IMPORTANT POINT
A defective return cannot be regarded as an invalid return.

JUDGMENT :

UJJAL BHUYAN, J.

1. The perennial question in income tax jurisprudence, whether reopening of a concluded assessment i.e. reassessment under Section 147 of the Income Tax Act, 1961 (briefly “the Act” hereinafter) following issuance of notice under Section 148 of the Act is legally sustainable or is bad in law, is again confronting us in the present batch of appeals. The Income Tax Appellate Tribunal, Cochin Bench, Cochin (‘Tribunal’ hereinafter) had decided in favour of the assessee by setting aside the orders of reassessment. However, the High Court of Kerala in appeals filed by the revenue under Section 260A of the Act has reversed the findings of the Tribunal by deciding the appeals preferred by the revenue in its favour.

2. Aggrieved by the aforesaid orders passed by the High Court of Kerala (briefly “the High Court” hereinafter), the assessee had preferred special leave petitions to appeal before this Court and on leave being granted, civil appeals have been registered.

3. We have heard Mr. Raghenth Basant, learned counsel for the appellant/assessee (which would be referred to either as the appellant or as the assessee) and Mr. Shyam Gopal, learned counsel for the respondent/revenue (again, would be referred to either as the respondent or as the revenue).

4. A brief narration of facts is necessary.

5. For the sake of convenience, we may refer to Civil Appeal Nos. 8580, 8581 and 8582 of 2011 (M/s Mangalam Publications, Kottayam vs. Commissioner of Income Tax, Kottayam).

6. The above three civil appeals pertain to assessment years 1990-91, 1991-92 and 1992-93.

7. The assessee was a partnership firm at the relevant point of time though it got itself registered as a company since the assessment year 1994-95. The assessee is carrying on the business of publishing newspaper, weeklies and other periodicals in several languages under the brand name “Mangalam.” Prior to the assessment year 1994-95 including the assessment years under consideration, the status of the assessee was that of a firm, being regularly assessed to income tax.

8. For the assessment year 1990-91, assessee filed return of income on 22.10.1991 showing loss of Rs. 5,99,390.00. Subsequently, the assessee filed a revised computation showing income at Rs. 5,63,920.00. Assessee did not file any balance sheet alongwith the return of income on the ground that books of account were seized by the income tax department (department) in the course of search and seizure operations on 03.12.1995 and that those books of account were not yet returned. In the assessment proceedings, the assessing officer did not accept the contention of the assessee and made an analysis of the incomings and outgoings of the assessee for the previous year under consideration. After considering various heads of income and sale of publications, the assessing officer made a lump-sum addition of Rs. 1 lakh to the disclosed income vide the assessment order dated 29.01.1992 passed under Section 143 (3) of the Act.

9. Likewise, for the assessment year 1991-1992, the assessee did not file any balance sheet along with the return of income for the same reason mentioned for the assessment year 1990-1991. The return of income was filed on 22.10.1991 showing a loss of Rs. 21,66,760.00. As per the revised profit and loss account, the sale proceeds of the publications were shown at Rs. 8,21,24,873.00. Assessing officer scrutinised the net sale proceeds as per the Audit Bureau of Circulation figure and the certified Performance Audit Report. On that basis assessing officer accepted the sale proceeds of Rs. 8,21,24,873.00 as correct being in conformity with the facts and figures available in the Audit Bureau of Circulation report and the Performance Audit Report. After considering the incomings and outgoings of the relevant previous year assessing officer reworked the aforesaid figures but found that there