Commissioner of Income-tax Vs. Universal Trading Co. - Court Judgment

Deb, J.

1. This is a reference under Section 256(1) of the Income-tax Act, 1963. The assessment year under consideration is 1963-64.

2. The assessee is a firm. Registration granted to it earlier was continued up to the assessment year 1962-63. In September, 1963, the assessee filed its return of income for the assessment year 1963-64, but it did not furnish a declaration along with the said return. Thereafter, the assessee filed a revised return of income along with a declaration in Form No. 12 seeking continuation of its registration.

3. The Income-tax Officer did not grant the registration. The appeal filed by the assessee was dismissed by the Appellate Assistant Commissioner. The assessee filed further appeal. The Tribunal held that the declaration filed with the revised return was valid and that the registration should have been allowed to it. Then, at the instance of the Commissioner, the following question was referred to this court by the Tribunal:

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the declaration made in Form No. 12 (prescribed under the Income-tax Rules, 1962), which was filed by the assessee along with the revised return of income made on 6th March, 1968, was valid, and complied with the provisions of Section 184(7) of the Income-tax Act, 1961, and the assessee, consequently, was to be treated as a registered firm for the assessment year 1963-64?'

4. Mr. B. K. Bagchi, learned counsel for the revenue, cites Indo Traders, Calcutta v. Commissioner of Income-tax : [1978]111ITR355(Cal) , a decision of this court, and argues that a declaration in Form No. 12 must be filed along with the original return of income. He also argues that a declaration filed along with the revised return of income is invalid in view of Section 184(7) of the Act.

5. Mr. A. C. S. Chari, learned counsel for the assessee, on the other hand, cites the cases of Commissioner of Income-tax v. Sitaram Bhagwandas : [1976]102ITR560(Patna) and Halima Fancy Stores v. Commissioner of Income-tax : [1976]104ITR190(Mad) , in support of his contention that the declaration in Form No. 12 can be filed at any time before the assessment is completed.

6. The aforesaid decisions, however, do not deal with the question with which we are concerned and it is unnecessary for us to discuss them here.

7. Section 184(7), as it stood at the relevant time, reads as follows :

'Where registration is granted to any firm for any assessment year, it shall have effect for every subsequent assessment year :

Provided that--

(i) there is no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the registration was granted ; and

(ii) the firm furnishes, along with its return of income for the assessment year concerned, a declaration to that effect, in the prescribed form and verified in the prescribed manner.'

8. To us it appears that Clause (ii) of the proviso contemplates furnishing of a declaration only once and that too with the return of income. Therefore, the issue before us is whether the term 'return of income' includes 'revised return'.

9. If a declaration is furnished along with the return of income under Section 139(1) or Section 139(2) of the Act, filing of such declaration must be held to be valid. If, however, the firm discovers any omission or wrong statement in the return of income furnished under Sub-section (1) or Subsection (2) of Section 139, it can file a revised return under Sub-section (5) of Section 139 of the Act.

10. If a revised return is accepted by the Income-tax Officer, assessment has to be made on the basis of such return and not on the basis of the original return although the original return may be relevant for other purposes under the Act.

11. Since Section 184(7) contemplates furnishing of a declaration only once, an anomalous situation will arise if the firm furnishes it along with the original return and also with the revised return and such revised return is accepted by the Income-tax Officer. Similarly, if the firm furnishes the declaration along with the original return and then files a revised return without furnishing the declaration and if the revised return is accepted by the Income-tax Officer another anomalous situation will arise, because in both the cases assessment has to be made on the basis of the revised return which takes the place of the original return for the purposes of assessment.

12. Therefore, to avoid anomaly the term 'return of income' 'should be reasonably construed and, in any event, anomaly should be resolved in favour of the firm. Accordingly, the term 'return of income', in ouropinion, includes a 'revised return'.

13. In our opinion also if a declaration is furnished along with the originalreturn, no further declaration need be furnished by the firm along withthe revised return. Similarly, if no declaration is furnished along with theoriginal return and it is furnished along with the revised return, it must beheld that the declaration has been duly furnished in terms of Clause (ii) ofthe proviso to Section 184(7) of the Act.

14. In the premises, we answer the question in the affirmative and in favour of the assessee. There will be no order as to costs.

Sudhindra Mohan Guha, J.

15. I agree.