The Commissioner Of Income Tax-I, Chandigarh v. Harjinder Kaur

In the High Court of Punjab and Haryana, Chandigarh. ITA No. 811 of 2008 Date of Decision: 12.01.2009 The Commissioner of Income Tax-I, Chandigarh. ....appellant. Versus Harjinder Kaur. ....Respondent. Coram:- Hon'ble Mr.Justice J.S. Khehar Hon'ble Mr. Justice Nawab Singh Present: Ms. Urvashi Dhugga, Advocate for the appellant.... J.S. Khehar, J. (Oral). The procedure for assessment under the Income Tax Act, 1961(hereinafter referred to as the 1961 Act) is laid down in the provisionscontained in Chapter XIV. Section 139(9) of the 1961 Act stipulates asunder:- “139(9). Where the Assessing Officer considers that the returnof income furnished by the assessee is defective, he mayintimate the defect to the assessee and give him an opportunityto rectify the defect within a period of fifteen days from thedate of such intimation or within such further period which, onan application made in this behalf, the Assessing Officer may,in his discretion, allow; and if the defect is not rectified withinthe said period of fifteen days or, as the case may be, thefurther period so allowed, then, notwithstanding anythingcontained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shallapply as if the assessee had failed to furnish the return : Provided that where the assessee rectifies the defect after theexpiry of the said period of fifteen days or the further periodallowed, but before the assessment is made, the AssessingOfficer may condone the delay and treat the return as a validreturn. Explanation : For the purposes of this sub-section, a return ofincome shall be regarded as defective unless all the followingconditions are fulfilled, namely :- (a) the annexures, statementsand columns in the return of income relating to computation ofincome chargeable under each head of income, computation ofgross total income and total income have been duly filled in;(b) The return is accompanied by a statement showing thecomputation of the tax payable on the basis of the return;(bb) The return is accompanied by the report of the auditreferred to in section 44AB, or, where the report has beenfurnished prior to the furnishing of the return, by a copy ofsuch report together with proof of furnishing the report; (c) The return is accompanied by proof of - (i) the tax, if any,claimed to have been deducted or collected at source and theadvance tax and tax on self-assessment, if any, claimed to havebeen paid; Provided that where the return is not accompanied by proof ofthe tax, if any, claimed to have been deducted or collected atsource, the return of income shall not be regarded as defective if-- (a) a certificate for tax deducted or collected was not furnishedunder section 203 or section 206C to the person furnishing hisreturn of income; (b) such certificate is produced within a period of two yearsspecified under sub-section (14) of section 155; (ii) The amount of compulsory deposit, if any, claimed to havebeen made under the Compulsory Deposit Scheme (Income-taxPayers) Act, 1974 (38 of 1974); (d) Where regular books of account are maintained by theassessee the return is accompanied by copies of - (i)manufacturing account, trading account, profit and loss accountor, as the case may be, income and expenditure account or anyother similar account and balance sheet; (ii) In the case of a proprietary business or profession, thepersonal account of the proprietor; in the case of a firm,association of persons or body of individuals, personalaccounts of the partners or members; and in the case of apartner or member of a firm, association of persons or body ofindividuals, also his personal account in the firm, associationof persons or body of individuals; (d) Where regular books of account are maintained by theassessee the return is accompanied by copies of - (i)manufacturing account, trading account, profit and loss accountor, as the case may be, income and expenditure account or anyother similar account and balance sheet; (ii) In the case of a proprietary business or profession, thepersonal account of the proprietor; in the case of a firm,association of persons or body of individuals, personalaccounts of the partners or members; and in the case of apartner or member of a firm, association of persons or body ofindividuals, also his personal account in the firm, associationof persons or body of individuals; (e) Where the accounts of the assessee have been audited, thereturn is accompanied by copies of the audited profit and lossaccount and balance sheet and the auditor's report and, wherean 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; (f) Where regular books of account are not maintained by theassessee the return is accompanied by a statement indicatingthe amounts of turnover or, as the case may be, gross receipts,gross profit, expenses and net profit of the business orprofession and the basis on which such amounts have beencomputed, and also disclosing the amounts of total sundrydebtors, sundry creditors, stock-in-trade and cash balance as atthe end of the previous year.” A perusal of sub-section (9) of Section 139 of the 1961 Act, leaves no roomfor doubt, that in case of a defective return, the Assessing Officer isrequired to afford an opportunity to an assessee to rectify the defect. Having given the aforesaid opportunity to the assessee, if he/she fails torectify the defect, the Assessing Officer is authorized to treat the return asan invalid return and to make an assessment, as if the assessee had failed tofurnish any return. It is, therefore, apparent that an Assessing Officercannot make an assessment on an invalid return. In so far as, the question of invalid return in the present case isconcerned, the same has to be determined in reference to Section 140 of the1961 Act, which inter-alia mandates, that a return submitted by an assesseeis required to be signed and verified by him. In so far as, the presentcontroversy is concerned, it is not a matter of dispute, that the return underreference was neither signed by the assessee nor verified in terms of themandate of Section 140 of the 1961 Act. It is in the aforesaidcircumstances, the Income Tax Appellate Tribunal vide its order dated29.2.2008 (Annexure A-3) set aside the assessment of income rendered by the Assessing Officer. In order to repudiate the determination rendered by theAssessing Officer, learned counsel for the appellant has invited this Court’sattention to Section 292 B of the 1961 Act, which is being extractedhereunder: -- “292 B. Return of income, etc., not to be invalid on certain grounds. No return of income, assessment, notice, summons or otherproceedings, furnished or made or issued or taken or purportedto have been furnished or made or issued or taken in pursuanceof any of the provisions of this Act shall be invalid or shall bedeemed to be invalid merely by reason of any mistake, defect oromission in such return of income, assessment, notice,summons or other proceeding if such return of income,assessment, notice, summons or other proceeding is insubstance and effect in conformity with or according to theintent and purpose of this Act.” “292 B. Return of income, etc., not to be invalid on certain grounds. No return of income, assessment, notice, summons or otherproceedings, furnished or made or issued or taken or purportedto have been furnished or made or issued or taken in pursuanceof any of the provisions of this Act shall be invalid or shall bedeemed to be invalid merely by reason of any mistake, defect oromission in such return of income, assessment, notice,summons or other proceeding if such return of income,assessment, notice, summons or other proceeding is insubstance and effect in conformity with or according to theintent and purpose of this Act.” On the strength of the aforesaid provision, learned counsel requires us to setaside the order passed by the Income Tax Appellate Tribunal, dated29.2.2008 (Annexure A-3). In this behalf, it is the contention of the learnedcounsel for the appellant, that defects in returns filed by the assesseesdepicting mistakes or omissions of income, assessment, notice, summons orother proceedings, should be overlooked and need not be given effect to. Itis, therefore, the contention of the learned counsel for the appellant, that theassessee in the present case had filed the return in response to a noticeissued to her under Section 148 of the 1961 Act, as the return earlier filed by her as a member of HUF, was treated as a defective return. Having given our thoughtful consideration to the submissionadvanced by the learned counsel for the appellant, we are of the view, thatthe provisions of Section 292B of the 1961 Act, do not authorize theAssessing Officer to ignore a defect of a substantive nature and it is,therefore, that the aforesaid provision categorically records, that a returnwould not be treated as invalid, if the same “in substance and effect is inconformity with or according to the intent and purpose of this Act”. In sofar as, the return under reference is concerned, in terms of Section 140 ofthe 1961 Act, the same cannot be treated to be even a return filed by therespondent – assessee, as the same does not even bear her signatures andhad not even been verified by her. In the aforesaid view of the matter, it isnot possible for us to accept, that the return allegedly filed by the assesseewas in substance and effect in conformity with or according to the intentand purpose of this Act. Thus viewed, it is not possible for us to accept thecontention advanced by the learned counsel for the appellant on the basis ofSection 292 B of the 1961 Act. The return under reference, which had beentaken into consideration by the Revenue, was an absolutely invalid return asit had a glaring inherent defect which could not be cured inspite of thedeeming effect of Section 292 B of the 1961 Act. In view of the above, we find no merit in the instant appeal andthe same is, accordingly, dismissed. ( J.S. Khehar )JudgeJudge ( Nawab Singh ) Judge.