S.K. Mal Lodha, J. - (1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (for short "the Tribunal" herein), has referred the following question for our opinion: "Whether, on the facts and in the circumstances of the cases, the Tribunal was right in holding that the assessments in question were valid and were completed within the period of limitation ?"
(2.) M/s. Manakchand Laxmichand, Sirohi, is a registered firm. Its partners are Laxmichand and Vimalchand. The previous year relevant to the assessment year ended on October 31, 1970, in the case of the firm as well as its partners. The three assessees, namely, the registered firm and its partners, Laxmichand and Vimalchand, were to file returns by June 30, 1971. No returns were filed within that time. It appears from the order of the Tribunal dated August 27, 1976, that no notice was issued under Section 139(2) of the I.T. Act, 1961 (No. XLIII of 1961) (for short "the Act"), to the assessees. Subsequently, the assessee-firm filed a return on March 11, 1974, declaring an income of Rs. 34,560. The assessment of the assessee-firm was completed on October 10, 1974, on a total income of Rs. 43,117. Laxmichand, one of the partners of the firm, filed a return under Section 139(4) on August 29, 1971, declaring an income of Rs. 32,292. Subsequently, another return (the alleged revised return) was filed on March 13, 1974, declaring a total income of Rs. 32,348. The assessment was completed on November 6, 1974, on an income of Rs. 40,119. Vimalchand, the other assessee (partner of the firm), filed a return under Section 139(4) of the Act, on August 29, 1971, in which an income of Rs. 17,265 was shown. Another return (the alleged revised return) was filed on March 13, 1974, declaring an income of Rs. 17,327. The Income-tax Officer (ITO) completed the assessment, vide order dated November 6, 1974, on a sum of Rs. 17,327. The assessees went in appeal. The Appellate Assistant Commissioner (AAC) held that the returns filed by the assessee were no returns in the eye of law and that the period of limitation could not be extended by filing the returns under Section 139(5) of the Act. He opined that the assessments in question should have been completed by March 31, 1974, and as the assessments were completed beyond the said time, they were a nullity. Consequently, he annulled the three assessments made by the ITO. The Department filed appeals before the Tribunal. The Tribunal noticed CIT v. Kulu Valley Transport Co. P. Ltd. [1970] 77 ITR 518 (SC). On behalf of the Department, CWT v. Kripashankar Dayashankar Worah [1971] 81 ITR 763 (SC) (sic), Bihar Electricity Board v. CIT [1975] 101 ITR 740 (Pat), CIT v. Sahu Jain Ltd. [1976] 103 ITR 135 (SC) (sic), and CIT v. Gangaram Chapolia [1976] 103 ITR 613 (Orissa) [FB] were cited. Learned counsel appearing for the assessees relied on Vedadri v. CIT [1973] 87 ITR 76 (Mad), Addl. CIT v. Santosh Industries [1974] 93 ITR 563 (Guj), Shiv Shankar Lal v. CGT [1974] 94 ITR 269 (Delhi) and Venkata Krishnaiah & Co. v. CIT [1974] 93 ITR 297 (AP). The Tribunal also considered the provisions of Sections 139(1), 139(4), 139(5) and 153(1)(c) of the Act and after relying on Kulu Valley Transport Co.'s case [1970] 77 ITR 518 (SC) and, examining the authorities cited on behalf of the Department and the assessees, observed as follows : "Provisions of Sections 139(4) and 139(5) are in parimateria with Section 22(3) of the 1922 Act. Thus, the return filed by the assessees under Section 139(4) of the Income-tax Act, 1961, shall be valid returns. Thus, the provisions of Section 139(1) for the purpose of assessments must be held to have been complied with. The assessees themselves filed the returns under Section 139(5) of the Act. They have themselves treated them as revised returns. In fact, the Income-tax Officer was within his right to complete the assessments before the expiry of one year from the date of filing of revised returns under Sub-section (5) of Section 139." And thereafter it reached the following conclusions : "As discussed above, the assessees have filed returns under Section 139(4) of the Act. They were revised by the assessees under Section 139(5) of the Act. The revised returns under Section 139(5) were filed in March, 1974. The assessments were completed in October, 1974. Thus they are within time. The decisions relied on by the learned departmental representative support our conclusion." In view of this, the orders of the AAC were set aside and it was held that the assessments were completed by the ITO within time. The Tribunal, therefore, remanded the appeals to the AAC to decide them on merits after hearing both the parties. Reference applications under Section 256(1) of the Act were filed by the assessees. According to the Tribunal, a question of law arose out of its order, and, therefore, it has referred the aforesaid question for our opinion. Before we proceed to answer the question, we may notice the facts which are found mentioned in the statement of the case and regarding which there is no dispute. The relevant assessment year under consideration in respect of the assessees is 1971-72, the corresponding previous year ending on October 31, 1970. The returns of the assessee under Section 139(1) of the Act could be filed by June 30, 1971. Neither returns under Section 139(1) of the Act were filed nor notices were issued to the assessee under Section 139(2) of the Act. However, returns under Section 139(4) of the assessee-firm, M/s Manakchand Laxmichand, were filed on August 9, 1971. The partners, Laxmichand and Vimalchand, filed their returns under Section 139(4) on August 29, 1971. The assessment could have been completed of the assessee-firm according to the normal period of limitation by March 31, 1974. The extended time for filing of the returns in accordance with Section 153(1)(c) is one year from the date of the filing of the return under Section 139(4) or Section 139(5) from the date of filing of a return or revised return, whichever is the latest. The assessment order in the case of the firm was passed on October 10, 1974, and in the case of the partners, Laxmichand and Vimalchand, on November 6, 1974. Thus, admittedly, the assessment orders were passed after March 31, 1974.
(3.) SECTION 139 of the Act corresponds to Sub-sections (1), (2), (2A), (3) and (5) of SECTION 22 of the Indian I.T. Act, 1922 (No. XI of 1922) (for short "the Act of 1922"). We may notice the difference between the two provisions, which are relevant for our purpose, (1) The liability to furnish a return of income under SECTION 22(1) flowed when a general public notice is issued requiring to furnish a return within the time specified in the notice. Whereas under SECTION 139(1), there is no necessity of issuing a general public notice. It fixes a statutory liability to furnish a return of income within the statutory period specifically mentioned in that section. (2) Under SECTION 22(1) of the Act of 1922, the ITO was empowered under its proviso in his discretion to extend the date for furnishing the return and there was no provision for charging any interest on any such extension of time and no prescribed form was there for asking for extension. Under the original proviso to SECTION 139(1), extension of time can be granted only on an application made in the prescribed Form No. 6 but if it was beyond a certain date, interest was to be charged at the prescribed rate. Later, this proviso was substituted by a fresh proviso by the Taxation Laws (Amendment) Act 1970, with effect from April 1, 1971. (3) There was no such prescription about time-limit in SECTION 22(2) of the Act of 1922, but it was interpreted to mean that a notice under that section can be served during the relevant assessment year and not after the expiry of the assessment year, whereas in SECTION 139(2), a specific provision has been made that a notice under this section can be issued and served before the end of the relevant assessment year. (4) According to the provisions of SECTION 22(3), an assessee could furnish a return voluntarily if he had not filed any return under SECTION 22(1) or SECTION 22(2) at any time before the assessment was made, while under SECTION 139(4), the right of the assessee to furnish a return voluntarily does not extend beyond the period of time normally available to an Income-tax Officer to make a regular assessment. Kulu Valley Transport Co.'s case [1970] 77 ITR 518 (SC) was a case under Sections 22(1), (2A), (3) and 24(2) and (3). It was held per majority (Shah J., as he then was, dissenting) that Section 24(2) confers the benefit of loss being set off and carried forward and there is no provision under Section 22 of the Act of 1922 under which losses have to be determined for the purpose of Section 24(2). It was further held that Section 22(2A) simply lays down that in order to get the benefit of Section 24(2), the assessee must submit his last return within the time specified in Section 22(1) and that that provision must be read with Section 22(3) for the purpose of determining the time within which a return has to be submitted. In other words, the majority view was that Section 22(3) is merely a proviso to Section 22(1). On the basis of the aforesaid findings, it was held that a return submitted at any time before the assessment is made is a valid return and for considering whether a return filed is within time, Section 22(1) must be read with Section 22(3). It was observed by their Lordships of the Supreme Court as follows (p. 529): "A return whether it is a return of income, profits or gains or of loss must be considered as having been made within the time prescribed if it is made within the time specified in Section 22(3). In other words, if Section 22(3) is complied with, Section 22(1) also must be held to have been complied with. If compliance has been made with the latter provision, the requirements of Section 22(2A) would stand satisfied." In coming to this conclusion, it was also opined that even if two views are possible, the view which is favourable to the assessee must be accepted while considering a provision of a taxing statute. His Lordship, Shah J. (as he then was), did not agree with the conclusion arrived at by the majority, on the ground that Sub-section (3) of Section 22 cannot be read as implying that notwithstanding the restriction placed by Section 22(2A), a return disclosing loss of income computable under Section 10 will not only be entertained but the loss determined and declared under Section 24(3) of the Act so as to enable the assessee to carry it forward. According to him, if a return of loss is filed in pursuance of the general notice under Sub-section (1), Sub-section (2A) will serve no purpose whatsoever. It was also observed that the limitation placed upon the right to file a return of loss is clearly intended to avoid practical difficulties in the administration of the Act of 1922. The majority approved Radhakrishna Rungta v. Seventh ITO [1963] 49 ITR 846 (Bom) and affirmed Kulu Valley Transport. Co. P. Ltd. v. CIT [1967] 64 ITR 121 (Punj). The decision in Kulu Valley Transport Co.'s case [1970] 77 ITR 518 (SC), gave rise to two different interpretations by some of the High Courts. Learned counsel appearing for the assessee has, in all fairness, placed both the views before us. ;