JUDGMENT
Y.R. Meena, J.
1. On an application under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for our opinion :
“Whether, on the facts and circumstances of the case and on an interpretation of sections 139, 147 and 153 of the Income-tax Act, 1961, the Tribunal was correct in holding that the assessment was not barred by limitation ?”
2. For the assessment year 1987-88, the last date for filing the return under Section 139(1) of the Income-tax Act, 1961, was July 31, 1987. The assessee filed an application for extension of time on August 3, 1987. The time was allowed uptil October 31, 1987. The return could not be filed. He again filed the application for extension of time for filing the return and again the time was extended uptil February 28,1988. Even then the return was not filed by the assessee. The Assessing Officer has issued the notice under Section 148 on October, 1988. On March 30, 1989, the assessee filed the return declaring an income of Rs. 49,65,690. The assessment was made on August 22, 1990, under Section 143(3) read with Section 147(a) of the Act of 1961.
3. In appeal before the Commissioner of Income-tax (Appeals), the assessee has taken the ground that the return was filed under Section 139(4) of the Act of 1961 and limitation for making the assessment is only one year. As the assessment has been made after limitation the order of the Income-tax Officer is time barred. The Commissioner (Appeals) has taken the view that the return is filed in pursuance of the notice under Section 148, for that the limitation is four years and the assessment is completed on August 22, 1990. That is well within the limitation. The appeal was dismissed.
4. Before the Tribunal the same plea was taken. The Tribunal also found that the return was filed in pursuance of the notice under Section 148 that the return cannot be treated as a return under Section 139(4) of the Act and the Tribunal has also dismissed the appeal of the assessee. Being
aggrieved, he filed an application for reference under Section 256(1) of the Act of 1961. The Tribunal has referred the aforesaid question.
5. Learned counsel for the assessee, Dr. Pal, submits that when there is a period for filing” the return under Section 139(4) of the Income-tax Act and the assessee has filed the return within that period, the return should be treated under Section 139(4) of the Act of 1961. He placed reliance on the decision of this court in the cases of Satyanarayan Bhalotia v. CIT [1994] 207 ITR 1030 ; Kareemsons Pvt. Ltd. v. CIT [19921 198 ITR 543 (Kar) [FB] ; CIT v. Kulu Valley Transport Co. P. Ltd. and Kumar Jagdish Chandra Sinha v. CIT .
6. Learned counsel for the Revenue submits that when the return is filed in pursuance of the notice under Section 148 of the Income-tax Act, 1961, for that limitation is four years. Thus, the assessment made was within limitation and that is not barred by limitation. He placed reliance on the decision of this court in the cases of Balish Singh and Co. v. CIT ; Kumar Jagadish Chandra Sinha v. CIT and Iqbal Singh Atwal v. CIT .
7. The facts are not in dispute that for the assessment year 1987-88, the last date for filing the return under Section 139(1) of the Income-tax Act was July 31, 1987. When the return was not filed till October 25, 1988, the Assessing Officer has issued the notice under Section 148 of the Income-tax Act, 1961, on October 26, 1988. The assessee has filed the return declaring income of Rs. 49,65,690 on March 30, 1989.
8. Therefore, the limited controversy before us is whether the return filed
on March 30, 1989, should be taken under Section 139(4) of the Act or
should be taken in response to the notice under Section 148 of the Act of
1961. If the return is taken in response to the notice under Section 148, the
assessment made is not barred by limitation.
9. Before we proceed we would like to refer to the decisions on which both the sides have placed reliance and also referred to by the Tribunal.
10. In the case of Assam Consolidated Tea Estates Ltd. v. ITO , the controversy before this court was when the assessee has filed the return for the assessment year 1957-58, can the Income-tax Officer issue the notice under section? This court has taken the decision that the Income-tax Officer cannot issue the notice under Section 148, ignoring the return filed for the assessment year 1957-58. In the case in hand no return has been filed before notice under Section 148. Therefore, the decision has no application.
11. In Auto and Metal Engineers v. Union of India [1978] 111 ITR 161 (P&H), the issue before the Punjab and Haryana High Court was that when the return was filed beyond the extended period and thereafter notice was issued under Section 148. The assessee claimed that the assessment made was time barred as the notice under Section 148 was illegal.
12. The court has taken the view that the provisions contained in Section 153(1)(a)(iii) were inapplicable. The plea that the assessment for 1972-73 had become time barred was without merit. When the assessee failed to file the return even within the outside limit, the Income-tax Officer could have reason to believe that the income for the said year had escaped assessment and was empowered to take action under Section 147 of the Act.
13. In Iqbal Singh Atwal v. CIT , the controversy before this court was whether, when the return was filed before the notice under Section 148 and the request of the assessee was that his return already filed be treated in response to the notice under Section 148 and the assessment was completed on the basis of those returns, the assessment was valid. This court has taken the view that the assessment was valid.
14. In the case in hand the notice was issued when no return was filed, within the period extended for filing of the return.
15. In Balish Singh and Co. v. CIT, the dispute before this court was when the return was filed within the period permitted under Section 139(4) and thereafter revised return was filed under Section 139(5) whether the revised return filed was a valid return and whether the assessment was barred by limitation. This court held that the assessment made on the basis of the revised return was not barred by limitation.
16. In CIT v. Kulu Valley Transport Co. P. Ltd. , the facts before their Lordships were that the assessee filed voluntarily returns disclosing loss for the assessment years 1953-54 and 1954-55 and the question was whether the loss had to be determined and carried forward under Section 24(2) of the Indian Income-tax Act, 1922, though the returns were not filed within the time specified in the general notice under Section 22(1) and the time had not been extended by the Income-tax Officer. No notice had been served on it under Section 22(2) of the Act of 1922. Their Lordships held that the losses had to be determined and carried forward on the basis of the return filed within the time permitted under Section 22(3) of the Act of 1922, as that permits the filing of the return before assessment is made and that return should not be ignored. Their Lordships further held that even if two opinions are possible the view which is in favour of the assessee must be accepted.
17. In Satyanarayan Bhalotia v. CIT , the issue before this court was when a notice under Section 148 of the Income-tax Act was issued and the return was filed before the time limit permitted under Section 139(4) whether the assessee is entitled to carry forward and set off of its loss even if the loss is determined in pursuance of a return filed under Section 148. This court had taken the view that carry forward and set off of its loss should be allowed on the basis of the return filed within the time permitted under Section 139(4) of the Act of 1961.
18. In Kareemsons Pvt. Ltd. v. CIT [1992] 198 ITR 543 (Kar) [FB], the dispute before the Karnataka High Court was when the return was voluntarily filed after notice under Section 148, but before the time permitted under Section 139(4) of the Act, the return should be treated under Section 139(4) of the Act and the assessee is entitled to carry forward loss declared in its return.
19. In Kumar Jagdish Chandra Sinha v. CIT one of the issues before their Lordships was when the return was filed under Section 139(4), can the assessee file the revised return under Sub-section (5) of Section 139. Their Lordships answered it in the negative and reversed the decision of this court in Kumar Jagadish Chandra Sinha v. CIT [1982] 137 ITR 722. Their Lordships held that the assessee could not file the revised return under Sub-section (5) of Section 139 in a case where he has filed the return under Section 139(4), the provisions of Section 153(1)(c) is not attracted.
20. In the case in hand we have no such dispute, no revised return has been filed under Sub-section (5) of Section 139, after filing the return under Section 139(4) of the Act of 1961.
21. From the judgments referred to above we have seen that there is no direct decision on the issue that when a return was filed after notice under Section 148 should it be taken to be a return under Section 139(4) or a return in response to the notice under Section 148 of the Act of 1961. Whether the return is filed in response to the notice under Section 148 of the Act or is a return filed under Section 139(4) depends upon the facts of each case. Therefore, for that we have to consider the facts available on record.
22. The facts available on record are not in dispute that the last date for filing of the return was July 31, 1987. The assessee filed an application for extension of time to file the return. Extension was allowed uptil October 31, 1987. The second time also the assessee prayed for extension of time for filing the return. The time was allowed up to February 28, 1988. The return was not filed till October 25, 1988. On October 26, 1988, notice under Section 148 of the Income-tax Act was issued and served, return filed only on March 30, 1989.
23. In the return there was no specified note that the return was filed under Section 139(4) of the Act of 1961. On the contrary, we found on the record that the assessment was made under Section 143(3) read with Section 147(a) of the Act, on August 22, 1990, treating the return in response to the notice under Section 148. No objection was raised by the representative of the assessee, that the return filed was under Section 139(4), therefore, the assessment is time barred. For the first time before the Commissioner of Income-tax (Appeals) the ground has been taken that the return filed by the assessee be treated under Section 139(4) of the Act and if it is
treated under Section 139(4) the assessment made by the Income-tax Officer was time barred.
24. The Commissioner of Income-tax (Appeals) as well as the Tribunal on appreciation of facts found that the return filed by the assessee was in response to the notice under Section 148 and that is a question of fact. When the Commissioner of Income-tax (Appeals) as well as the Tribunal found that the return was in response to the notice under Section 148 we found no justification to interfere in that finding.
25. We have also noted the fact that though the return was filed beyond the extended period but before the time permitted under Section 139(4) of the Act. Therefore, that return was treated as valid and considered for making the assessment for the assessment year 1987-88. It is also pertinent to note that no explanation has been given during the argument if the assessee filed the return under Section 139(4), why objection was not raised before the Income-tax Officer, that the return was filed under Section 139(4) and the Income-tax Officer cannot make the assessment as the assessment is time barred. Even no objection was raised when the assessment proceeding was taken treating the return of the assessee in pursuance of the notice under Section 148. The assessee’s representative was appearing regularly in the proceeding for order under Section 143(3) read with Section 147 of the Act. That means the return was also accepted by conduct that the return was in pursuance of the notice under Section 148 of the Act. Thereafter how can that fact be challenged in appeal which was accepted before the Assessing Officer by conduct. Thus, the question is not that the return should be treated under Section 139(4) or in response to the notice under Section 148 of the Act of 1961. The real question is whether the return is filed under Section 139(4) of the Act of 1961 or in pursuance of the notice under Section 148 of the Act of 1961. In view of the aforesaid facts, we are of the view that the return was filed in response to the notice under Section 148 of the Act of 1961.
26. When the return was filed in response to the notice under Section 148 of the Act the limitation for assessment is provided under Section 153(2) of the Act which provides where the assessment, reassessment or recomputation is to be made under Clause (a) of that section, after the expiry of four years from the end of the assessment year in which the notice under Section 148 was served. Admittedly, the assessment is made within four years from the date of notice. Therefore, it cannot be said that the assessment is barred by limitation.
27. In the result, we answer the question in the affirmative, that is, in favour of the Revenue and against the assessee.
