Commissioner of Income Tax vs Smt. Jyoti Dhillon

Ashok Bhan, J.—At the instance of the Commissioner of Income Tax, Patiala, the following question of law has been referred to this court for its opinion by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as the Tribunal ) :

"Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal erred in law in annulling the assessment order, for the assessment year 1974-75, made on September 10, 1980 ?"

The assessee filed a return u/s 139(4) of the Income Tax Act, 1961 (hereinafter referred to as the Act), on September 6, 1975, for the assessment year 1974-75. A revised return was filed by the assessee on March 21, 1977. Taking the return filed by the assessee on March 21, 1977, as the revised return, the Income Tax Officer, framed a best judgment assessment u/s 144 on March 6, 1978. On an application made by the assessee, the assessment u/s 144 made on March 6, 1978, was cancelled by the Income Tax Officer on March 19, 1978. Thereafter, the Income Tax Officer continued the assessment proceedings which culminated in the assessment order made u/s 143(3) of the Act on September 10, 1980,

The appeal filed by the assessee before the first appellate authority was dismissed. The assessee carried a further appeal to the Tribunal which was accepted. One of the questions which came up for determination before the Tribunal was as to whether the assessment framed by the Income Tax Officer on March 6, 1978, was beyond the period of limitation. After noticing the difference of opinion between the Delhi High Court in O.P. Malhotra Vs. Commissioner of Income Tax, Delhi, , the Allahabad High Court in Dr. S.B. Bhargava Vs. Commissioner of Income Tax, , on the one hand, and the Calcutta High Court in Mst. Zulekha Begum (Khatoon) Vs. Commissioner of Income Tax, , on the other hand, the Tribunal adopted the interpretation which was favourable to the assessee and held that the assessment framed by the Income Tax Officer on March 6, 1978, was beyond the period of limitation. The Tribunal accepted the view taken in O.P. Malhotra Vs. Commissioner of Income Tax, Delhi, and Dr. S.B. Bhargava Vs. Commissioner of Income Tax, . The other submission raised by the Revenue that limitation was saved by Section 153(1)(b) was not accepted on the ground that the Income Tax Officer before framing the assessment had failed to record a prima facie finding that the case fell within the provisions of Section 271(1)(c), and, therefore, the extended period of limitation provided u/s 153(1)(b) is available to him. The appeal was allowed by the Tribunal by recording the following finding :

"8. After giving careful consideration to the rival submissions and as already stated above we are of the opinion that the assessment made by the Income Tax Officer on March 6, 1978, was beyond the period of limitation within which he could make a valid assessment. In the judgment relied upon by learned counsel for the assessee, the Income Tax Appellate Tribunal, Chandigarh Bench, considered this issue at length from various angles and came to the conclusion that a return filed u/s 139(4) could not be revised by the assessee because there was no provision for revising such a return in the Income Tax Act, 1961. The Delhi High Court and the Allahabad High Court, as pointed out supra, have upheld the view. As pointed out by the Revenue, there is a view adopted by the Calcutta High Court which is contrary to the view of the above authorities. Thus, it is clear that there are two reasonable views and when such a situation arises we are duty bound to follow the judgment of the Supreme Court in the case of Naga Hills Tea Co. Ltd., (supra) wherein the court has held that if a provision of a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee has got to be accepted. We, therefore, accept the view in favour of the assessee. In this view of the matter, the assessment made by the Income Tax Officer is annulled.

Before we close we would like to point out that the Income Tax Officer made a feeble attempt in his impugned order to make out a case that he was saved from limitation by Section 153(1)(b) of the Act. The judgment of the Appellate Tribunal in the case of Shri Balwant Singh Arora, cited supra, to which learned counsel for the assessee has referred and on which he has placed reliance, has clearly pointed out that if the Income Tax Officer wants to avail himself of the period of time beyond the ordinary limitation provided in the statute, he has to say so before the expiry of the ordinary limitation for completion of the assessment. We have informed ourselves from the record of the Income Tax Officer that there was no such finding recorded by the Income Tax Officer. Learned counsel for the assessee also made a statement at the Bar that during the course of assessment proceedings the Income Tax Officer had at no stage intimated the assessee that he was taking the assessment beyond the period of ordinary limitation by invoking the provisions of Section 153(1)(b) of the Act. This appears to be correct because the Income Tax Officer has not anywhere recorded that he was treating this case as a case of concealment and, therefore, was availing of the extended period of limitation provided u/s 153(1)(b) of the Act. The Income Tax Officer merely tried to meet the challenge posed to him after he had incurred a expense (sic) and the assessment had become barred by time. He could not justify it We, therefore, reverse the order of the learned Commissioner and annul the assessment. Assessment annulled."

In the petition filed u/s 256(1) of the Act at the instance of the Revenue, the question referred to in the earlier part of the judgment has been sent to us for our opinion.

The question regarding the limitation now stands concluded by the decision of their Lordships of the Supreme Court in Kumar Jagdish Chandra Sinha (dead) Through LRs. etc. Vs. Commissioner of Income Tax, West Bengal, , in favour of the assessee and against the Revenue. Their Lordships have accepted the view taken by the Delhi High Court and the Allahabad High Court by overruling the view taken by the Calcutta High Court in Mst. Zulekha Begum (Khatoon) Vs. Commissioner of Income Tax, . The question regarding recording of finding by the Income Tax Officer beyond the expiry of ordinary period of limitation after completion of assessment, for extension of limitation u/s 153(1)(b) is a finding of fact. As the matter now stands concluded by the Supreme Court of India in Kumar Jagdish Chandra Sinha (dead) Through LRs. etc. Vs. Commissioner of Income Tax, West Bengal, , the question referred to us is answered in the negative, i.e., against the Revenue and in favour of the assessee. No costs.