A notice under Section 143(2) of the Income Tax Act, 1961 is under challenge in the present writ petition.
Learned Additional Advocate General appearing for the petitioner submits that, the impugned notice is barred by the limitation prescribed under
Section 143 of the Act of 1961. In support of his contentions, he relies upon (2008) 307 ITR 53 (Commissioner of Income Tax Versus Sohan Lal
Chajjan Mal). He seeks leave to file a supplementary affidavit. Supplementary affidavit filed in Court today be taken on record.
Learned Advocate appearing for the revenue submits that, the initial return filed by the petitioner was defective and the same was corrected
subsequently. The impugned notice was issued within the prescribed period of limitation under Section 143 of the Act of 1961 taking the date of
limitation to commence from the date of rectification of the return.
It would be appropriate to permit the parties to file affidavits.
Learned Advocate for the revenue submits that, the respondents do not wish to file any affidavit.
In such circumstances, the writ petition is taken up for final hearing.
 Learned Additional Advocate General appearing for the petitioner draws the attention of the Court to the impugned notice under Section 143(2) of
the Act of 1961. He submits that, the return of the petitioner was filed on October 14, 2016. The same was a valid return. At no stage subsequent
thereto did the department consider such return to be invalid. He draws the attention of the Court to the letter dated February 6, 2017 issued under
Section 139(9) of the Act of 1961. He submits that, the department treated the return to be valid and required the petitioner to rectify the defects
noted in such notice. In response, the petitioner stated that, there was no defects requiring any rectification. He refers to the response of the petitioner
dated February 19, 2017 in this regard. He submits that, the department issued a second notice under Section 139(9) of the Act of 1961 on July 10,
2017. The petitioner responded thereto on July 21, 2017. The petitioner did not file anything new pursuant to such notice. He refers to the averments
made in paragraph 2 of the writ petition. He submits that, such averment remains uncontroverted with the department choosing not to file any
affidavit. Therefore, according to him, the return filed by the petitioner on October 14, 2016 is a valid return. The period of limitation prescribed under
Section 143(2) of the Act of 1961 expired on September 30, 2017. The impugned notice dated August 8, 2018 therefore, being beyond the period of
limitation should be quashed. In support of his contention that, the period of limitation under Section 143(2) of the Act of 1961 should be reckoned from
the date of filing of the initial return being October 14, 2016, he relies upon Sohan Lal Chhajan Mal (supra). He submits that, a Special Leave Petition
carried against Sohan Lal Chhajan Mal (supra) was dismissed by the Hon’ble Supreme Court on merit on July 21, 2008. He submits that, Sohan lal
Chhajan Mal (supra) relies upon a decision of the Hon’ble Division Bench of the Calcutta High Court reported in (1986) 162 ITR 652
(Commissioner of Income Tax Versus Bharat Refineries Ltd.). Therefore, he submits that, the impugned notice should be quashed.
Learned Advocate appearing for the revenue relies on the contents of the letter dated September 6, 2018 issued by the department. He submits that,
the department required the petitioner to remove the defects. The last of the notices requesting for removal of such defect was issued on July 10,
2017. The response of the petitioner thereto was on July 21, 2017. Therefore, the period of limitation under Section 143(2) of the Act of 1961 should
be considered to be ending on September 30, 2018. The impugned notice is, therefore, within the period of limitation. The writ Court, therefore, should
not intervene.
The petitioner is an assessee under the Income Tax Act, 1961. It filed a return for the assessment year 2016-2017 on October 14, 2016. The petitioner
suffered a notice under Section 139(9) of the Act of 1961 on February 6, 2017. Such notice of the department does not treat the return filed by the
petitioner on October 14, 2016 as invalid. It requires the petitioner to remove the defects found in the return. The defects are specified. The petitioner
responded thereto by a writing dated February 19, 2017 contending that, there are no defects as alleged in the notice dated February 6, 2017. The
petitioner did not file any corrected return as according to the petitioner, the initial return did not contain any defect. The department issued a second
notice dated July 10, 2017 under Section 139(9) of the Act of 1961. Again, the petitioner responded thereto by contending that, there was no defect in
the return warranting correction. The petitioner did not file any return consequent upon the request for correcting the defects as made by the two
notices dated February 6, 2017 and July 10, 2017. Such is the statement made in paragraph 2 of the writ petition. The petitioner states in such
paragraph that, no revised return was filed by the petitioner. This averment of the petitioner remains uncontroverted by the department with the
department choosing not to file any affidavit despite an opportunity to file affidavit being afforded to the department.
The relevant provisions of the Income Tax Act, 1961 for the purpose of decision of the instant case are Section 139(9) and Section 143(2). They are
as follows:
“139(9) Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the
assessee and give him an opportunity to rectify the effect within a period fifteen days from the date of such intimation or within such further period
which, on an application made in this behalf, the Assessing Officer may, in his discretion, allow; and if the effect is not rectified within the said period
of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the
return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return:
Explanation.- For the purpose of this sub-section, a return of income shall be regarded as defective unless all the following conditions are fulfilled,
namely:-
(a) the annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income,
computation of gross total income and total income have been duly filled in;
(b) the return is accompanied by a statement showing the computation of the tax payable on the basis of the return;
(bb) the return is accompanied by the report of the audit referred to in section 44AB, or, where the report has been furnished prior to the furnishing of
the return, by a copy of such 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 the advance tax and tax on self-assessment, if any, claimed to have been
paid:
(ii) the amount of compulsory deposit, if any, claimed to have been made under the Compulsory Deposit Scheme (Income-tax Payment Act, 1974 (38
of 1974);
(d) Where regular books of account are maintained by the assessee, the return is accompanied by copies of â€
(e ) Where the accounts of the assessee have been audited, the return is accompanied by copies of the audited profit and loss account and balance-
sheet and the auditor’s report and, where an 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 the assessee, the return is accompanied by a statement indicating the amounts of turnover
or, as the case may be, gross receipts, gross profit, expenses and net profit of the business or profession and the basis on which such amounts have
been computed, and also disclosing the amounts of total sundry debtors, sundry creditors, stock-in-trade and cash balance as at the end of the previous
year:â€
143(2) Where a return has been furnished under Section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or
the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understand the
income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date
to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any
evidence on which the assessee may rely in support of the return:
Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in
which the return is furnished.
The Act of 1961 requires an assessee to file a return. Such return can be revised at the instance of the assessee under Section 139(9) of the Act of
1961 if the assessee is of the view that, there are errors requiring such revision. However, the assessee must file the revised return before the
completion of the assessment of such return. Section 139(9) of the Act of 1961 allows the Assessing Officer to require the assessee to correct any
defect noticed in the return filed. If the assessee does not correct the defects required, within the time granted or the extended time, then the
department can treat the return as an invalid and consequences laid down under the Act of 1961 for failing to file a return stand attracted. In both the
two cases, the initial return has to be a valid return. There is a distinction between a valid and invalid return under the Act of 1961. A valid return
brings into its wake various consequences both for the assessee and the department. An invalid return on the other hand, does not clothe the
department with such consequences as a valid return. An invalid return will have consequences for the assessee. An invalid return is treated as non-
existent in the eye of law. Correcting an invalid return therefore, under Section 139(9) of the Act of 1961 by filing a revised return does not arise as
the initial return, if invalid, will not permit its revision or correction. A valid return is allowed to be revised or corrected.
Sohan Lal Chhajan Mal (supra) notices distinction between a valid and invalid return. It goes on to hold, a valid return can be allowed to be revised or
the defects pointed out therein corrected. This view expressed in Sohan Lal Chhajan Mal (supra) was found to be correctly in law by the Hon’ble
Supreme Court in its order dated June 21, 2008.
In the facts of the present case, the initial return was filed on October 14, 2016 with the department treating the same to be a valid return and
requiring the petitioner to correct the defects therein. According to the petitioner, there were no defects in the return filed requiring correction. Despite
such stand taken by the petitioner, the department did not treat the assessee to have failed to correct the defects pointed out under Section 139(9) of
the Act of 1961 and treated the return of the assessee as invalid and the assessee to have failed to file its return for the relevant assessment year.
Therefore, in terms of Section 143(2) of the Act of 1961, the time period prescribed therein expired on September 30, 2017 for the department to
invoke such provisions. The impugned notice is dated August 8, 2018 and is beyond the prescribed period of limitation.
In such circumstances, the impugned notice is without jurisdiction.
Therefore, the same is quashed.
WP No.21966(W) of 2018 is disposed of accordingly.
No order as to costs.
Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance of the requisite formalities.
