Commissioner of Income Tax vs A. Yunus Kanju

K. Sreedharan, J.—The Income Tax Appellate Tribunal, Cochin Bench, has referred the following question to this court for its opinion u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that successive returns can be filed u/s 139(4) of the Income Tax Act, 1961, within the period prescribed by Clause (b) of the said provision and that the Income Tax Officer is bound to consider these returns in framing the assessment ?"

The short facts necessary for answering the above question are as follows: The assessee in the instant case did not file a return u/s 139(1) of the Act for the accounting year 1977-78. He was issued notice u/s 139(2) of the Act dated January 10, 1979, calling upon him to file the return. That notice was served on him on January 25, 1979. He did not comply with the notice by filing any return. Instead, he filed a return on July 17, 1980. Thereafter, within the period prescribed by Section 139(4)(b)(iii), he filed another return on November 17, 1980. The Income Tax Officer refused to consider the second return and completed the assessment on the basis of the first return filed by the assessee. Before the Commissioner of Income Tax (Appeals), the assessee challenged the action of the Income Tax Officer and contended that the second return is to be treated as a revised one and assessment to be made on its basis. The Commissioner accepted that contention and quashed the order of assessment and directed the Income Tax Officer to pass a fresh order of assessment on the basis of the second return. The Department questioned the action of the Commissioner by preferring an appeal, I. T. A. No. 410/ (Coch) of 1982, before the Tribunal. The stand taken by the Department was that the second return filed by the assessee cannot be taken as a revised return u/s 159(5) of the Act and that the assessment should have been made only on the basis of the first return, namely, the one filed on July 17, 1980. The assessee also took up the matter before the Tribunal in I. T. A. No. 307/(Coch) of 1982. According to the assessee, when the Commissioner quashed the order of assessment which was based on the first return dated July 17, 1980, he went wrong in directing the Income Tax Officer to complete the assessment on the basis of the revised return dated November 17, 1980. Both appeals were disposed of by the Tribunal by annexure "C" order holding :

"The Commissioner of Income Tax (Appeals) was, therefore, fully justified in asking the Income Tax Officer to complete the assessment on the basis of the second return."

and rejected the contention of the assessee that the Commissioner of Income Tax (Appeals) could not have restored the matter to the Income Tax Officer for passirig an order of assessment on the basis of the second return.

The Revenue filed R. A. No. 427/(Coch) of 1984 praying for referring the following question to this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in confirming the order of the learned Commissioner of Income Tax (Appeals) who had set aside the order of assessment completed on the basis of the ''first return'' ?"

On the basis of the said application, the Tribunal referred the question quoted at the beginning of this judgment to this court u/s 256(1) of the Act.

Dissatisfied with the question referred, as framed by the Tribunal, the Department has preferred O. P. No. 10736 of 1985 u/s 256(2) of the Act for compelling the Tribunal to refer the question in the form in which they wanted the reference, namely :

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in confirming the order of the learned Commissioner of Income Tax (Appeals) who had set aside the order of assessment completed on the basis of the ''first return'' ?"

If the assessee, in the instant case, was not entitled to file a second return, since he had not filed a return either u/s 139(1) or Section 139(2), the question that is to be decided is whether his return dated November 17, 1980, can be the basis for the assessment for the year 1978-79. If it cannot be the basis for assessment, then it follows that the Commissioner''s decision directing the Income Tax Officer to pass an order of assessment on the basis of the return dated November 17, 1980, must fall to the ground. Viewed in this light, the question as framed and referred is alone to be answered on the facts and circumstances of the case. Consequently, we hold that O. P. No. 10736 of 1985 is misconceived. It is, accordingly, dismissed.

Coming to the question referred to this court u/s 256(1) of the Act, we feel that the decision in Eapen Joseph Vs. Commissioner of Income Tax, will apply on all fours. Eapen Joseph Vs. Commissioner of Income Tax, to which one of us (Sreedharan J.) was a party, took the view that any return filed subsequent to the first one, which was filed u/s 139(4), had no legal consequence. In Eapen Joseph Vs. Commissioner of Income Tax, it was observed (at page 31) :

"Firstly, Section 139(5) of the Act permits a later or revised return to be filed only where the (original) return was filed u/s 139(1) or (2) of the Act. Filing of a revised return is not contemplated u/s 139(5) of the Act in cases governed by Section 139(4) of the Act. Any return filed subsequent to the filing of an original return is only a revised return. If the filing of such a revised return is not contemplated or permitted in the return filed u/s 139(4) of the Act, it is not possible to say that any number of subsequent returns can be filed u/s 139(4) of the Act itself. The statute expressly provides for filing a revised return (subsequent return) u/s 139(5) of the Act, only in cases where the return is filed u/s 139(1) or (2) of the Act. So, it has to be held that the Act impliedly bars or forbids the filing of a subsequent or revised return in other cases. In this view, there cannot be any subsequent or revised return in a case where the original return is filed u/s 139(4) of the Act."

Learned counsel representing the assessee brought to our notice a later decision of the Division Bench of the Madhya Pradesh High Court in Commissioner of Income Tax Vs. Dr. N. Shrivastava, , which took a view different from the one taken by the Division Bench of this court. On the basis of that decision, learned counsel pleaded before us to refer the matter to a larger Bench for final decision on the issue. But, on going through the judgment of the Madhya Pradesh High Court, we are not persuaded to take a view different from the one expressed in Eapen Joseph Vs. Commissioner of Income Tax, We are not in a position to agree with the view taken by the Madhya Pradesh High Court because, according to their Lordships, there is an anomalous situation in the statute and since the said anomalous situation was not taken note of by the Legislature, the courts will have to remedy the anomaly. This approach, we are afraid, is not proper. The courts are not to venture to adopt legislative process. It is to understand the law as enacted by the Legislature. When the Legislature under two different situations provide two different modes leading to two different consequences, those modes will have to be given effect to. According to the Division Bench of the Madhya Pradesh High Court, a person who has been compelled to file a return by a notice under Sub-section (2) of Section 139 of the Act can file a revised return under Sub-section (5) thereof, if he discovers any omission or any wrong statement, therein; but the same benefit is to be denied to a person who filed a return u/s 139(4) voluntarily. This is held to be an anomalous situation, it would, according to the Division Bench, be putting a person filing a voluntary return in a disadvantageous position compared to a person who has been compelled u/s 139(2) of the Act to file a return. Their Lordships went on to state (at page 564) :

"To say that the Legislature became oblivious of this aspect of the matter with regard to a person who has filed a return voluntarily under Sub-section (4) of Section 139 would be imputing unreasonableness to the Legislature. We find nothing in Section 139 which may justify such imputation."

Section 139(5) specifically provides that, if any person having furnished a return under Sub-section (1) or Sub-section (2) discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made. This sub-section has been enacted after stating in Sub-section (4)(a) that any person who has not furnished a return within the time allowed to him under Sub-section (1) or Sub-section (2) may, before the assessment is made, furnish the return for any previous year. When the Legislature was aware of the difference between persons who filed the return under sub-sections (1) and (2) and those who filed the return u/s 139(4) and gives the former alone the benefit of filing a revised return, the courts are not to take the view that the same benefit is to be extended to persons who filed returns u/s 139(4) voluntarily. If such a view is to be taken, according to us, the courts will be rewriting the statute, which is not within the province of the courts.

In the instant case, the assessee was a regular assessee to Income Tax. He ought to have filed his return u/s 139(1) which he did not. Notice u/s 139(2) was served on him. That was also not complied with. Only thereafter, he came forward with a return u/s 139(4). Such an assessee is not entitled to have the right to furnish a revised return as contemplated by Section 139(5) of the Act. We do not find any reason to differ from the law stated by this court in Eapen Joseph Vs. Commissioner of Income Tax, Further, we are bound by the said decision. Consequently, we are of the view that the Tribunal went wrong in holding that the second return is a valid return u/s 139(4) of the Act for the Income Tax Officer to make the assessment based on it.

In view of what has been stated above, we answer the question referred to us in the negative, i.e., in favour of the Revenue and against the assessee.

A copy of this judgment under the seal of this court and the signature of the Registrar shall be forwarded to the Tribunal as required by law.