical terms. The draftsman occasionally aims at avoiding clumsiness; and presentation in a separate sub-section of what is common to both sub-ss. (1) and (2) was the device adopted to make the provision more elegant. This drafting device cannot assist the assessee's contention of treating sub-s. (4) as an independent provision.
10. The result of the above discussion is to establish that the return dated December 14, 1964, is a return under s. 139(4) read with s. 139(2) and that the revised return filed on October 5, 1969, is a return under s. 139(5) read with s. 139(2) of the Act. The order of assessment can, therefore, be made before the expiry of one year from the date of the filing of the revised return under sub-s. (5) of s. 139 as contemplated by clause (c) of s. 153(1).
11. The assessee by filing a revised return on October 5, 1968, relying on s. 139(5) cannot now be heard to say that the return was an invalied return or should be ignored. No assessee can be expected to file a return before the ITO and ultimately tell him that the return must be ignored, except in cases where the ITO has lost his power to act on it. There is no warrant in the statute for encouraging an assessee to indulge in this kind of fun of filing within a statutory period a return duly followed by a statement that the ITO cannot act on it. He cannot hope to find in this provision any opportunity for the proverbial last laugh wherever else, as it sometimes happens, he looks for and achieves it.
12. It is not in dispute that the question posed before us is not convered by any decision. However, the learned counsel for the assessee drew our attention to certain decisions, which may now be briefly referred to. In CIT v. Subramania Chettiar : [1977]110ITR602(Mad) , the point to be considered was the circumstances in which s. 139(5) could be applied. In that case, the assessee filed a return on March 16, 1964. Subsequently, on February 7, 1968, a revised return disclosing a larger income was filed along with a petition under s. 271(4A). The assessment was completed in due course, and penalty proceedings were initiated. The Tribunal cancelled the penalty taking the view that, as the assessee had filed the revised return even before the ITO started investigation of the first return on the question of the bogus character of certain transactions, there was no question of concealment of income and for that purpose, relied on a decision of this court in CIT v. Ramdas Pharmacy : [1970]77ITR276(Mad) . The question before this court in CIT v. Subramania Chettiar : [1977]110ITR602(Mad) was thus whether the assessee was liable to be penalised for concealment despite the return filed under s. 139(5) not appearing from such a charge. It was pointed out that s. 139(5) would apply only to those cases where, out of an inadvertent omission or unintended wrong statement, error had crept in in the return filed by the assessee. If the assessee had filed a return originally with figures which could not be traced to inadvertence or bona fides, then s. 139(5) could not apply, as that provision would apply only to a case of omission or wrong statement and not the a case of concealment or false statement. This decision did not have to consider the question that is now before us of the legal character of the returns under ss. 139(4) and 139(5). At any rate there is nothing in this case which supports the assessee here.
13. Reference was made to the decision of the Supreme Court in CIT v. Kulu Valley Transport Co. (P.) Ltd. : [1970]77ITR518(SC) . In that case, the assessee filed voluntary returns disclosing loss. But, those returns were filed after the period contemplated by s. 22(1) or s. 22(2A) of the Indian I.T. Act of 1922. The assessee claimed that notwithstanding this delay in filing the return, it would be entitled to adjustment of the carried forward losses as the return filed should be treated to be a return under s. 22(1) read with s. 22(3). The Supreme Court by a majority accepted this submission of the assessee. It was held that s. 22(2A) of the 1922 Act simply provided that in order to get the benefit of s. 24(2) of that Act for the purpose of getting adjustment of the carried forward loss, the assessee must submit his loss return within the time specified in s. 22(1) and that that provision had to be read with s. 22(3) for the purpose of determining the time within which the return had to be submitted. Sub-s. (3) of s. 22 was construed to be merely a proviso to s. 22(1) and a return submitted at any time contemplated by s. 22(3) was taken to be a valid return. In other words, if s. 22(3) was complied with, then s. 22(1) should also be held, in their Lordship's view, to have been complied with and that if compliance had been made with. 22(1), then the requirements of s. 22(2A) would stand satisfied. This decision is useful to show that a return filed under s. 22(3) corresponding to s. 139(4) would be a return under s. 22(1). As that was a case of a voluntary return, it was necessary only to refer to s. 22(1). In the present case, the return is traceable to the notice issued by the ITO and would, therefore, be a returned under s. 139(2). Thus, jut as the return under s. 22(3) was treated as a return under s. 22(1), similarly, in the present case, the return under s. 139(4) is liable to be treated as a return under s. 139(2). If so much is granted, then the return under s. 139(5) would be a valid revised return so as to furnish the starting point of limitation contemplated by s. 153(1)(c) of the Act. Thus, this decision far from supporting the assessee's case would appear to be against it.
14. In Vedadri v. CIT : [1973]87ITR76(Mad) , the assessee furnished belated returns though before the assessment, as contemplated by s. 139(4). The question was whether penalty for the failure to file the return in time could be levied. The assessee claimed that by reason of the return having been filed under s. 139(4) before the assessment, the ITO had no jurisdiction to levy penalty. It was held that the return under. s 139(4) did not set at naught the jurisdiction to levy penalty. It was pointed out that a return under s. 139(4) was a permissive return in the sense that the statute permitted the furnishing of such a return beyond the time prescribed under s. 139(1) and that the question whether the delay in filing such return was liable to be penalised had to be adjudicated upon under the independent provision of s. 271 and that this jurisdiction was not lost merely because the statute permitted the acceptance of a return beyond the prescribed time-limit subject to its being filed before the assessment. The attempt of the learned counsel for the assessee was to show that in the said case, the return under s. 139(4) was not treated as a return under s. 139(1). We do not consider that the learned counsel is justified in reading this decision in this manner. The scope of enquiry in that case was whether by reason of the return having been filed before the assessment under s. 139(4), the ITO could not take up penalty proceedings for the belated submission of the return taking into account the time-limit prescribed in s. 139(1). The conclusion was in effect that the delay in filing the return under s. 139(1) could not be confused with or cured by a return filed before the assessment. This aspect which is now before us as to whether the return under s. 139(4) was a return under s. 139(1) or s. 139(2) did not come up for consideration and the court cannot be taken to have pronounced an opinion on it.
15. Thus, taking into account the effect of the relevant provisions, I consider that the return filed on October 5, 1968, was a valid return and it gave a starting point of limitation, so that if the assessment was completed within one year therefrom, then it would be a valid assessment. In the present case, the assessment, which was completed within one year therefrom, was a valid assessment. The question is accordingly answered in the negative and in favour of the Revenue. The Revenue will be entitled to its costs. Counsel's fee Rs. 500.
T.C. No. 253 of 1975 :
Sethuraman, J.
16. The Income-tax Appellate Tribunal has referred the following question under s. 256(1) of the I.T. Act, 1961 :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law holding that the assessment made on September 22, 1969, for the assessment year 1964-65 is not barred by limitation ?'
17. The relevant facts are as follows :
In response to a notice served under s. 139(2), the assessee should have filed a return of its income on or before August 24, 1964. It, however, filed a return only on November 26, 1964. Subsequently, it submitted its revised return on October 5, 1968, and the assessment was completed on September 22, 1969.
18. The assessee contended before the AAC that this assessment was time barred. The AAC did not accept this submission. On appeal, the Tribunal following its earlier order in I.T.A. No. 586/MDS/1971-72 dated April 29, 1974, negatived the contention of the assessee. Therefore, the assessee has come on reference raising the question set out above.
19. The order followed by the Tribunal was the subject-matter of reference in T.C. No. 230 of 1975 (Nanjappa Textiles v. CIT) which was heard alone with this reference. We have just now disposed of the said reference. As the contentions are identical, we do not think it necessary to go through them over again here. For the reasons stated therein, we answer the question referred in the present case in the negative and in favour of the Revenue. There will be no order as to costs.
T.C. No. 291 of 1975 :
Sethuraman, J.
20.In this reference under s. 256(1) of the I.T. Act, 1961, the following question has been referred :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessment made on October 8, 1969, for the assessment year 1964-65 is not barred by limitation ?'
21. The assessee filed a return on February 3, 1965, for the assessment year 1964-65 and thereafter filed a revised return on March 20, 1969. The assessment was completed on October 8, 1969. The assessee contended without success before the AAC and the Tribunal that the said assessment was barred by limitation. The Tribunal has referred the question set out above at the instance of the aggrieved assessee.
22. In disposing of the appeal, the Tribunal followed its earlier order in I.T.A. No. 586/MDS/1971-72 and this order is the subject-matter of reference in Nanjappa Textiles v. CIT (T.C. No. 230 of 1975). These references were heard together and the same leaned counsel appeared for both sides and the contentions were identical. As all the contentions have been considered in T.C. No. 230 of 1975, we do not think it necessary to go through them over again here :
For the reasons mentioned therein, we answer the question referred in the negative and against the assessee. There will be no order as to costs.
Balasubrahmanyan, J.
23. I have read the judgment of my learned brother and I agree with his conclusions. I give below my reasons for doing so.
T.C. No. 230 of 1975 :
24. The question which arises in this case is one of limitation for assessment. It bears on the construction of s. 153(1) of the I.T. Act, 1961. The earlier I.T. Act, 1922, also had a limitation provision in s. 34(3). That provision was not difficult to apply. Section 153(1) of the present Act, by comparison, is somewhat involved. This provision does not prescribe limitation by laying down what the period is, when it commences and when it draws to an end. Under the scheme of s. 153(1), we have to take into consideration more than one factor and fix time-limit for assessment having regard to the presence of one or the other of the factors mentioned therein. Section 153(1) refers to as many as three different term of reference in clause (a), clause (b) and clause (c). Each of these clauses carries a different period of time and a different starting point for the computation of that period. If the circumstances of a given case make it fall within all the three clauses, then the period of limitation has got to be determined with reference to that period which expires last. With particular reference to the assessments for 1967-68 and earlier assessment years, clause (a) provides an assessment should not be made beyond the expiry of four years from the end of the assessment year concerned. Clause (b) applied to cases which fall within s. 271(1)(c) of the Act. Clause (c) applied to a case where an assessee has filed a return under s. 139(4) or a revised return under s. 139(5) of the Act. As earlier observed, under clause (a), the time-limit is four years from the end of the assessment year. Under clause (b), the period is eight years from the end of the assessment year. Under clause (c), the period is one year from the date of filing of the return under s. 139(4) or the date of filing of the revised return under s. 139(5). The statutory scheme is, therefore, to calculate a four year period from the end of the assessment year, an eight year period from the end of the assessment year and a one year period from the date of the return under s. 139(4) or a revised return under s. 139(5) of the Act and then institute a comparison between the workings under the three different sets of computation and after comparison find out which yields the date which expires last. That date provides the bar of limitation for making an assessment.
25. The assessee in the present case is a registered partnership firm carrying on business in art silk yarn. The ITO served a notice on the assessee-firm under s. 139(2) of the I.T. Act calling upon the assessee to file a return on or before August 19, 1964. The assessee did not file the return within that time; nor did the assessee apply to the ITO for extension of time. Instead, the assessee filed a belated return on December 14, 1964. In that return, the assessee admitted an income of Rs. 26,593. Nearly four years thereafter, the assessee filed a revised return in which it offered for assessment a further sum of Rs. 1,307. The ITO, however, did not accept the figures furnished even in the revised return as being borne out by the materials. On the materials available to him, he made an assessment of the assessee's income at Rs. 4,88,023. In the assessment order, the officer had stated that subsequent to the filing of the original return, the assessee had made a voluntary disclosure of suppressed income under. 68 of the Finance Act, 1965, and in the revised return offered a further income over and above that which was voluntary disclosed earlier. In this view, the officer held that this was a case for levy of penalty for concealment of income under s. 271(1)(c) of the Act and initiated separate action in that regard even while completing the assessment. The order of assessment in this manner was passed on September 22, 1969.
26. The case of the assessee is that the assessment is time-barred. If clause (a) alone were to apply, this should be clearly time-barred because it is beyond four years from the end of the assessment year and the four year period would expire by March 31, 1969. The Department sustained the assessment as being within time by referring to the provisions of s. 153(1)(c) of the Act. It was pointed out that the assessee had filed a revised return on October 5, 1968, and a one year period allowed by s. 153(1)(c) of the Act would expire only on October 5, 1969, whereas the assessment was actually completed earlier by order dated September 22, 1969. The Department's stand was upheld by the AAC and also by the Tribunal. The case of the assessee before us is that s. 153(1)(c) will not apply to the present case because the so-called revised return filed by the assessee was not a revised return under s. 139(5) of the Act. The assessee's learned counsel pointed out that s. 153(1)(c) would apply only in a case where the revised return is filed under sub-s. (5) of s. 139. Referring to s. 139(5), it was urged that a revised return under s. 139(5) can be filed only in a case where a person having furnished a return under s. 139(1) or s. 139(2) discovers any omission or wrong statement in the original return which he wishes to revise. Learned counsel's thesis before us is that in the present case although the ITO issued a notice to the assessee under s. 139(2) of the Act, and the assessee filed a return pursuant to that notice, that return should not be regarded as a return furnished under s. 139(2). The argument is that a return can properly be regarded as having been furnished under s. 139(2) only where it is filed within the time allowed under s. 139(2). In the present case, it was pointed out that the due date for filing the return under s. 139(2) expired by August 19, 1964, and the assessee-firm did not obtain any extension of time but merely filed the return of income on December 14, 1964. This return, which was filed belatedly and beyond the time allowed under s. 139(2), could not be regarded as a return furnished under s. 139(2) of the Act. If the return is not filed under s. 139(2), then any revision thereof cannot render the subsequent return a revised return within the meaning of s. 139(2) because a revised return is a revised return only where an assessee has filed earlier a return under. 139(2) of the Act.
27. The argument of the assessee in this case involves a double self-stultification. In the first place, the assessee had repudiated its original return and characterised it as not being a return under s. 139(2) although it was filed in response to a notice under s. 139(2). Secondly, the assessee while it had filed a revised return on October 5, 1968, in supersession of its earlier return dated December 14, 1964, nevertheless has taken a stand that it is not a revised return under. 139(5). The audaciousness of this stand on the part of the assessee, however, should not deter us from going into the question. An assessee is entitled to plead a technicality either as conception or application of the taxing provision and there is no estoppel against it in the statute. However, we do not accept the submission of learned counsel even as a matter of construction. Section 139(2) is in the following terms :
'If any person having furnished a return under sub-section (1) or sub-section (2), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made.'
28. This provision speaks of a person having furnished a return under s. 139(1) or s. 139(2) and such a person may furnishe a revised return. In the present case, the question is whether the return filed by the assessee on October 5, 1968, is a revised return. This would depend upon whether the original return dated December 14, 1964, was a return under s. 139(2) or the Act. It is true that a return has to be furnished under s. 139(1) or s. 139(2) within the time limited therefor. Where a return in filed although in response to a notice under s. 139(2) subsequent to the expiry of the time limited, the question is whether it can be regarded as a return furnished under s. 139(2) of the Act.
29. The Act makes provision for the filing of a return even where the time allowed by a notice under s. 139(2) had expired. Under s. 139(4) of the Act, an assessee who has not furnished a return within the time allowed under s. 139(1) or s. 139(2) may file a return within four years if the return relates to any assessment year up to and inclusive of 1967-68. In the present case, the assessee filed the return on December 14, 1964, for the assessment year 1964-65, and although the return was filed beyond the time allowed for the filing of the return under s. 139(2) that return was filed by the assessee under cover of the provision of s. 139(4). The question, therefore, is whether a belated return filed under s. 139(4) pursuant to a notice under s. 139(2) can be regarded as a return filed under s. 139(2) of the Act.
30. The assessee's learned counsel submitted that only the returns filed within time pursuant to a notice under s. 139(2) can be regarded as returns filed s. 139(2). Any return filed beyond that time-limit but in accordance with the provisions of s. 139(4) cannot be regarded as a return failed under s. 139(2) but must be regarded as a return falling under a separate category, namely, return filed under s. 139(4). This provision cannot be accepted on a consideration of the scheme of the Act. In CIT v. Ranchoddas Karsondas : [1959]36ITR569(SC) , a case arising under the Indian I.T. Act, 1922, the question was whether a voluntary return filed by an assessee belatedly, that is to say, beyond the time specified in the general notice issued by the government under s. 22(1) of the Act, can be regarded as a valid return. It was held that while no return was filed by the assessee in that case within time, yet the return filed by the assessee was before the assessment and such a return could be filed under s. 22(3) of the Act. In that case, the return filed by the assessee was of income below the taxable limit. But the Supreme Court held that it was nevertheless a valid return. Two questions were argued before the Supreme Court in that case - one was whether the return was a valid return even though the persons who filed the return had income below the exempted limit. The other question was whether this return could be accepted and acted upon although filed beyond the time limited under s. 22(1). The court held that the return was valid in both respects. The Supreme Court did not have occasion in that case to hold that a belated return filed under s. 22(3) beyond the time-limit mentioned in s. 22(3) must yet be regarded as a return filed under s. 22(1) of the Act. In CIT v. Kulu Valley Transport Co. P. Ltd. : [1970]77ITR518(SC) , the Supreme Court had to decide the validity of a return of loss filed by an assessee beyond the time limited under s. 22(2A) of the Indian I.T. Act, 1922. The ITO refused to countenance this return on the score that it was filed beyond the time limited under s. 22(2A) of the Act. The Supreme Court, however, upheld the validity of that return on the score that it was filed before the assessment was completed and the rereturn of loss although filed beyond the time limited under s. 22(2A) must nevertheless be acted upon by the ITO if filed within the time limited under s. 22(3) of the Act. In this case too, the Supreme Court did not actually go to the extent of saying that a belated loss return filed within the time limited under s. 22(3) must be regarded as a return filed under s. 22(2A) although they went very near to laying down that proposition. Grower J., expressing the majority view of the Supreme Court in that case, observed that s. 22(2A) provided that a loss return must be submitted within the time specified by s. 22(1). He further held that that provision must be read with s. 22(3) and he went to the extent of observing that s. 22(3) must be construed as a approves to s. 22(1) and the two sections must be read together. The learned judge further observed that if s. 22(3) is complied with, then s. 22(1) also must be held to have been complied with. The learned judge summed up the position thus : 'A return whether it is a return of income, profits or gains or of loss must be considered as having been made within the time specified in s. 22(3). With particular reference to the loss return, the learned judge observed that if compliance is made with s. 22(3), the requirements of s. 22(2A) would stand satisfied. The Supreme Court has not stated in categorical terms that a return filed beyond the time limited under s. 22(2A) must yet be regarded as having been filed under s. 22(2A) having regard to the provisions of s. 22(3) of the Act. In State of Assam v. Deva Prasad Barua : [1970]75ITR18(SC) , the Supreme Court had to deal with a voluntary return filed by an assessee under the Assam Agricultural Income-tax Act, 1939. Section 19 of the Act was almost on the same terms as s. 22 of the Act of 1922. Section 19(1) provides for a general notice calling upon the assessee having agricultural income above the exemption limit to file a return within thirty days of the notice. Section 19(2) provides for the ITO serving individual notices on the assessees calling upon them to furnish their returns of income. Section 19(3) provided that if any person had not furnished a return within the time allowed by or under s. 19(1) or s. 19(2), he may furnish a return at any time before the assessment is made. Section 19(3) made it clear that where an assessee furnishes a return at any time before the assessment is same, any return so made shall be deemed to be made in due time under this section. On a construction of the provisions of s. 19(3) and also following their previous decision in CIT v. Ranchhoddas Karsondas : [1959]36ITR569(SC) , the Supreme Court held that in respect of a voluntary return filed beyond the time specified in general notice, the ITO has got to pursue that return and proceed with the assessment and he cannot ignore it as an invalid return. In this case, it would appear that s. 19(3) of the Assam Agricultural Income-tax Act would seem to go a little farther than the text of s. 22(3) of the Indian I.T. Act, 1922. Section 23(3) simply says that if any person has not furnished a return within the time allowed by or under sub-s. (1) or sub-s. (2), he may furnish a return at any time before the assessment is made. This section had the following words which, however, were deleted by the Amendment Act of 1939. Those words were 'and any return so made shall be deemed to be a return made in due time under this section'. The words 'and any return so made shall bee deemed to be a return in due time under this section' were omitted by the Amendment Act of 1939 because it was felt that such a deeming provision might assist an assessee in evading the penalty for failure to submit a return. The Notes on Clauses to the amendment which deleted these words from s. 22(3), in so far as they are relevant, reads a under :
'Section 22(3) allows an assessee to file a return or a revised return before assessment is made and so to escape an assessment under s. 23(4). He is to retain this right, but in order to prevent him from escaping the consequences of submitting an original false return of evading the penalty for failure to submit a return, the closing words of this sub-section have been omitted......'
31. It may be observed that s. 28(1) (a) of the Indian I.T. Act, 1922, provides for the levy of a penalty not only for non-submission of a return but also for a delayed submission of a return. This shows that a return while having been filed belatedly may incur the consequences of penal action under s. 28(1)(a) of the Act would yet be a return filed under s. 22(1) of the Act.
32. Leaned counsel for the assessee submitted that a return filed under s. 139(5) of the I.T. Act, 1961, cannot be regarded as a return filed under s. 139(1) or, as the case may be, under. 139(2) of the Act. He submitted that reference in the I.T. Act, 1961, to a return under s. 139(5) would show that the Act itself recognised a return filed under s. 139(4) as a separate category in itself and not to be confused with a return under s. 139(1) or s. 139(2). I am unable to agree with this submission. As pointed out by the Supreme Court in CIT v. Ranchhoddas Karsondas : [1959]36ITR569(SC) , what s. 23(1) and s. 23(2) did was to impose a time-limit for filing the return. But s. 22(3) gave to an assessee a locus penetentiae within which to file a return even though the time fixed under a general notice under s. 22(1) or and individual notice under s. 22(2) had expired. The courts have thus regarded the provision of s. 22(3) not a provision revolving on an axis of its own but merely as an appendage to the provisions of s 22(1) and. 22(1). In the words, while a period is fixed by the statute itself for a returned to be filed under s. 139(1), the period can be extended on application to the ITO and likewise while a period i fixed by the notice under s. 139(2) which on application can be extended by the officer on sufficient cause being shown, s. 139(4) provides for a further extension of the period under force of the statute. In this view, the filing of a return under s. 139(4) must be regarded as the filing of a return under s. 139(1), or, as the case may be, under s. 139(2) of the Act. It may be observed that the provision of s. 22(3) of the Act of 1922 had been split up into two and they figure in tow different provisions in the present Act. In so far as the assessee is permitted to file a return at any time before the assessment is made which is a provision contained in s. 22(3) of the old Act, that provision is found to have been incorporated in s. 139(4) of the Act. The language of s. 139(4) refers to 'any person who has not furnished a return within the time allowed to him under sub-s. (1) or sub-s. (2)'. In contrast, the language of s. 139(5) refers to 'any person having furnished a return under sub-s. (1) or sub-s. (2) discovers any omission, etc...' The question, therefore, is whether a person who has not furnished a return within the time allowed under s. 139(1) or s. 139(2) and filing a return under s. 139(4) can be regarded as a person having furnished a return under s. 139(1) or s. 139(2). In any view, there is a difference between the phrase 'not furnished a return within the time allowed under s. 139(1) and s. 139(2)' on the one hand and the phrase 'having furnished a return under s. 139(1) and s. 139(2)' on the other. The latter phrase does not make any reference to the time allowed under sub-s. (1) or sub-s. (2). It only refers to a matter of substance. It does not refer to the compliance with a matter of limitation. In other words, there are only two category of returns, namely : (1) a voluntary return in the sense that he is not filing the return in response to any individual notice, and (2) a return filed in response to an individual notice. Where, therefore, no notice has been issued by the ITO, then a return filed either within time or our of time must be regarded as a return filed under s. 139(1) of the Act. But where a return is filed in response to a notice by the ITO, that return must be regarded as a return filed under s. 139(2) whether or not the same filed within the time allowed. The importance of the time-limits provided under ss. 139(1) and 139(2) are only in the context of penalty proceedings. It does not have any other importance. It does not make any difference in the subsequent assessment proceedings. It does not have any different consequences in the matter of bar of limitation.
33. If so much is granted, namely, that the return filed by the assessee in this case on December 14, 1964, although belated, must be regarded as a return filed under s. 139(2) of the Act, then the subsequent revised return dated October 5, 1968, must necessarily be regarded as a revised return filed under s. 139(5) of the Act. If a comparison is made between the four year period from the end of the assessment year 1964-65, and the one year period from the date of filing the revised return, then the one year period must be regarded as the one which expires later. That period expired only after the assessment was made in the present case, namely, September 22, 1969. Hence, on a comparison between the two, it must be regarded as later in point of time on the basis of which the assessment must be upheld as within time.
34. The Tribunal in its order had observed in the present case that a comparison of the periods set out in clause (a), clause (b) and clause (c) of s. 153(1) of the Act yielded the result that the period under clause (c) alone gave the latest point of expiry. The Tribunal was not justified in making this observation because the Tribunal had not really gone into the question of the applicability of the fact situation bearing on the application of s. 153(1)(b) of the Act on the facts of the present case. The Tribunal disposed of the case merely by comparing the four year period from the expiry of the assessment year and the one year period from the date of the revised return. It did not turn over for consideration the period of eight years from the expiry of the assessment year, which is the period set out in s. 153(1)(b) of the Act. In the course of our hearing the reference, consideration of the matter in the light of s. 153(1)(b) was projected almost unwittingly by the argument of the learned counsel for the assessee. One of the arguments which he addressed before us for showing that the revised return filed by his client on October 5, 1968, did not fall under s. 139(5) of the Act was that that the return was not of a kind for which provision was made by that section. Learned counsel pointed out that an assessee is at liberty to file a revised return not to supersede the earlier returns in which he has suppressed the income but only for the purpose of correcting any omission or any wrong statement which he might have discovered in the return which he had filed under s. 139(1) or s. 139(2), as the case may be. Learned counsel was positive that the so-called revised return filed by his client on October 5, 1968, did not purport to merely rectify any omission or wrong statement in the original return. Learned counsel relied in this connection on the ruling of a Division Bench of this court of which one of us was a party in CIT v. Subramania Chettiar : [1977]110ITR602(Mad) . In that case, a Bench of this court held that s. 139(5) applies only to a limited category of cases wherein the original return contained an omission or a wrong statement and it did not apply to cases of concealment or false cases of which the assessee was aware even at the time he filed the original return.
35. This argument of the learned counsel certainly enables the assessee to wriggle out of the situation under s. 139(5) of the Act. It enables the assessee to assert that the impelling motive for filing the so-called revised return was not the rectification of any inadvertent error or wrong statement but the supersession of an earlier return which deliberately understated the income. If this were so, then while the argument is valid to set at naught the validity of the revised return as one falling under s. 139(5) of the Act, that would not efface the earlier return filed under s. 139(4) of the Act. The assessee's case all along had been that his revised return should not be taken note of for one reason or the other. But it has always stood by its earlier return dated December 14, 1964. It stood by the validity of that return as the return properly filed under s. 139(4) of the Act and all it said was it was not a return under s. 139(2) but it never cared to deny that it was not the return under s. 139(4) of the Act. If so much is granted, namely, if the return dated December 14, 1964, is a return under s. 139(4), but that return was proved to be false by the assessee's own subsequent so-called revised return dated October 5, 1968, then the necessary ingredients for the application of s. 153(1)(b) would be present in this case. It is in view of this fact that while doing the assessment, the ITO has clearly mentioned that he was taking separate action for levy of penalty for concealment of income under s. 271(1)(c) of the Act. It is now well settled and that is the law laid down by a Division Bench in CIT v. Subramania Chettiar : [1977]110ITR602(Mad) , that the mere filing of a revised return will not absolve an assessee of liability to penalty where his original return had concealed particulars of income or furnished inaccurate particulars about income. The result is that the provisions of s. 153(1)(b) also come into play in the assessee's case. If that is so, then it would be a necessary part of the inquiry into the bar of limitation in the present case to find out what the computation of the eight year period would be. There is not doubt that the eight year period would expire only on March 31, 1973. Thus, we have three expiry dates. The expiry of four year period under clause (a), namely, March 31, 1969, the expiry of eight year period under clause (b), namely, March 31, 1973, and the expiry of one year period from the date of the revised return, namely, October 5, 1969. Applying the rule in s. 153(1) that the time-limit is set by the latest amongst these three points of time, it must be held that the latest point is achieved by the application of clause (b) which yields March 31, 1973, as the last date. It follows, therefore, that the Tribunal was in error in holding that the latest expiry period of limitation would be yielded by application of s. 153(1)(c). Actually, it is s. 153(1)(b) as I have shown above.
36. The effect of this line of application of s. 153(1) of the Act to the facts of the present case is that the assessment in this case has been made safely within time. Learned counsel for the assessee submitted that s 153(1)(b) cannot be applied to the present case since this case cannot be characterised as a case 'falling within clause (c) of sub-s. (1) of s. 271'. Learned counsel argued that a case falling within s. 271(1)(c) must be a case in which a penalty must actually have been levied and sustained. This argument, however, is untenable. The contention of the learned counsel would be to put the penalty clause before the assessment clause. Under the scheme of the Act although penalty proceedings had got to be initiated in the course of assessment proceedings, penalty can only be levied subsequent to the completion of the assessment. That is because the quantification of the penalty and even the determination with regard to the levy of penalty would depend upon the manner of assessment, the findings therein and the quantum of income or tax, as the case may be, which has been determined in the assessment. Hence, it is that penalty questions have always been regarded by courts and Tribunals as being consequential to the fate of the concerned assessments. In almost all cases, penalty follows the assessment. In these circumstances, to say that the question of time-limit for making an assessment would depend upon the actual levy of penalty would be a topsy turvy way of understanding the whole scheme of the I.T. Act. It would place a court of construction in an impossible situation if we were to accept the argument of learned counsel which may be reduced to this proposition. We cannot say whether the extended time limit of eight years would apply unless there is actual levy of penalty for concealment and we cannot levy a penalty for concealment until the assessment is completed. The result of this argument would take us moving on the surface without any sense of direction. As has been observed by a Division Bench to which we have referred, all that s. 153(1)(b) requires is that the assessment in question must involve a case of concealment of income under s. 271(1)(c) of the Act, and that what the provision contemplates is that the assessment must involve a case of penalty. If this is present, it is unnecessary to project our mind further and find out if subsequent to the assessment, there was actual levy of penalty in that case. I have earlier mentioned that the assessment order very clearly mentions in a footnote that action under s. 271(1)(c) for penalty for concealment had been initiated against the assessee for the assessment year in this case. That is enough to render this assessment fall within the provisions of s. 153(1)(b) of the Act.
37. I have covered this latter aspect of s. 153(1)(b) of the Act since the question referred for our decision in this case is :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the return filed on October 5, 1968, could be construed as a return under section 139(5) and the assessment made on September 22, 1969, for the assessment year 1964-65 is not barred by limitation ?'
38. This question raises, as it did raise before the Tribunal, the construction and application of s. 153(1) of the Act which means that in the context of those provisions, we have to examine the applicability to the facts of this case of each and every one of the three clauses of s. 153(1) on a comparison of all of which alone we can properly come to a conclusion on the question of time bar. The Tribunal itself is quite aware that the section demands the institution of a comparison as between the fact-sitation falling under all the three clauses. But it came to a wrong conclusion that the time-limit computed under. 153(1)(c) yielded the latest time-limit overlooking that, on the facts on record, this is also a case which falls under s. 153(1)(b) of the Act. I do not conceive the ambit of a reference as restricted to the arguments addressed before the Tribunal. On the contrary, it is the fuction of this court to render its judicial opinion on the question of law referred by the Tribunal so as to effectively dispose of the reference without leaving any loose ends. It is true that the Tribunal had not addressed itself to the question; but the records before the Tribunal as well as the particular arguments which were addressed by learned counsel before us especially on the basis of the decision in CIT v. Subramania Chettiar : [1977]110ITR602(Mad) had compelled me to enter into this aspect of the case which I regard as only one facet of the question of law before us. It will be seen that the present case, in the context of s. 153(1)(b), has actually provided a short cut to the conclusion which both I and my colleague had arrived at on the other question, namely, whether the revised return filed by the assessee in this case is a revised return within the meaning of ss. 139(5) and 153(1)(c) of the Act. For all the above reasons, I concur with the answer rendered by my learned brother on the question of law, namely, that the assessment is not barred by limitation. I also agree with my learned brother's direction as to costs.
T.C. No. 253 of 1975 :
39. The question of law for our consideration in the present case is as follows :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessment made on September 22, 1969, for the assessment year 1964-65 is not barred by limitation ?'
40. The above question of law differs in language from the question of law found in T.C. No. 230 of 1975 which we have disposed of by our separate judgments earlier today. The difference in language, however, does not make for any difference in treatment. I and my colleague have considered a similar question, viz., whether a belated return filed under s. 139(4) can be regarded as a return under s. 139(2) so as to enable an assessee to file a revised return under s. 139(5) of the Act. We have held that there is no such thing as a return under s. 139(4) and it can only be a return either under s. 139(1) or under s. 139(2) and on that basis a revised return can very well be filed under s. 139(4) for revising a return filed under s. 139(5) of the Act. In this case, which concerns the same assessment year, namely, 1964-65, the return called for by notice under s. 139(2) was due by the assessee on August 24, 1964, but was actually filed belatedly only on November 26, 1964. The assessee filed a revised return on October 5, 1968, and the assessment was completed on September 22, 1969. Not accepting even the revised return which showed a higher income than the original return, the ITO made a huge addition to the income shown even in the revised return and also initiated penalty action against the assessee under s. 271(1)(c) of the Act as the assessment order itself in its footnote disclosed. In these circumstances, following my decision in T.C. No. 230 of 1975, I must construe the return filed on October 5, 1969, as a return under s. 139(5) and also on the basis that this assessment raises a case of penalty under s. 271(1)(c) of the Act and hold that the assessment was not barred by limitation. The time limited for making the assessment was either eight years from the end of the assessment year, namely, March 31, 1975, or one year from the date of the revised return, namely, October 5, 1969. The assessment actually made was on September 22, 1969, and, hence, the answer to the question must be that the assessment is not barred by limitation. The answer to the question referred to us for our consideration must be two-fold, viz., that the return filed by the assessee on October 5, 1968, is a return filed under s. 139(2) and the assessment made on September 22, 1969 is not barred by limitation, but is within time either under s. 153(1)(b) or s. 153(1)(c). I answer the reference accordingly. There will be no order as to costs.
T.C. No. 291 of 1975 :
41. This tax reference is at the instance of an individual assessee, who was a partner of two registered firms by name M/s. Nanjappa Textiles and M/s. Nanjappa Chettiar and Sons, respectively. The question of law for decision in this reference concerns the time-limit for the assessment made on this assessee as an individual in respect of his hares from the two firms for the assessment year 1964-65 under the provisions of s. 143 of the I.T. Act, 1961. In the connected tax cases of the two firms in which the assessee is a partner, namely, T.C. Nos. 230 of 1975 and 253 of 1975, we have held that the assessments made on those firms on September 22, 1969, for the assessment year 1964-65 were not barred by limitation. A similar argument was addressed in the case of the present assessee for the assessment made on him individually for the same assessment year. The facts in the assessee's case are almost similar to those in the two assessments of the two firms for the same assessment year. In this assessee's case, the ITO issued a notice under s. 139(2) of the Act calling for a return from the assessee. The assessee did not file the return within time but filed it belatedly on February 3, 1965. Subsequently, on March 20, 1969, he filed a revised return. The ITO did not accept either the original return or even the enhanced figure of income offered in the revised return but adopted the same income from the partnership as assessed in the two registered firms in which the assessee was a partner. The assessment order passed by the ITO in this case has been exhibited as part of the paper book but by some inadvertent omission, the copy exhibited in the paper book does not contain the footnote in which the ITO had made an entry to the effect that separate action against the assessee for the assessment year is taken for the levy of penalty under s. 271(1)(c) of the Act. This omission was pointed out at the Bar at the time of hearing. The nature of the question for consideration in this case as well as the arguments addressed before us are identical with those which figured in the other two references in T.C. No. 230 of 1975 and T.C. No. 253 of 1975, relating to the two firms in which the assessee in this case is a partner. In those tax cases we have held that a return, although filed beyond the time limited by notice under s. 139(2) of the Act, must really be regarded as a return filed under that sub-section and would enable the assessee under s. 139(5) to file a revised return and such a return must be construed to be a revised return also for the purpose of s. 153(1)(c) of the Act. On that basis, it must be held that the assessment order passed in this case within one year from the date of the revised return must be upheld as being quite within time. The assessment can be supported as being within time also on the ground that the case being one falling under s. 271(1)(c) of the Act, a time-limit of eight years from the end of the assessment year would really set the latest time-limit for the completion of the assessment.
42. For the above reasons, this reference is answered in favour of the Revenue and against the assessee. There will, however, be no order as to costs.