NISHAN SINGH v. INCOME TAX OFFICER
[Citation -1985-LL-1129-1]

Citation 1985-LL-1129-1
Appellant Name NISHAN SINGH
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 29/11/1985
Assessment Year 1974-75
Judgment View Judgment
Keyword Tags protective assessment • barred by limitation • condition precedent • extension of time • protective basis • original return • special bench
Bot Summary: The learned senior departmental representative, Mr. R. K. Bali, on the other land, besides relying on the order of the AAC, submitted that besides the decision in the case of Mrs. Jyoti Dhillon, there is another Tribunal's decision in the case of Madan Mohan Lal Aggarwal IT Appeal No. 317 of 1983 dated 7-2-1984 which instead supports the contention of the revenue. We had occasions to deal with similar aspects of the matter in detail in the case of Smt. Jyoti Dhillon, even in respect of the issue agitated by the learned senior departmental representative regarding section 153(1) and the instant case being on a better footing because in this case it was only protective assessment which was made, the assessee succeeds. In support of this contention, we have a Special Bench decision in Bohra Film Finance's case, in addition to our own decision in the case of Smt. Jyoti Dhillon and also the Delhi and the Allahabad High Court decisions, which are referred to by the AAC in his order, which finds place above. We have Special Bench decision in Bohra Film Finance's case which supports the assessee's contention both in respect of the first aspect that the extended time could not be available under section 153(1) and also it is held therein that in order to avail the standard time limit under section 153(1) the facts of the case should justify levy of penalty under section 271(1) and a specific finding to that effect should be recorded. The instant case in closer proximity with the case of Smt. Jyoti Dhillon than that of Madan Mohan Lal Aggarwal's case, relied upon by the learned senior departmental representative, though of this very Bench. At the same time, instant case still on the basis of two opinions and also on the basis that it is protective assessment, the revenue could not get any support from this case also. The Madras High Court decision in Manjappa Textiles' case, also cannot carry the revenue's case any further.


only ground raised in this appeal, by assessee reads as under: "That order under section 250(6) passed by learned AAC in against law and facts on file inasmuch as he erred in holding that case fell under section 153(1) (b ) and as such assessment made even on 28-1-1983 was within time prescribed. Return in instant case had been filed on 8-9-1975 under section 139(4) and that assessment could have been made in ordinary course only by 31-3-1977. Provisions under section 153(1) (b) in facts and circumstances of case were not attracted. Assessment made on 28-1-1983 being barred by limitation should have been annulled. learned AAC was not justified to set aside same for being done de novo." 2. On 17-7-1985, petition from learned counsel for assessee, Shri Mohan Lal, was received in which request was made for modification of said ground and he had come forward with three grounds, which are placed on file. However, when it was pointed out to him that modified grounds are nothing but different aspects of main ground raised in appeal, he could address Bench on all aspects of original ground, therefore he elected not to press for admission of modified grounds. 3. As is apparent from above said ground, contention of assessee is that assessment framed on 28-1-1983 is barred by time as original return was filed under section 139(4) of Income-tax Act, 1961 ('the Act') and same could not be revised. In order to appreciate issue, facts may be briefly stated as under: Return of income was filed under section 139(4) for assessment year 1974-75 on 8-9-1975 and said return was revised on 31-3-1977, purporting it to be returned under section 139(5). ITO considering revised return, completed assessment under section 144 of Act proceedings vide his order dated 14-3-1978, which was reopened under section 146 of Act vide his order dated 20-3-1978. Afterwards assessment proceedings went on and under section 143(3) of Act on 28-1-1983 assessment was framed on 'protective basis', as addition on account of investment in godowns was also made in case of Smt. Jyoti Dhillon [IT Appeal No. 361 (Chd.) of 1981, dated 11-10-1982], assessee's daughter. 4. When case came before AAC, he though accepted assessee's contention that said assessment was barred by time, up to para 5 of his order, but further dealing with issue of limitation, held that in light of section 153(1) (b) assessment was in order and, therefore, set aside same to be made de novo, as he observed in para 8 of his order that addition of Rs. 58,333 was made on ground that no evidence had been produced by assessee. It is this action of AAC which is disputed by assessee. 5. learned counsel for assessee submitted before us that looking to dates and following decision of Tribunal in case of Smt. Jyoti Dhillon (supra) copy of which he placed on assessee's compilation, assessment deserves to be quashed and annulled and action of AAC setting aside same is erroneous. He submitted that initially section 153(1) (b ) provisions were never invoked by ITO nor mention of concealment was made in assessment or before it. Of course, it was after assessment was framed that notice under section 271(1) (c) of Act was mentioned to be issued. He relied on cases of S. Kanwal Tej Singh v. ITO [1966] 60 ITR 23 (Punj.), Jyoti Prakash Mitter v. Union of India [1978] 112 ITR 378 (Cal.), T. B. Hanumantharaj v. CIT [1978] 111 ITR 414 (Mad.), CIT v. Surajpal Singh [1977] 108 ITR 746 (All.) and ITO v. Bohra Film Finance [1983] 4 ITD 247 (Jp.) (SB). Besides, he placed before us another decision from Bangalore Bench in case of Gowdar Jayadevappa v. First ITO [1985] 11 ITD 216 in form of photostat copy from Tribunal decisions. 6. learned senior departmental representative, Mr. R. K. Bali, on other land, besides relying on order of AAC, submitted that besides decision in case of Mrs. Jyoti Dhillon (supra), there is another Tribunal's decision in case of Madan Mohan Lal Aggarwal [IT Appeal No. 317 of 1983 dated 7-2-1984] which instead supports contention of revenue. He relied on cases of Prakash Yarn Trading Co. v. ITO [1985] 11 ITD 442 (Hyd.), Nanjappa Textiles v. CIT [1985] 153 ITR 109 (Mad.), H. G. Gupta & Sons v. CIT [1985] 45 CTR (Delhi) 20 and Kumar Jagadish Chandra Sinha v. CIT [1982] 137 ITR 722 (Cal.). 7. After taking into consideration rival submissions and looking to uncontroverted facts, we are unable to uphold finding of AAC setting aside assessment and hold that assessment is to be annulled. As matter of fact, in instant case, it was only protective assessment which was made. question of concealment before assessment, which is condition precedent for application of section 153(1) (b) provisions, was absent nor there was no mention of said section by ITO in assessment order. We will b e dealing with case law cited by both parties and in case all decisions are carefully gone through, assessee's contentions get support not only from decisions relied upon by learned counsel but even from some of decisions which are relied upon by learned senior departmental representative looking to clear aspect that it was in case of Smt. Jyoti Dhillon (supra) that assessment was anulled by us, facts in background are absolutely same, with only difference, that in instant case assessment was made on protective basis which places instant case in better footing still on other hand, it was in respect of same investment of godowns made in name of Smt. Jyoti Dhillon, and also on basis of two opinions thereon both from different High Courts and from Tribunal, since there is decision in favour of revenue also is Prakash Yarn Trading Co.'s case (supra) assessee succeeds. We had occasions to deal with similar aspects of matter in detail in case of Smt. Jyoti Dhillon (supra), even in respect of issue agitated by learned senior departmental representative regarding section 153(1) (b) and instant case being on better footing because in this case it was only protective assessment which was made, assessee succeeds. 8. As stated above, return in this case was filled under section 139(4) , which was revised subsequently. It was considering revised return that ITO completed 'best judgment assessment' under section 144. In other words, assessment proceedings after ex parte assessment was reopened, went on and, ultimately, assessment was framed on 28-1-1983. As matter of fact, about this aspect, we may not even dwell at length because AAC himself has accepted assessee's contention in para 5 of his order, which is placed below, in which on basis of two views theory, he held contention of learned counsel for assessee to be correct: "I have carefully considered rival submissions. There are differences of opinion among various High Courts as to whether in case where first return filed under section 139(4) , revised return filed after that gives extended time to complete assessment under section 143(3) or not. But in view of Supreme Court judgment in CIT v. Naga Hills Tea Co. [1973] 89 ITR 236, view that favours assessee has to be adopted. Therefore, decisions of Delhi and Allahabad High Courts favouring appellant have to be adopted in this case." 9. Now what survives to be dealt with is issue pertaining to dragging instant case under section 153(1) (b) . Our attention was also invited in this regard to Instruction No. 888 dated 1-10-1975, as per which extension by limit of one year under section 153(1) (b) w as not available in respect of revised returns filed under section 139(5) where original return was filed under section 139(4). In support of this contention, we have Special Bench decision in Bohra Film Finance's case (supra), in addition to our own decision in case of Smt. Jyoti Dhillon (supra) and also Delhi and Allahabad High Court decisions, which are referred to by AAC in his order, which finds place above. In way, in this regard, Supreme Court decision in case of CIT v. Naga Hills Tea Co. Ltd. [1973] 89 ITR 236 on two views theory that one favouring assessee is to be adopted, supports contention of assessee. 10. Undoubtedly, coming to issue whether this assessment could fall under section 153(1) (b) , there cannot be two opinions about fact that in case it fell under section 153(1) (b ), it could be completed on or before 31-3- 1983. In this regard, it will be better if we reproduce herebelow section 153(1) (b), which is also extracted and placed by AAC in his order: "(1) No order of assessment shall be made section 143 or section 144 at any time after - (b) expiry of eight years from end of assessment year in which income was first assessable, in case falling within clause (c) of sub-section (1) of section 271; " In this regard, what is required before is finding regarding concealment of income. We are unable to appreciate observations made by learned A C that merely because section 271(1) (c) notice was issued after assessment was framed could give benefit of extended period under section 153(1) (b). T his could not take place of condition precedent according to us. Moreover, in this case even penalty under section 271(1) (c) could not be justified because it was framed on protective basis. We are in agreement with learned counsel for assessee to this effect that there should have been finding recorded by ITO. Though this issue has also been considered by us in case of Smt. Jyoti Dhillon (supra), i.e., daughter of assessee, according to ITO, she was full owner of godowns and entire investment was made by her. As above said, in assessee's case that is under consideration, it was merely protective. According to us, even in that view of matter, case is not saved from limitation as it does not fall under section 153(1) (b) . 11. Now it is apparent from Bangalore Tribunal's decision in case of Gowdar Jayadevappa (supra), in which case facts were identical, it was held under section 139(4) /139(5) read with section 153(1) (c) that return which was filed under section 139(4) d subsequently revised, could not be entitled to further lease of life. It was also held in that case that assessment was since completed after limitation and first return could have been acted upon and assessment should have been completed before stipulated time. Then, we have Special Bench decision in Bohra Film Finance's case (supra) which supports assessee's contention both in respect of first aspect that extended time could not be available under section 153(1) (c) and also it is held therein that in order to avail standard time limit under section 153(1) (b) facts of case should justify levy of penalty under section 271(1) (c) and specific finding to that effect should be recorded. It is further held therein that formal notice issued under section 271(1) (c) beyond extension of time limit would amount to harassment. It is further held in that case that since ITO could as matter of routine issue such notice in each and every case and get benefit of extended period of limitation. instant case in closer benefit of extended period of limitation. instant case in closer proximity with case of Smt. Jyoti Dhillon (supra) than that of Madan Mohan Lal Aggarwal's case (supra), relied upon by learned senior departmental representative, though of this very Bench. learned senior departmental representative had relied on para 20 of said order but reading of that alone shows how far it is from facts of instant case. Calcutta High Court decision, however, supports contention of revenue but again in this case what was dissented was Delhi High Court decision and that makes case of two opinions. Looking to another Delhi High Court decision in H. G. Gupta & Sons' case (supra), this case is under Indian Income-tax Act 1922 ('the 1922 Act') but, however, mentions that section 28(1) (c) of 1922 Act, which is in pari materia with section 271(1) (c), nowhere makes it mandatory that ITO is required to record any reason before applying this provision. But at same time, instant case still on basis of two opinions and also on basis that it is protective assessment, revenue could not get any support from this case also. Hyderabad Bench decision in Prakash Yarn Trading Co.'s case (supra), to some extent, supports contention of revenue, but, against that, we have already mentioned, there is Special Bench decision and also decision of this very Bench. Similarly, Madras High Court decision in Manjappa Textiles' case (supra), also cannot carry revenue's case any further. To summarise, mainly on our decision in case of Smt. Jyoti Dhillon (supra), in which all these matters are discussed at length, assessee's contentions are accepted and assessment is annulled. Since we have reversed finding of learned AAC, assessee succeeds. 12. In result, appeal is allowed. *** NISHAN SINGH v. INCOME TAX OFFICER
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