ORDER
H.S. Ahluwalia, Judicial Member
1. A very ticklish issue is involved in this appeal. On 22-5-1968, the assessee filed return of his income at Rs. 21,172. This was neither in the prescribed form nor was it verified by the assessee underneath the verification. This return was accepted by the Income-tax Officer under Section 143(1) of the Income-tax Act, 1961, and assessment was made accordingly. On 10-1-1969, the assessee filed another return declaring an income of Rs. 71,944. Pending this return, on 7-4-1969 the ITO served a notice to the assessee Under Section 148 on 10-4-1969. Vide his letter dated 19-5-1969, the assessee requested for vacating the said notice or, in the alternative, he pleaded that the return filed by him on 10-1-1969 be considered as having been filed in response to the said notice. On 28-2-1973, the assessee filed another return declaring an income of Rs. 69,180. Ultimately, an assessment was made Under Section 147/143(3) on 21-3-1973. Meanwhile, the assessee also put in an application for cancellation of the order of assessment dated 23-5-1968, which was rejected by the Commissioner of Income-tax on 28-3-1969 on the ground that no prejudice had been caused to the assessee by assessment Under Section 143(1). The assessee also put in an application Under Section 154 for cancellation of this assessment order on 22-1-1969. This application was rejected by the ITO on 16-8-1974.
2. On 5-2-1975, the Appellate Assistant Commissioner accepted the appeal of the assessee against the order of the ITO rejecting the application for cancellation of the assessment and that order was upheld by the Tribunal in ITA No. 79/75-76 dated 19-2-1976. The department went in reference and in Income-tax Reference No. 2 of 1977, the Tribunal’s order was upheld by the High Court with the following observations :
…To sum up, a return which is not verified does not conform to the salient requisites of a return as required by sections 139/140 of the Act and Rule 12 of the Rules, is an invalid return and no assessment can be framed on the basis of such a return. We answer the question referred to us in the affirmative, i.e. in favour of the assessoe and against the revenue.
3. The present application was filed by the assessee Under Section 154 on 21-4-1975 seeking amendment of this assessment order Under Section 147(a)/ 143(3). The application was initially rejected by the ITO on 30-8-1976 and the assessee went in appeal. Ultimately by its order dated 16-12-1978, the Tribunal directed the ITO to consider the points raised by the assessee and pass a speaking order.
4. Following mistakes in the original assessment order were pointed out in this application :
That the notice Under Section 148 for a.y. 68-69 was issued by the ITO on 7-4-1969 while a return of income filed by me Under Section 139(4) for the same a.y. was pending with you as undisposed, having been filed by me on 10-1-1969.
It is very obvious that the issue of notice by you Under Section 148 in the above circumstances is a mistake apparent from the record.
I may point out that no valid return of income had ever been furnished by me prior to furnishing of the above-referred return on 10-1-69. This return, therefore, was clearly a return filed Under Section 139(4) and, as stated above, was pending on the date of issue of notice Under Section 148. I may also point out that an invalid assessment was made on 23-5-1968 on the basis of an alleged so-called return which was in fact or in law no return at all. I had moved an application Under Section 154 to cancel the same as far back as on 22-3-1969.
The ITO for the reasons best known to him did not dispose of this application in spite of repeated requests and reminders till 16-8-1974 when he rejected and the learned AAC vide his order dated 5-2-1975 in Appeal No. 9-C/74-75, Abohar, upheld my contention and has held that there was no valid return filed by me on 22-5-1968. It is, therefore, now settled beyond any doubt whatsoever that the first return was filed by me on 10-11-1969.
I may point out that as soon as I received your aforesaid notice dated 7-4-1969, I have requested you by my letter dated 19-5-1969 that ‘the assessee abovenamed had already filed his income-tax return for a.y. 68-69 on 10-1-1969 and as such the above notice may kindly be vacated’. Instead of acceding this request, the ITO completed the asstt. in pursuance of this invalid notice.”
After a detailed discussion ultimately, the ITO was of the opinion that the notice Under Section 148 could be challenged only in appeal and not Under Section 154. Moreover, the application Under Section 154 was barred by time as it could be filed only within four years of the issue of notice Under Section 148.
Section 153(b) clearly laid down that in case where provisions of Section 271(l)(c) were applicable, the time limit would stand-extended up to eight years from the end of the assessment year in which a return had been filed instead of four years. In the present case, on the date of framing the assessment, there was a difference of about Rs. 50,000 between the previously assessed income and the initially returned income. The assessee had already moved the CIT Under Section 271(4A) and thus impliedly agreed that the provisions of Section 271(l)(c) were applicable to his case. It was only to avoid the consequences that he alleged that the assessment was barred Under Section 148. According to the ITO, since all these points were debatable, there was no case for rectification. He, therefore, rejected the application.
5. On appeal, the AAC was of the opinion that the assessment order dated 21-3-1973 was barred by limitation as laid down under the provisions of Section 153(l)(a)(ii) and that the assessee had a right to get the assessment cancelled under the provisions of Section 154 on the footing that the assessment order invalidly passed beyond the prescribed period of limitation was a mistake apparent from the records. He, therefore, annulled the assessment. The revenue has come up in second appeal before the Tribunal.
6. We have heard the representatives of the parties at length in this appeal. The main points urged on behalf of the revenue were that at the time the present assessment was made, i.e. on 21-3-1973, the original assessment order dated 23-5-1968 was valid and since this assessment had been framed at an income of Rs. 21,172 and the assessee’s subsequent return itself showed an income of Rs. 71,944, it was a clear-cut case where the ITO was satisfied that the assessee’s income had escaped assessment for his failure to disclose fully and truly the particulars necessary for doing so. In other words, the notice Under Section 148 was fully valid in law. The present assessment having been made in pursuance of this notice, was perfectly in order until and unless the first assessment had been cancelled. This was done only on 5-2-1979 but on that date what had already been done could not be undone. Alternatively, it was argued that the assessment was framed in circumstances where there was clear-cut concealment shown on the part of the assessee and the provisions of Section 153 were not applicable to the case. Lastly, it was contended that in any case it was a highly debatable question and no rectification could be done in such circumstances. For this purpose, reliance was placed upon a decision of the Supreme Court in the case of T.S, Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 and the Indian Iron & Steel Co. Ltd. v. STO [1973] 32 STC 95 (All.).
7. On behalf of the assessee, lengthy arguments were addressed. It was first contended that a return which was not duly signed and verified according to law was an invalid return and assessment made on the basis of the first return was wholly invalid one. The Punjab and Haryana High Court in the case of CIT v. Dr. Krishan Lal Goyal [1984] 148 ITR 283 had already held that the previous return filed by the assessee was not a return in the eyes of law and the ITO’s subsequent assessment order was only a waste paper. Next it was argued that the assessee had already submitted a return of income on 10-1-1969 and the ITO could not in law issue a notice Under Section 148 once the return was pending before him. For this purpose, reliance was placed upon the following authorities :
Y. Narayana Chetly v. ITO [1959] 35 ITR 388 (SC) CIT v. Ranchhoddas Karsondas [1959] 36 ITR 569 (SC)
Estate of the Late A.M.KM. Karuppan Chettiar v. CIT [1969] 72 ITR 403 (SC)
CIT v. M.K.K.R. Muthukaruppan Chettiar [1970] 78 ITR 69 (SC)
CIT v. Kurban Hussain Ibrahimji Mithiborwala [1971] 82 ITR 821 (SC)
Smt. Sova Sarkar v. ITO [1983] 139 ITR 386 (Cal).
Next it was contended that the plea regarding the limitation, which was purely a legal plea, could be taken up by the assessee in any proceedings and for this purpose, reliance was placed upon the Punjab and Haryana High Court decision in the case of Vijay Kumar Jain v. CIT [1975] 99 ITR 349. It was also contended that there could be no waiver in respect of the plea that the asstt. order was beyond limitation and for this purpose, reliance was placed upon the following authorities :
Benarsi Silk Palace v. CIT [1964] 52 ITR 220 (All.) Sewlal Daga v. CIT [1965] 55 ITR 406(Cal.)
Kurbanhussein Ibrahimji Mithiborwala v. CIT [1968] 68 ITR 407 (Guj.)
Smt. Parbati Devi v. CIT [1970] 75 ITR 625 (All.).
It was further contended that if the notice issued by the ITO Under Section 148 was invalid, then the proceedings taken by the ITO in pursuance of such a notice would naturally be illegal and void. For this purpose, reliance was placed upon the Supreme Court decision in the case of CIT v. Thayaballi Mulla Jeevaji Kapasi [1967] 66 ITR 147. Lastly, it was contended that ‘mistake’ is not an ordinary word in taxation law. It has a special signification. It is not an arithmetical or clerical error that comes within its purview. It comprehends errors which are discerned after a judicious probe into the record from which it is supposed to emanate. It is inherently indefinite in scope and mostly subjective, the dividing line being thin and undiscernible. If a well-equipped and trained judicial mind will reach a different decision after scrutinising the record, it will be a mistake apparent on record. For this proposition, again a number of authorities were cited, namely, Walchand Nagar Industries Ltd. v. V.S. Gaitonde, ITO [1962] 44 ITR 260 (Bom.), T.S. Rajam v. CED [1968] 69 ITR 342 (Mad.), Blue Star Engg. Co. (Bombay) (P.) Ltd. v. CIT [1969] 73 ITR 283 (Bom.), Parshuram Pottery Works Co. Ltd. v. D.R. Trivedi, WTO [1975] 100 ITR 651 (Guj.), CIT v. Hari Raj Swarup & Sons [1982] 138 ITR 462 (AIL), M.V. Govindaraju Chetty v. CTO [1968] 22 STC 46 (Mys.).
8. After carefully considering all the facts and circumstances of the case, we are of the opinion that the revenue is entitled to succeed. Firstly, at the time when the ITO had issued a notice Under Section 148 there was a valid assessment order Under Section 143(1) in existence, so that the issue of a notice Under Section 148 was not wholly bad in law. It was also otherwise not mala fide inasmuch as a return declaring an income of Rs 71,944 had been filed by the assessee from which a prima facie presumption could be drawn by the ITO that in the earlier assessment, some income of the assessee had escaped therefrom. In response to this notice, the assessee while he had requested for vacating the same but, in the alternative he pleaded that the return filed by him on 10-1-1969 be considered as a return in response to this notice. It needs be pointed out that till then there was no case set-up for the assessee that the return filed by him earlier on 22-5-1968 was no return in the eyes of law. Therefore, any proceedings taken in pursuance of this return should ordinarily be not interfered with merely because at some stage there had been a discovery of some collateral irregularity.
9. This is not all. On 28-2-1973, the assessee filed another return declaring an income of Rs. 69,180. Now Under Section 153(l)(c), an order of assessment can be made after the expiry of one year from the date of filing of a return or a revised return under Sub-section (4) or Sub-section (5) of Section 139. For all intents and purposes, the return filed by the assessee on 28-2-1973 was a revised return within the meaning of Section 139(5). The only possible argument that can be raised on behalf of the assessee was that since the original return had been filed by him on 10-1-1969, it was a return Under Section 139(4) and it could be revised Under Section 139(5) but here again it is a highly debatable issue because there is absolutely no reason as to why if an assessment can be made upon a return Under Section 139(4), why any mistake or omission discovered therein cannot be corrected by filing a revised return. Moreover, the assessee had himself in response to the notice Under Section 148 stated that his return filed on 10-1-1969 may be treated as a return filed in pursuance of this notice. Under Section 148(1), the ITO is to issue a notice under Sub-section (2) of Section 139 and all the provisions of the Act do, so far as they may be, apply accordingly as if it was notice issued under that Sub-section. If the notice issued by the ITO Under Section 148 be treated as a notice Under Section 139(2), which the assessee himself wanted the ITO to do, there is no reason why the return filed by the assessee in pursuance to this notice could not be revised. When it was actually revised on 28-2-1973, it was not open for the assessee to agitate that this subsequent return was no return in the eyes of law. The asstt. made within one year on such a revised return which otherwise would be barred by law has been held to be a valid asstt. in Mst. Zulekha Begum (Khatoon) v. CIT [1981] 129 ITR 560 (Cal.) and Kumar Jagadish Chandra Sinha v. CIT [1982] 137 ITR 722 (Cal.). At any rate, all these points are highly debatable and when the assessee did not choose to file an appeal against the original assessment, he cannot be allowed to take recourse to proceedings Under Section 154 because certainly there can be two opinions on every aspect of the matter argued before us. The fact that the proceedings for cancellation of the first assessment travelled to the High Court itself shows that it was a debatable one. Again it took nearly two hours for the representative of the assessee to bring out various mistakes alleged to have been committed by the 1TO and this all by itself shows that the point is highly debatable.
10. This is not all. All the authorities to which reference was made at the time of hearing before us at the Bar, pertained to assessment before 1975. Now there is a specific provision. Section 292B of IT Act, inserted by Taxation Laws (Amendment) Act, 1975, w.e.f. 1-10-1975, reads as under :
292B. No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.
As we have pointed out above the present assessment was made on the basis of a return filed by the assessee himself and was for all practical purposes in substance and effect in conformity with or according to the intent and purpose of the Act. While, according to strict interpretation of law, the assessment may be invalid because of the technical mistake, defect, omission or irregularity therein such an irregularity now stands cured by provision, which had not been the subject-matter of interpretation in any of the authorities quoted above. Against the assessment, the assessee could possibly have no grudge and that is why he did not choose to go in appea]. The earlier authorities which laid down that there can be no waiver would cease to have relevance in the present case where the assessment is for all intents and purposes in substance in conformity with the provisions of the Act. Only because of the assessee’s fault in not verifying the earlier return which was accepted by the ITO, certain developments resulted in making the provisions of Section 147 technically inapplicable to the case. Otherwise, it is probably the fittest case where provisions of Section 147 should be invoked because clearly the assessee at the time of filing his original return of income had failed to disclose fully and truly all the material facts necessary for the assessment in question. Consequently, the present assessment could be made within eight years from the end of the assessment year in which the income was assessable under Clause (b) of Section 143(1). The assessment year having ended on 31-3-1969, the present assessment could otherwise be treated to be valid assessment up to 31-3-1977 and having been made on 21-3-1973, it would be certainly within limitation under this clause.
11. Thus, considered from whatever angle it may be, the present order of the ITO refusing to cancel the previous assessment order and rejecting the assessee’s application Under Section 154, is fully warranted by the facts and circumstances of this case. The order of the AAC to the contrary is, therefore, set aside and that of the ITO is restored.
12. In the result, the appeal is allowed.