Commissioner
of Income Tax, Jullundur Vs. Ajanta Electricals, Punjab [1995] INSC 254 (2
May 1995)
Nanavati
G.T. (J) Nanavati G.T. (J) Jeevan Reddy, B.P. (J) Nanavati, J.
CITATION:
1995 AIR 2172 1995 SCC (4) 182 JT 1995 (7) 429 1995 SCALE (3)336
ACT:
HEAD NOTE:
(WITH
C.A. NOS.2499-2501 of 1977)
These
four appeals arise out of the judgment delivered by the Punjab and Haryana High
Court in I.T. Reference Nos.17, 1 44 and 45 of 1974. A common question which
arises for considera in these appeals is whether an application made under
Section 139(2) of the Income Tax Act for extension of time for filing of the
return of income, after the expiry of the stipulated peri could be regarded as
legal and valid.
The
respondent in Civil Appeal No.2636 of 1977 is a partnership firm and the
respondents in Civil Appeal Nos. 2499-2501 of 1977 are its partners. In respect
of the assessment year 1966-67 individual notices under Section 139(2) were
issued to the firm and its three partners requiring them to furnish returns of their
income within 30 days from the date of service of the notice. The notice was
served upon the firm on 18.5.1966 and the partners were served on 24.6.1966.
Therefore, the return was required to be filed by the firm on or before
19.6.1966 and the partners had to file their returns on or before 24.7.1966.
All of them submitted their returns on 27.6.1967.
At the
time of completing the assessments the I.T.O. initiated proceedings under
Section 271(1)(a) for levying penal as there was delay in filing the returns
without reasonable cause. In those proceedings the assessees pointed out that
they had made applications to the I.T.O. on 29.6.1966 and 31.12.1966 for
extending the time upto 31.12.1966 and 31.3.1967 respectively and contended
that no penalty should be imposed upon them as they reasonably believed that
those applications were granted since they were not rejected by the I.T.O. The
I.T.O. did not accept this contention as in his view no authenti evidence was
produced by the assesseees in that behalf and also because such applications
had to be made before the expiry of the due date for the filing of the returns.
He,
therefore, pass orders levying penalty upon them. The assessees went in appeal
to the Appellate Assistant Commissioner. He recorded a finding that
applications dated 29.6.1966 and 31.12.1966 were made by the assessees and that
the firm had made one more application dated 15.5.1967 for extension of time upto
30.6.1967. He accepted the contention of the assessees that they had reasonably
presumed that their applications were granted as they were not rejected and
thus there was reasonable cause for the delay in filing the returns, till the
last date upto which extension was sought for. He, therefore, cancelled the penalt
imposed upon the firm and restricted the penalty imposed upon the partners to
the period for which no reasonable cause was shown. The Revenue preferred
appeals against those orders to the Tribunal. It held that belated applications
cannot be regarded as legal and valid allowed the appeals and restored the
orders passed by the I.T.O. At the instance of the assess the Tribunal made the
references to the High Court. Main judgment was delivered by the High Court in
I.T. Reference No. 17 of 1974. The High Court held that as the proviso to
Section 139(2) does not contain any limitation to the effect that an
application for extension should be filed within the stipulated time, an
application for extension of time can be made even after the expiry of that
period. The Form prescribed for making an application for extension of time
also indicates that an application for that purpose can be filed even after the
expiry of the due date. It, therefore, decided the question in favour of the assessees.
What
is contended by the learned counsel for the Revenue is that the High Court has
not interpreted the proviso to Section 139(2) correctly. It is submitted that
the Income Tax Act is a complete Code by itself and in the absence of a
specific provision in the Act or the rules made there under it should have been
held that making an application for extension of time is not permissible after
the expiry of the period either specified originally or extended by the I.T.O.
for the filing of the return; and, therefore, the belated applications filed by
the assessees were invalid.
Section
139(2), which was deleted with effect from 1.4.1989, at the relevant time read
as under:- "(2) In the case of any person who, in the Income- tax
Officer's opinion, is assessable under this Act, whether on his own total
income or on the total income of any other person during the previous year, the
Income-tax Officer may, before the end of the relevant assessment year, serve a
notice upon him requiring him to furnish, within thirty days from the date of
service of the notice, a return of his income or the income of such other
person, during the previous year, in the prescribed form and verified in the
prescribed manner and setting forth such other particulars as may be
prescribed:
Provided
that on an application made in the prescribed manner the Income-tax Officer
may, in his discretion, extend the date for the furnishing of the return, and
when the date for furnishing the return, whether fixed originally or on
extension, falls beyond the 30th day of September or as the case may be the
31st day of December of the assessment year, the provisions of sub-clause (iii)
of the proviso to sub- section (1) shall apply." It provided for the
manner in which a person, who in the opinion of the I.T.O., was assessable,
could be directed to furnish a return of his income and the manner in which he
had to file the return. A notice was required to be given to such person and he
had to file the return within thirty days from the date of service of the
notice. The period so fixed could be extended by the I.T.O., if an application
for that purpose was made in the prescribed manner. The proviso enabled the
I.T.O. to extend the date for furnishing the return and laid down the procedure
for moving the I.T.O. for that purpose. The manner of making such an
application was prescribed by Rule 13. The form prescribed was Form No.6. It
reads as under:
"Form
No.6: Under Section 139(1)/(2)/(3) of the Income- tax Act, 1961 I/We have to
file the return of my/our income ------------------------------------------------------------
in income of......in respect of which I/we are Iassessable for the assessment
year commencing on 1st April, 19 before 19. For the reasons given below it is
not possible ------------------ has not been possible for me/us to file the
return before the said date." We are also referring to this prescribed
form because the High Court after referring to it, has observed that "the
prescribed form clearly shows that the application for extension of time may be
filed even after the expiry of the period prescribed for filing the
return." The Calcutta High Court in Sunderdas Thackersay & Bros. vs.
C.I.T. 137 ITR 646 has also taken the same view.
Even
when the I.T.O. extended the date, if it fell beyond the dates mentioned in the
proviso, the provision of sub-clause (iii) of the proviso to sub-section (1)
became applicable and interest at the rate of 6 per cent became payable as
stipulated in that provision. The object of the provision was to see that the assessee
did not gain in any way by postponement of furnishing the return with the hope
that he could postpone payment of tax to a later date and have the advantages
of utilising that amount during that period, as he was made to pay interest on
the amount of tax found payable. At the same time, it was provided in sub-
section (8) that the I.T.O. could in prescribed cases and under prescribed
circumstances, reduce or waive the interest payable. Moreover, a person who
failed to furnish the return within time allowed under Section 139(2) was at
the relevant time not only liable to pay interest but also penalty under
Section 271 and fine under Section 276.
In
this context, the question whether a belated application could be regarded as
valid or not has to be considered. As rightly pointed out by the Punjab and Haryana
High Court while deciding these cases under Section 256(2) and by the Calcutta
High Court in Sunderdas Thackersay & Bros. (Supra), there are no words of
limitation in Section 139(2) to the effect that no application could be filed
after the period allowed had expired. As we have stated earlier, it was a
procedural provision. The limit of thirty days was not intended to be final as
discretion was given to the I.T.O. to extend that date. The I.T.O. could have
been called upon to exercise that discretion for proper reasons.
No
fetters were placed upon the discretion of the I.T.O. as regards the number of
times he could extend the date or the period for which he could extend it. It
is conceded that repeated applications could be made within the time allowed,
in view of the clear indication to that effect in Form No.6, by the use of
words "it has not been possible". If it was intended that the
application for extension of time under Section 139(2) was to be made within
the time allowed originally or within the extended time then the words "it
has not been possible" were not at all necessary and the words "it is
not possible" would have been sufficient.
Though
the rule cannot affect, control or derogate from the section of the Act, so
long as it does not have that effect, it has to be regarded as having the same
force as the section of the Act. If Section 139(2) is read alongwith Rule 13
and Form No.6 it becomes clear that an application for extension could be made
even after the period allowed originally or as a result of extension granted
had expired.
Keeping
in mind the object of giving discretion to the I.T.O. and the consequences that
were to follow from not filing the return within time, we see no justification
for reading into the section any limitation to the effect that no application
could be made after the time allowed had expired. We see no good reason to
construe the section so narrowly.
We
cannot accept the contention raised on behalf of the Revenue that the word
`extend' in the proviso to Section 139(2) implies that at the time of making
the application the time allowed should not have expired. Though the Civil
Procedure Code by itself does not apply to the proceedings under the Income Tax
Act, we see no reason why a principle of procedure evolved for doing justice to
a party to the proceeding cannot be called in aid to while interpreting a
procedural provision contained in the Act. Section 148 of the Code provides
that where any period is fixed or granted by the Court for the doing of any act
prescribed or allowed by the Code, the Court may, in its discretion, from time
to time, enlarge such period, even though the period originally fixed or
granted may have expired. Various situations can be envisaged where a party to
the proceeding is prevented by circumstances beyond his control from doing the
required act within the fixed period. The assessee may be able to point out
that because of a sudden death in the family or because he had to leave for an
outside place all of a sudden or because he could not return from outside in
spite of his best efforts, or for other good reasons, as the case may be, he
was not able to file the return within time. This Court while dealing with the
power of the Court under Section 148 observed as under in the case of Mahanth
Ram Das vs. Ganga Das AIR 1961 SC 882:
"The
procedural orders though peremptory (conditional decrees apart) are in essence,
in terrorem, so that dilatory litigants might put themselves in order and avoid
delay. They do not, however, completely estop a Court from taking note of
events and circumstances which happen within the time fixed." This Court
further observed that Section 148 clothes the Court with ample power to do
justice to a litigant if sufficient cause is made out for extension and that an
order extending time for payment, though passed after the expiry of the time
fixed, could operate from the date on which the time fixed expired.
The
learned counsel for the Revenue strongly relied upon the decision of the Andhra
Pradesh High Court in T. Venkata Krishnaiah and Co. vs. C.I.T. 93 ITR 297
wherein it has been held that it is not open to the assessee to file an
application beyond the period within which he was required to file his return
as per the notice under Section 139 and submitted that it deserved to be
accepted as laying down the correct law on the point. In that case one of the
questions which was referred to the High Court for its opinion was whether the
Income Tax Officer should be deemed to have granted extension of time for filing
the return when he did not pass any orders on the assessee's belated
application? The High Court held:
"There
is no provision in the Act or the rules made there under which requires the
Income-tax Officer to pass an order on an application filed by an assessee
subsequent to the time given to him for filing his return pursuant to a notice
under sub-section (2) to Section 139. ... We may add that there is no scope for
presuming or assuming that an application filed by an assessee for extension of
time must have been granted in its favour when no order has been passed on its
application by the Income-tax Officer. There is no scope for such a presumption
or deeming provision in a taxing statute. The Income-tax Act is a
self-contained code. The provisions of the Act and the Rules made there under
must specifically provide for such a deeming provision. Otherwise, the assessee
cannot claim any advantage or derive benefit when the Income-tax Officer did
not pass any order on its application filed beyond the time within which it was
required to furnish its return." The High Court also observed that as the
application for extension of time was not received by the Income-tax Officer
within time, he was not bound to pass any order thereon. It also observed that
it was not open to the assessee to file an application beyond the period within
which it was required to file its return as per the notice under Section 139.
We do not think that High Court was right in holding that it was not open to
the assessee to file an application beyond the period within which he was
required to file his return. What appears to have weighed with the High Court
while taking that view is the absence of any specific provision in the Act or
the rules permitting the assessee to file such an application. For various
reasons the Legislature may not make provisions in detail in matters of
procedure to be followed. It may rest with conferring discretionary power upon
the Court or the authority and leave it to the court or that authority to
exercise that power in its discretion as deemed proper and just depending upon
the facts and circumstances of each case. Whether a particular thing could be
done or not in absence of a specific provision to that effect would depend upon
the object of that provision and other relevant factors like the consequences
which may follow if it is held that it cannot be done. From mere absence of a
specific provision authorising the I.T.O. to entertain an application made
beyond time it was not proper to hold that it was not open to the assessee to
make an application under Section 139(2) for extension of time after the time
allowed had expired and that such an application could not be entertained by
the I.T.O. If an application could be made even after the time allowed had expired
it became the duty of the I.T.O. either to grant it or reject it. Once the assessee
called upon the upone I.T.O. to exercise his discretion it was not open to him
to ignore that request and not to pass any order thereon. In our opinion, the
Andhra Pradesh High Court did not correctly interpret the proviso to Section
139(2).
The Patna
High Court in C.I.T. vs. S.P. Viz Construction Co. 165 ITR 732 has also, in the
context of Section 139, held that "any application filed after the due
date for filing the return loses all its sanctity." If the assessee made
an application for extension of time after the expiry of the time allowed then
the Income Tax Officer was not bound under the provisions of the Income Tax Act
or the rules made thereunder to pass any order thereon. The Patna High Court
has only followed the decision of the Andhra Pradesh High Court in the case of
T. Venkata Krishnaiah and Co. (supra). In Assam Frontier Veneer and Saw Mills vs. C.I.T. 104 I.T.R. 479, to which our
attention was drawn by the learned counsel for the Revenue, the Gauhati High
Court held that "the Income-tax Officer is not obligated to take into
consideration an application for extension of time filed by an assessee in
accordance with Form No.6, rule 13 of the Income-Tax Rules, 162, even when it
is admittedly submitted long after the due date for filing the return, unless
there be prima facie valid grounds taken therein, explaining the reasons for
the delay." The Gauhati High Court referred to the decision of the Andhra
Pradesh High Court in T. Venkata Krishnaiah and Co. (supra) and observed that
it was in agreement generally with the observation made therein while answering
the question whether the Income-tax Officer should be deemed to have granted
extension of time for filing the return when he did not pass any orders on the assessee's
belated application and particularly with the one stating "that it is the
duty of an assessee to file his application for extension of time before the
expiry of the due date of his return". Having said so the Gauhati High
Court observed that "On the other hand, we also do not see that the
Income-tax Officer would cease to have any power, under this proviso, to
exercise his discretion to grant extension of time upon a belated application,
provided it is filed before the essessment order." From a close reading of
that decision it becomes clear that it does not support the contention now
raised before us by the learned counsel for the Revenue. What it has really
held is that the proviso did not oblige the Income-tax Officer to consider an
application for extension, however, belatedly it might have been made and pass
an order thereon, even when it had been made long after the due date of
submission of the return.
We
hold that the view taken by the Punjab and Haryana High Court in these cases
and by the Calcutta High Court in Sunderdas Thackersay & Bros. vs. C.I.T.
137 ITR 646 is correct and the contrary view taken by the Andhra Pradesh High
Court in T. Venkata Krishnaiah and Co. vs. C.I.T. 93 ITR 297, Guhati High Court
in Assam Frontier Veneer and Saw Mills vs. C.I.T. 104 ITR 479 and the Patna
High Court in C.I.T. vs. S.P. Viz Construction Co. 165 ITR 732 is not correct.
The applications made by the assessees under Section 139(2) for extension of
time after the expiry of the time allowed were maintainable and, therefore,
valid. We, therefore, dismiss the appeals but pass no order as to costs.
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