Commissioner of Income Tax Vs. Bharat Aluminium Co. Ltd. - Court Judgment

Excerpt:
- - 26,81,25,000/- on account of additional power cost and other expenses in connection with failure of transmission tower which earlier were not claimed in the original return. it is apparent from the record that the assessed had incurred additional power costs and other expenses in connection with the failure of transaction tower and these expenses were incurred wholly and exclusively for the purpose of business and they cannot be held as capital or personal expenses. that rule says that what a man can do himself can equally well be done by his duly authorised agent. it is well-settled that unless there is a specific provision of law, requiring the signatures and verification of the assessed himself, the signature, etc. the commissioner has to be satisfied of twin conditions, namely, (i) the order of the assessing officer sought to be revised is erroneous; 26,81,25,000/-.further the assessed had submitted full details of the expenses incurred for the failure of transmission tower which consisted of rs.v.b. gupta, j.1. the revenue has filed the present appeal under section 260a of the income tax act, 1961 (for short as act) against the order dated 6th october, 2004 passed by income tax appellate tribunal (for short as tribunal) in ita no. 1818/del/2004 for the assessment year 1999-2000.2. the appeal was admitted for hearing and following substantial questions of law have been formulated for determination:(i) whether the order passed by the ao was erroneous and prejudicial to the revenue in as much as the ao had accepted the revised computation of income without any revised return filed by the assessed as required under section 139(5) of the act?(ii) whether the revised computation of income could be accepted even after the expiry of time limit to file a revised return as prescribed under section 139(5) of the act?3. the brief facts are that the assessed filed income-tax return for the assessment year 1999-2000 on 31st december, 1999 declaring income of rs. 160,03,15,698/-. the said return was processed under section 143(1)(a) on 8th september, 2000 and thereafter the case was selected for scrutiny. during the course of assessment proceedings, the assessed vide letter dated 26th december, 2001 filed revised computation of income thereby reducing the income to rs. 133,21,90,698/- by claiming further expenses of rs. 26,81,25,000/- on account of additional power cost and other expenses in connection with failure of transmission tower which earlier were not claimed in the original return.4. the assessed vide letter dated 19th march, 2002 filed another revised computation of the income further reducing the income to rs. 131,31,94,406/- by claiming further deduction of rs. 3,41,69,312/- on account of the expenses being the cost of afford station of mines and maintenance of roads, as these two were not claimed earlier in the original return.5. the assessing officer after considering the facts of the case and statements made by the assessed, allowed the expenses claimed in the first revised computation of income to the extent of rs. 26,81,25,000/- but disallowed the expenses of rs. 3,41,69,312/- claimed in the second revised computation of the income holding that the same are of capital nature. the assessment was completed at rs. 146,88,61,184/-, vide assessment order dated 28th march, 2002.6. the commissioner of income tax, delhi-i after examining the record of the assessed held that the assessing officer has passed the erroneous assessment order on 28th march, 2002 which order is prejudicial to the interest of the revenue and, thereforee, issued a show cause notice to the assessed as to why order passed by the assessing officer should not be revised.7. the commissioner of income tax (appeals) after hearing the assessed and after taking into consideration all the submissions made on behalf of the assessed passed an order under section 263 of the act on 31st march, 2004 and thereby set aside the order passed by the assessing officer with the directions that it may be reframed de novo after making enquiries as may be considered necessary.8. the assessed, feeling aggrieved against the order of the commissioner of income tax (appeals) filed an appeal before the tribunal challenging the order of the commissioner of income tax (appeals) passed under section 263 of the act.9. the tribunal after hearing the parties, vide impugned order 6th october, 2004 allowed the appeal of the assessed and set aside the order passed by the commissioner of income tax (appeals).10. aggrieved against the order passed by the tribunal, the revenue has filed the present appeal.11. it has been contended by the learned counsel for the revenue that the order passed by the assessing officer is erroneous and prejudicial to the revenue as the assessing officer has accepted the revised computation of income without any revised return filed by the assessed as required under section 139(5) of the act. the revised return under the law can only be filed within the period of one year after the expiry of assessment year and the assessed being unable to revise the return since the limitation period has expired, filed the revised computation of income which was nothing but the revision of the return of income.12. the order passed by the tribunal is contrary to law since it allowed the assessed to do indirectly what he could not do directly. further more acceptance of revised computation of the income beyond the period of limitation as prescribed under section 139(5) of the act makes this provision redundant. the assessed-company did not furnish revised return of income since revised return as contemplated under section 139(5) of the act should be in the proper and prescribed form and it should be duly signed and verified by a competent authority. it is also contented that it can be filed any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. the additional deductions claimed by the company were, thus, beyond the stipulated time, i.e., the expiry of one year from the end of the relevant assessment year and these revised computation of income dated 26th december, 2001 was not signed by the competent authority as prescribed under section 140(c) of the act. if it is not signed and verified in the prescribed manner, then it is a breach of section 140(c) of the act and, thereforee, the same is not to be taken as a valid return.13. further, the revised claim made by the assessed through the letter does not amount to a revised return. unless and until the return is revised, the claim originally made in the return could not be disturbed.14. on the other hand, it has been argued by the learned counsel for the assessed that the commissioner of income tax (appeals) did not find the order passed by assessing officer erroneous in any manner. the phrase 'prejudicial to the interest of the revenue' has to be read in conjunction with an erroneous order and not in isolation. it is not clear as to how by allowing the legitimate deduction to the assessed, a prejudice is caused to the revenue. provision of section 140(c) of the act only requires the return to be signed by a competent person but no legal burden is casted on an assessed to correct the original return only through a specified person. it is sufficient if the correction has been made by the authorised representative. the assessing officer has allowed the claim of the assessed after making due and proper enquiry but the commissioner of income tax (appeals) does not say in its order that the claim is wrong or is not allowable. the main reason taken by the commissioner of income tax (appeals) is that the claim for further deduction cannot be allowed merely by filing revised computation beyond the stipulated time for revision of the return. there is a distinction between a revised return and correction of the return. it is contended that if an assessed files an application for correcting the original return, it does not mean that the return already filed has been revised. the return also on record retains the character of original return whereas by filing the revised return, the assessed in fact admits that the original return filed by him was not correct or complete and as a result thereof such original return is taken to have been withdrawn and is submitted by the revised return.15. return of income in this case was filed on 31st december, 1999. it was processed under section 143(a) of the act vide intimation dated 8th september, 2000 wherein the returned income was accepted as such. thereafter notice under section 143(2) of the act were issued within the prescribed period. the assessed submitted a revised computation of assessable income vide its letter dated 26th december, 2001 which was further amended vide their letter dated 19th march, 2002.16. as per tribunal's order, the commissioner of income tax (appeal) has not disputed this fact that the assessing officer has reached at the conclusion after considering the relevant facts and evidences and the assessment has been framed after making due and proper inquiry. the commissioner of income tax has not shown any disagreement on the allow ability of deduction legally to the assessed and no fault have been found in the action of assessing officer in this respect. the main objection of the commissioner of income tax (appeal) is that the claim made by the assessed through his letter dated 26th september, 2001 during the assessment proceedings was beyond the time prescribed for revising return as envisaged under section 139(5) of the act and as such the decision of the assessing officer to allow deduction is erroneous and pre-judicial to the interest of the revenue. it is apparent from the record that the assessed had incurred additional power costs and other expenses in connection with the failure of transaction tower and these expenses were incurred wholly and exclusively for the purpose of business and they cannot be held as capital or personal expenses.17. the assessed has claimed 1/5th of the total expenditure in the original return of income by considering the balance as deferred revenue expenditure. since there is no concept of deferred revenue expenditure in the act, assessed claimed deduction for the whole amount of such expenditure within the year itself through his letter dated 26th december, 2001. further, the assessed did not revise the return for which the time as prescribed under section 139(5) of the act expired but made this claim during the course of assessment proceedings and the assessing officer allowed the claim after considering all the relevant facts and evidences, the same being in accordance with law.18. before the assessing officer, the assessed did not say that by making such a claim he has revised his return and the original return must be taken to have been withdrawn. the assessed also did not say that the original return should not be taken as a basis of assessment. what the assessed has maintained before the assessing officer is that the original return is a valid return and he has merely made a further claim of expenditure which was duly disclosed in the return filed originally but only a part of it was claimed as deductible in the year under consideration and through its revised claim only the quantum was enhanced and as such the assessed did not make a new claim. the commissioner of income tax (appeal) nowhere said in his order that claim is wrong or is not allowable legally.19. chapter xiv of the act deals with 'procedure for assessment'. amongst other things it specifies as to by whom the return should be signed, whether a revised return can be furnished and what is the time limit for furnishing the revised return.20. section 139(5) of the act deals with revised return and it read as under:(5) if any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier:provided that where the return relates to the previous year relevant to the assessment year commencing on the 1st day of april, 1988 or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year.21. section 139(5), in terms, empowers only those assessed who have furnished returns i.e. under section 139(1) or under section 139(2) or in pursuance of a notice issued under section 142(1), to furnish a revised return if the assessed discovers any omission or any wrong statement in the originally filed return. such a revised return can be furnished before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.22. the filing of the revised return after discovery of omission or wrong statement is not by itself sufficient to bring the revised return within the ambit of section 139(5). the further requirement is that this omission or wrong statement in the original return must be due to a bona fide inadvertence or mistake on the part of the assessed.23. section 140 of the act lays down as to by whom return should be signed. the relevant provision of this section for the purpose of present case is 140(c) which read as under:section 140. return by whom to be signed. - the return under section 139 shall be signed and verified-(a) xxx xxx xxx xxx(b) xxx xxx xxx xxx(c) in the case of a company, by the managing director thereof, or where for any unavoidable reason such managing director is not able to sign and verify the return, or where there is no managing director, by any director thereof.provided that where the company is not resident in india, the return may be signed and verified by a person who holds a valid power of attorney from such company to do so, which shall be attached to the return:provided further that,-(a) where the company is being wound up, whether under the orders of a court or otherwise, or where any person has been appointed as the receiver of any assets of the company, the return shall be signed and verified by the liquidator referred to in sub-section (1) of section 178;(b) where the management of the company has been taken over by the central government or any state government under any law, the return of the company shall be signed and verified by the principal officer thereof;(cc) xxx xxx xxx xxx(d) xxx xxx xxx xxx(dd) xxx xxx xxx xxx(e) xxx xxx xxx xxx(f) xxx xxx xxx xxx24. the common law maxim 'qui facit per alium facit per se' governs the matter of signatures by persons. that rule says that what a man can do himself can equally well be done by his duly authorised agent. it is well-settled that unless there is a specific provision of law, requiring the signatures and verification of the assessed himself, the signature, etc., may be validly affixed by the constituted attorney. it would be sufficient if the correction has been made in the hand of authorised representative.25. as per substantial questions of law framed in the present case, it is to be seen as to whether the order passed by the assessing officer was 'erroneous and prejudicial to the revenue.'26. to deal with this issue, it will be apt to quote section 263(1) of act which is relevant for our purpose.263. revision of orders prejudicial to revenue - (1) the commissioner may call for and examine the record of any proceeding under this act, and if he considers that any order passed therein by the assessing officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessed an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the cse justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.explanation-a bare reading of this provision makes it clear that the prerequisite to the exercise of jurisdiction by the commissioner suo motu under it, is that the order of the income-tax officer is erroneous in so far as it is prejudicial to the interests of the revenue. the commissioner has to be satisfied of twin conditions, namely, (i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. if one of them is absent-if the order of the income-tax officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue-recourse cannot be had to section 263(1) of the act.27. the apex court in malabar industrial co. ltd. v. commissioner of income tax [2000] 243 itr 83, had the occasion of interpreting, the phrase 'prejudicial to the interests of the revenue'. it held that:the phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the assessing officer. every loss of revenue as a consequence of an order of the assessing officer cannot be treated as prejudicial to the interests of the revenue. for example, when an income-tax officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the income-tax officer has taken one view with which the commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue, unless the view taken by the income-tax officer is unsustainable in law. it has been held by this court that where a sum not earned by the person is assessed as income in his hands on his so offering, the order passed by the assessing officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue.28. vide letter dated 26th december, 2001, the assessed filed revised computation of income. as per this letter, in the original return a sum of rs. 6,70,31,000/- was claimed as part of cost repair of transmission tower, cost of extra raw material consumed and additional power purchased from madhya pradesh state electricity board and thus the total additional expenditure incurred was rs. 33,51,56,000/- during the year. since such additional cost had been actually incurred because of the transmission tower carrying power between their captive power plant and plant at korba complex, a total sum of rs. 33,51,56,000/- was shown under the head 'deferred revenue expenditure' and has been shown in the assets side of the balance sheet 1/5th of the same amounting to rs. 6,70,31,000/- was only debited to profit & loss a/c. and the balance amount of rs. 26,81,25,000/- has been omitted to be claimed in the income tax return. this expenditure is wholly incurred for purpose of business and the same is an allowable deduction and thus the assessed claimed deduction of whole sum of rs. 33,51,56,000/- and computed the total taxable income at rs. 133,21,90,698/-. considering the additional expenditure of rs. 26,81,25,000/-.29. as per assessment order passed by assessing officer, an amount of rs. 7,81,50,000/- has been claimed as deferred revenue expenditure by the assessed. the company submitted a revised computation of assessable income vide its letter dated 26th december, 2001 and assessed also submitted the details of revised deferred revenue expenditure vide their letter dated 15th february, 2002. it was clarified during the hearing that additional expenditure towards power cost and other miscellaneous expenses incurred during the year amounted to rs. 33,51,56,000/- which was charged to deferred revenue expenses. further, 1/5th of this amount i.e. rs. 6,70,31,000/- was deducted being already amortised during the year and the balance amount claimed in the revised computation comes to rs. 26,81,25,000/-. further the assessed had submitted full details of the expenses incurred for the failure of transmission tower which consisted of rs. 32,22,21,000/- paid to madhya pradesh state electricity board towards additional power consumed; rs. 54,98,608/- towards cost of additional raw material due to power breakdown and rs. 74,36,329/- towards repair expenses of transmission tower.30. so from the material available on record it is clear that 1/5th amount, that is, rs. 6,70,31,000/-had already been mentioned by the assessed in his original return.31. the tribunal in impugned order has observed that the perusal of revision order reveals that the commissioner of income tax did not find the order erroneous in any manner as a matter of fact. the phrase 'prejudicial to the interest of revenue' has to be read in conjunction with an erroneous order and not in isolation. thus, the commissioner of income tax does not say as to how by allowing the legitimate deduction to the assessed a prejudice has been caused to the revenue. in any event, when the order was not found erroneous, the commissioner of income tax did not acquire jurisdiction to revise the order of assessment made by the assessing officer.32. so, there is a categorical finding by the tribunal to this effect that even commissioner of income tax did not find the order erroneous and as such the commissioner of income tax had no power to revise the order of assessment made by the assessing officer.33. the tribunal further held that provision of section 140(c) of the act only requires that the return should be signed by a competent person and no legal burden is casted upon the assessed to correct the original return only through a specified person. it is sufficient if the correction was made in the hand of authorised representative. the assessed had corrected the claim allowable to it by virtue of the provision of section 37(1) of the act on account of the expenditure which was incurred wholly and exclusively for purpose of business.34. allahabad high court in dhampur sugar mills ltd. v. commissioner of income tax, delhi central : [1973]90itr236(all) , had the occasion to distinguish between revised return and correction of the return. it was held:there is a distinction between a revised return and a correction of the return. if the assessed files some application for correcting a return already filed or making amends therein, it would not mean that he has filed a revised return. it will still retain the character of an original return, but once the revised return is filed, the original return must be taken to have been withdrawn and to have been substituted by a fresh return for the purpose of the assessment.35. thus in our opinion the order passed by the assessing officer in accepting the revised computation of income was not erroneous and prejudicial to the revenue and the revised computation of income has been accepted within the prescribed period. as such the first question is answered in 'negative' whereas, second question is answered in 'affirmative'.36. accordingly, the present appeal filed by the revenue stands dismissed.37. no order as to costs.