M.M. Kumar, J. - (1.) AT the instance of the Revenue the Income Tax Appellate Tribunal, Delhi Bench (C), New Delhi (for brevity, "the Tribunal") has referred the following questions of law under Section 256(1) of the Income Tax Act, 1961 (for brevity, "the Act"), which are stated to have emerged from its order dated August 31, 1998, passed in I.T.A. No. 7023/Del of 1992 and C.O. No. 75/Del of 1995 in respect of the assessment year 1989 -90: 1. Whether the Tribunal is justified in holding, on the facts and in the circumstances of the case, that the return dated March 30, 1990, had legal efficacy and that notice under Section 143(2) should have been issued with reference to it on or before September 30, 1990.
(2.) IF the answer to the above question is in the affirmative, whether the Tribunal was justified in holding that notice under Section 143(2) could not be issued after September 30, 1990, and, therefore, the notice dated January 3, 1992, is void ab initio and cannot give rise to a valid assessment under Section 143(3). 2. The facts as stated in the statement of the case are that the assessee -respondent filed its return on March 30, 1990. The Assessing Officer found that there were defects in the return, inasmuch as, it was not accompanied by the profit and loss account and the balance -sheet. On December 20, 1991, the Assessing Officer required the assessee for production of the aforementioned documents, which were filed on January 3, 1992. Thereafter, on January 6, 1992, notice under Section 143(2) of the Income Tax Act, 1961 (for brevity, "the Act") was issued. It is appropriate to mention that earlier two notices were issued on March 30, 1990, and August 29, 1990, which were admittedly not served on the assessee -firm and, accordingly, the Commissioner of Income Tax (Appeals)(for brevity, "the CIT(A)") has held that the aforementioned notices were invalid and those findings were not challenged by the Revenue before the Tribunal. Accordingly, on March 30, 1992, the Assistant Commissioner of Income Tax, Investigation Circle, Faridabad, passed an order under Section 143(3) of the Act for the assessment year in question. The contention raised by the assessee that the period of six months as provided by the proviso to Section 143(2) of the Act from the date of filing of return had expired, was not accepted by the assessing authority. On appeal, the Commissioner of Income Tax (Appeals) upheld the order passed by the Assistant Commissioner of Income Tax, Investigation Circle, Faridabad. On the issue of limitation as provided by the proviso to Sub -section (2) of Section 143 of the Act, the Commissioner of Income Tax (Appeals) held that the return of income was deemed to be filed after removal of defects by the assessee on January 3, 1992, and the period of limitation of six months was to be counted from January 3, 1992, when complete and correct return of income was filed. Therefore, the Commissioner of Income Tax (Appeals) rejected the contention raised by the assessee holding that the order of the Assessing Officer was neither invalid nor without jurisdiction. However, the Commissioner of Income Tax (Appeals) allowed the appeal partially in respect of other claims, which are not in issue before us. However, against the order dated July 20, 2002, passed by the Commissioner of Income Tax (Appeals), the Revenue filed an appeal before the Tribunal and the assessee preferred its cross -objections. The Tribunal after making a detailed reference to the proviso to Sub -section (2) of Section 143 of the Act and Sub -section (9) of Section 139 of the Act pointed out that there is substantive difference between the two provisions which deals with "invalid return" and "defective return" respectively. According to the Tribunal, defective returns were covered by Section 139(9) of the Act and invalid returns would not attract the provisions of Section 143(2) of the Act. The Tribunal further held that in the instant case the return filed by the assessee was a defective return within the meaning of Section 139(9) of the Act and it was not an invalid return. The view of the Tribunal is discernible from paragraphs 17 and 18 and the same reads as under: 17. The difference in a valid return and invalid return as stressed earlier, is that a valid return had its legal consequences. e.g., the running of limitation and charging of interest, etc. An invalid return has no legal existence and, as such, no legal consequences would follow from it. A return filed without profit and loss account and balance -sheet has been held by the hon'ble High Court to be a valid return in the sense that it will have to be taken cognizance of for the purpose of charging interest for the duration of the delay, etc. It would not be correct to deem the return as having been filed only on the date when the defects were removed and to start counting legal consequences with reference to the latter date. It was for this reason that the charging of interest by the Commissioner of Income Tax up to the date of filing of the profit and loss account and balance -sheet was held to be erroneous in law. The return filed on October 6, 1971, was 'the return' (i.e., a valid return, though defective). Therefore, it had legal efficacy. 18. In the setting of the above proposition, the order of the learned Commissioner of Income Tax (Appeals) holding that the return dated March 30, 1990, had no legal efficacy and that, therefore, notice under Section 143(2) could not be issued with reference to it is without any authority of law and the said view is reversed. Notice under Section 143(2) could not be issued after September 30, 1990. Therefore, the notice dated January 3, 1992, is void ab initio and cannot give rise to a valid assessment under Section 143(3). The said order is, therefore, quashed. We have heard learned Counsel for the Revenue and perused the paper book minutely. We find that the questions referred to this Court are liable to be answered against the Revenue because there is a statutory difference recognized between a "defective return" and an "invalid return". In that regard, it would be profitable to read Sub -section (9) of Section 139 of the Act, relevant extract of which is reproduced as under: 139. Return of income. - -(1) to (8).... (9) Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the Assessing Officer may, in his discretion, allow ; and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return:.... Explanation. - -For the purposes of this sub -section, a return of income shall be regarded as defective unless all the following conditions are fulfilled, namely:.... (b) the return is accompanied by a statement showing the computation of the tax payable on the basis of the return;.... (d) where regular books of account are maintained by the assessee, the return is accompanied by copies of - (i) manufacturing account, trading account, profit and loss account or, as the case may be, income and expenditure account or any other similar account and balance -sheet; (ii) in the case of a proprietary business or profession, the personal account of the proprietor; in the case of a firm, association of persons or body of individuals, personal accounts of the partners or members ; and in the case of a partner or member of a firm, association of persons or body of individuals, also his personal account in the firm, association of persons or body of individuals; (e) where the accounts of the assessee have been audited, the return is accompanied by copies of the audited profit and loss account and balance -sheet and the auditor's report and, where an audit of cost accounts of the assessee has been conducted, under Section 233B of the Companies Act, 1956 (1 of 1956), also the report under that section; 5. A perusal of the aforementioned provision makes it evident that when the return of income furnished by the assessee is defective then the Assessing Officer is to intimate the defect to the assessee, afford him an opportunity to rectify the defect within a period of 15 days from the date of such intimation or within such further period which the Assessing Officer may in his discretion allow. If the defect is rectified then the return is to be considered as valid. The Explanation appended to Sub -section (9) of Section 139 of the Act clarifies that a return of income would be regarded as defective if the annexures, statements and columns in the return concerning computation of income, etc., are not fulfilled or copies of the audited or otherwise profit or loss account have not been attached as required by Clauses (e) and (f) of the Explanation. In other words, the statutory provision clearly envisages that in cases where profit and loss account and balance -sheet are not accompanying the return of income, it would be regarded as defective in contradistinction to invalid return. A defective return, therefore, cannot be regarded as invalid return ipso facto. It may assume the character of invalid return if the defect after due notice has not been removed by the assessee. The question is not res integra and fell for consideration of a Division Bench of the Calcutta High Court in the case of CIT v. : [1986]162ITR652(Cal) . In that case, the profit and loss account and balance -sheet were not enclosed with the return as is the position in the instant case. The assessee in response to the notice had produced and filed its profit and loss account as well as the balance -sheet. The Assessing Officer completed the assessment. 6. On appeal, the Commissioner of Income Tax (Appeals) held that the return was invalid and he set aside the assessment so far as the charging of interest was concerned and directed the Assessing Officer to charge interest on the return from the date of the return till the date of furnishing the profit and loss account and balance -sheet. On further appeal, the Tribunal found that the return filed by the assessee was accepted by the Assessing Officer as a legally valid return and he had acted upon the same. The Tribunal set aside the order of the Commissioner of Income Tax (Appeals). On a reference made to the High Court, it was held that once the return has been found to be valid and only a defect within the meaning of Section 139(9) of the Act was found then the Commissioner of Income Tax (Appeals) was not justified in levying interest. 7. We are in respectful agreement with the view taken by the Division Bench of the Calcutta High Court in the case of Bharat Refineries Ltd. : [1986]162ITR652(Cal) , which has been correctly followed and applied by the Tribunal. The finding recorded by the Tribunal in the instant case that the return was defective in contradistinction to be invalid must be regarded as a question of fact. Moreover, the absence of profit and loss account and balance -sheet from the return is itself has been considered by Clause (e) of the Explanation appended to Sub -section (9) of Section 139 of the Act. Therefore, it cannot be concluded that the return, in fact, was filed on the day when the defect was removed, i.e., on January 3, 1992. The date of filing the return would not change a fortiori. It follows that the period of limitation for issuance of notice under Section 143(2) of the Act could be issued only within a period of six months (as prevailing at the relevant time, i.e., the assessment year 1989 -90). 8. In view of the above, both the questions are answered against the Revenue and in favour of the assessee. ;