Back
1977 Supreme(Cal) 180
High Court Of Calcutta
M. M. Dutt, Sharma
MOHINDRA MOHAN SIRKAR - Appellant
Versus
INCOME-TAX OFFICER - Respondent
FMA 1 Of 1976
Decided On : 06/02/1977
AMAL BARAN CHATTERJEE, APARNA DUTTA, Nanda Lal Pal, R.N.Mitra, SANJAY BHATTACHARYA
An incorrect and incomplete return is not a return in the eye of law and should be ignored or disregarded, then Section 143 would become nugatory.
Headnote:
INCOME TAX - ASSESSMENT - REOPENING - JURISDICTION - RETURN - INVALIDITY - EFFECT - INCOME TAX ACT, 1961, SECTIONS 139, 143, 147, 148.
Fact of the Case:
The appellant, a Government contractor, filed income tax returns for the assessment years 1967-68, 1968-69, and 1969-70 within the prescribed period. The Income-tax Officer (ITO) issued a notice under Section 143(2) of the Income Tax Act, 1961, calling upon the appellant to appear and produce evidence in support of the returns. The appellant appeared before the ITO and produced relevant documents. However, no assessment order was passed, and no notice of demand was sent to the appellant. Later, the appellant applied for an income-tax clearance certificate, and the ITO issued a certificate stating that the returns filed by the appellant for the assessment years in question were invalid. The appellant challenged the validity of the ITO's action by filing a writ petition under Article 226 of the Constitution.
Finding of the Court:
The High Court held that the returns filed by the appellant were not invalid and that the ITO had no jurisdiction to ignore the returns and proceed to issue notices under Section 148 of the Income Tax Act, 1961, without completing the assessments. The Court observed that an incorrect and incomplete return is not a return in the eye of law and should be ignored or disregarded, then Section 143 would become nugatory. The Court further held that the ITO acted without jurisdiction in issuing the impugned notices under Section 148 and quashed the same.
Issues: 1. Whether the returns filed by the appellant were invalid? 2. Whether the ITO had jurisdiction to ignore the returns and proceed to issue notices under Section 148 of the Income Tax Act, 1961, without completing the assessments?
Ratio Decidendi: 1. The Court held that the returns filed by the appellant were not invalid merely because they did not include certain particulars regarding the profits and gains of his business. The Court observed that the returns were signed and verified by the assessee and that there was no provision in the Income Tax Act, 1961, for the rejection of an invalid return. 2. The Court held that the ITO had no jurisdiction to ignore the returns filed by the appellant and proceed to issue notices under Section 148 of the Income Tax Act, 1961, without completing the assessments. The Court observed that Section 143 of the Act lays down the procedure to be followed by the ITO when a return is not correct and complete or when it is so, as the case may be.
Final Decision: The High Court allowed the appeal, set aside the judgment of the learned judge, and made the rule absolute. The Court directed that a writ in the nature of certiorari issue quashing the impugned notices under Section 148 of the Income Tax Act, 1961, and a writ in the nature of mandamus issue commanding the respondents not to give any effect or further effect to the said notices or to any proceedings started thereon or any orders made pursuant to the same.
( 1 ) THIS appeal is directed against the judgment of the learned trial judge discharging the rule nisi obtained by the appellant on his petition under Article 226 of the Constitution.
( 2 ) THE appellant carries on his business as a Government contractor, and he is an assessed under the Income-tax Act, 1961. He filed his return for the assessment years 1967-68, 1968-69 and 1969-70 within the period prescribed therefor. He was served with a notice under Section 143 (2) of the Income-tax Act, 1961, on May 25, 1971, whereby he was called upon by the Income-tax Officer to appear and produce the relevant evidence in support of the returns filed by him. The date of hearing of the assessment proceedings was fixed on June 17, 1971, which was subsequently adjourned to September 22, 1971. On that date, the appellant was heard by the Income-tax Officer. He produced before the Income-tax Officer the payment certificate in original as given to him by the Government, the bank pass book and other relevant documents in connection with the heating of the assessment proceedings. No order of assessment was, however, passed and no notice of demand was sent to the appellant. On June 15, 1973, the appellant made an application for income-tax clearance certificate. On June 16, 1973, a certificate was given to the appellant by one P. K. Chatterjee, Income-tax Officer, Project Circle, North Bengal, Siliguri. In paragraph A (ii) of page 2 of the certificate it was inserted in ink by the said P. K. Chatter-jee that the returns of income filed by the appellant for the assessment years 1967-68 to 1969-70 were invalid. It is the case of the appellant that on coming to know of the said insertion he, by his letter dated August 22, 1973, addressed to the said Income-tax Officer, stated that all the returns in question were submitted by him in time, but he was not informed of the alleged invalidity of the returns filed by him. Further, it was stated by him in the said letter that he was not given any opportunity of being heard as to the alleged invalidity of the returns and requested the Income-tax Officer to issue to him a fresh income-tax clearance certificate without any such remark.
( 3 ) THE appellant did not receive any reply to his said letter dated August 22, 1973, but on March 18, 1974, he was served with three notices under Section 148 of the Income-tax Act, 1961, all dated March 14, 1974, and issued by the said P. K. Chatterjee, wherein it was alleged that the said Income-tax Officer had reasons to believe that the income of the appellant chargeable to tax for the nssessment years 1967-68, 1968-69 and 1969-70 had escaped assessment within the meaning of Section 147 of the Act, and the appellant was called upon to file returns for the said assessment years within 30 days of the date of the receipt of the said notices. Immediately on receipt of the aforesaid notices, on March 29, 1974, the appellant wrote to the Income-tax Officer contending, inter alia, that, since the returns for the said assessment years were already submitted by him and the assessment proceedings were pending, the Income-tax Officer had no jurisdiction to issue notices under Section 148 of the Act. It was the case of the appellant that there, was absolutely no material before the Income-fax Officer on which he could form a reasonable belief that the appellant's income had escaped assessment for the said assessment years or that the alleged escapement of income was on account of any omission or failure on the part of the appellant to file his returns for the assessment years in question. By a writ petition, the appellant challenged the legality of the said notices under Section 148 of the Act.
( 4 ) THE respondents filed an affidavit-in-opposition which was sworn by the Income-tax Officer, the respondent No. 1. The respondents admitted the filing of the returns by the appellant for the said assessment years. It was, however, alleged that on scrutiny of the retur
