Advocate Sameer Bhatia
The `Budget’ as the expression suggests sparks the introduction of multitudinous fiscal allocations and assignments through the touchstone of myriad sectors paving way for economic solidity and sanity. Having promulgated the exemplary streak of proposals tabled before the Parliamentarians besides the citizenry at large, debates seems to have made deep inroads into the mindsets of those who are leaned to be made a subject thereof.The Finance Bill, 2016 (Budget) as mooted on 29th February, 2016 by the Hon’ble Finance Minister Sh.Arun Jaitely contains plethora of amendments facilitating an impressionable score on the footprints of direct and indirect stream of taxes and levies. Chapter III of the said bill caters to the proposals on Direct Taxes with about 112 Clauses leading the frontal scene besides Chapter IV dealing with the incidence of Indirect Taxes. By inaugurating schematic proposals in the Finance Bill on the path of Direct Taxes, there seems to be a titanic transmutation of sections with many of them facing Amendments apart from assorted Insertions and Substitutions. One such amendment which pierces the return filing machinery provided under section 139 of the Income Tax Act, 1961 is the surrounding tenet of facilitating the revision of Belated Return filed under section 139(4) of the Income Tax Act, 1961 read with section 139(5) of the Act dealing with the apparatus of Revised Return.
In reference of Clause 65 of Chapter III leading the cause of Direct Taxes with effect from the 1st day of April, 2017,there stands a consequential amendment and substitution of sub-section (4) of Section 139 dealing with the channel of filing belated return. A return not tabulated and indexed to the filed with the Income Tax department. The new sub section (4) as will now be understood to be read as under:-
(a) For sub-section (4), the following sub section shall be substituted, namely:-
“(4) Any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.”
The said substitution effects a change in letter and spirit to the aged provision which previously read as under:-
Sub-Section (4) of the said section provides that any person who has not furnished a return within the time allowed to him under sub –section (1), or within the time allowed under a notice issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of relevant assessment year or before the completion of the assessment, whichever is earlier.
The conspicuous change affecting the belated filing is the aspect of limitation governing the conduct of such return. Earlier the stipulating criteria was boundless in terms of its temperament as the same could be filed beyond the relevant assessment year or before the completion of the assessment which ever falls earlier. As per the coherent submissions of Finance Bill, the manifest intrusion sitting over the limiting factor decisively tackling the issue of filing belated return of income is the very restrictive scope of such filing i.e.at any time before the end of relevant assessment year or before the completion of assessment,whichever is earlier thereby causing an intelligible inference of reducing the compliance burden of encroaching upon the year beyond the assessment year and strengthening the recovery mechanism by stepping into the shoes of assessment at the earliest. The amendment clearly highlights the limitation of preferring a belated return under section 139(4) of the Income Tax Act, 1961 through notified modes as preponed and consequentially abridged and shortened. It will also be pertinent to cite a verdict of the Hon’ble Supreme Court of India in a case titled Esthuri Aswathiah vs. Income Tax Officer (1961) 41 ITR 539 (SC) wherein it got settled, `A return furnished after the completion of the assessment for the year could not be considered to be a valid return and cannot be entertained.Thus the time stipulated for in the newly metered provision must be followed religiously in letter and spirit.
Another substitution also comes in sub-section (5) of Section 139with effect from 01st April, 2017 facilitating the revision of returns preferred belatedly under diverse modes available. The newly crafted sub-section (5) as proposed in the Finance Bill, 2016 reads as under:-
`If any person, having furnished a return under sub-section (1) or sub-section (4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.’
On a brief dissection of the above said provision, it becomes writ apparent that the intent giving way to substitution of new sub-section (5) is to enable the filing of revised return pursuant to filing of belated return of Income under the canons of Finance Bill, 2016. The aged sub-section (5) of section 139 as it previously stood can be referred to as under:-
`Sub-Section (5) of the said section provides that if any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142 discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the completion of the assessment, whichever is earlier.
It is discernible from the above said substitution of the newly crafted sub-section (5) of section 139 of the Income Tax Act, 1961 that the enduring arrangement clearly stipulates sub-section (4) within its realm thereby preaching an untrammelled and unfettered right of revising return of income even in a circumstance of having filed belated return under section 139(4). However the same will be subject to the confliction between the expressions`At any time before the expiry of one year from the end of the relevant assessment year OR Before the completion of the assessment whichever is earlier.’The said amendment is also worthy of the very fact that it overrides and nullifies the verdict of the Hon’ble Supreme Court of India in a case titled as Kumar Jagdish Chandra Sinha vs. Commissioner of Income Tax (1996) 220 ITR 67, 75, 74 (SC)whereby setting at rest the controversy on the issue, the Supreme Court had ruled no revised return can be filed under section 139(5) in a case where the return is filed under section 139(4). In other words, a person who filed a return under section 139(4) is not entitled to file a revised return under section 139(5) of the Income Tax Act, 1961.
It will also be of great significance to highlight the tenable circumstances adhering to the cognizance of latest return despitemultiple returns preferred under section 139(4)of the Income Tax Act, 1961 and placed on record. In this connection, various judicial foras had settled, `If an assessee, after having filed a return under section 139(4), files another return, it is to be assumed that he has given a go-by to the return filed previously and so far as he is concerned, the return filed subsequently is the correct and the proper return. In furtherance, where the assessing authority accepts the return filed subsequently and proceeds to assess the assesse on the strength of such return without encountering any objection from the assesse, it would not be open to the assesse to contend later on that the return filed subsequently was of no consequence and be declared as invalid thereby postulating no cognizance over the same.Reference can be made to Mst.Zulekha Begum vs. Commissioner of Income Tax (1981) 129 ITR 560, 568-69 (Calcutta), relying upon GurdarshanKaur vs. Commissioner of Income Tax (1964) 51 ITR 1 (Punjab) and Malik Damsaz Khan vs. Commissioner of Income Tax (1947) 15 ITR 445 (PC).
On a thoroughanalysis of the above amendment in section 139(5) of the statute, another thought provoking consideration comes to mind that departmental authorities used to infer the inherent element of penalty in cases where the assesse filed revised return under section 139(5) pursuant to a belated return under section 139(4). Such punitive measure was invoked to press the claim of infraction and transgression on the very strength that Belated return filed under section 139(4) cannot be revised under Section 139(5).Any inflated element of income deposed in the revised return though voluntarily used to be negated under the aegis of such a return being non-est and invalid in eyes of law. Though such a proposition was countered by a variety of verdicts pronounced by Hon’ble Judicial foras acting in the aid of Constitution, still the department used to exploit the grey area and pressed its claim for levying of penalty under the penal provisions. Though at various pedestals, it got settled that where revised return was made by the assesse on his own volition and belief even before and prior to the very act of concealment getting detected in the course of assessment proceedings and on consideration of the conduct of the assesse right from the inception to the filing of the revised return, the revised return had the incidence of reducing and mitigating the default of increased and jumped income.
Hon’ble Supreme Court of India in Commissioner of Income Tax vs. S.RamanChettiar (1965) 55 ITR 630 SC)settled in another path breaking verdict of the then prevalent statutory verse under section 139(4) as, `The then section 139(4)(a) provided that even if a person liable to furnish return of income has defaulted, and has not furnished a return within the time allowed wither under the then section 139(1),or the then section 139(2), as the case may be, the assesse might, nevertheless (unless assessment has already been made) submit a voluntary return at any time before the expiry of the limitation period referred to in the then section 139(4)(b), which is identical to the period prescribed in section 153(1)(a) for completion of the assessment for the relevant assessment year. If a person filed such voluntary return, before the end of the limitation period abovesaid or the making of the assessment, whichever was earlier, his return was to be considered at the time of making the assessment of his total income. Further references in the above said matter can be construed with regard to the righteous verdicts pronounced by myriad forasas being D.V.Patel& Co vs. CIT (1975) 100 ITR 524 (Guj), CIT vs. Surajpal Singh (1977) 108 ITR 746 (All), CIT vs. Swadeshi Sugar Suppliers Pvt. Ltd (1984) Tax LR 705 (Cal), M.V.PavadaiChettiar Sons vs. State of Madras (1968) 21 STC 67 (Madras), CIT vs. Utkal Agency (1977) 107 ITR 423 (Orissa), Qammar-ud-din & Sons vs. CIT (1981) 129 ITR 703 (Delhi), J.P.Sharma& Sons vs. CIT (1985) 151 ITR 333 (Rajasthan), CIT vs.Rajendra Prasad Gupta (1996) 220 ITR 558, 560 (Patna), H.K.Traders vs. CIT (1998) 149 CTR (MP) 374, 375-76, ITAT vs. S.Swamy Krishna Iyer (1974) Tax LR 924 (Kerala).
Going by the narratives and thorough examination of paramount amendments carved through substitution of existing provisions contained in section 139(4) and 139(5) of the Income Tax Act, 1961, the entire revision machinery appears to have been overhauled with dominant focus on self-declaration, self-assessment, speedyrecovery and reduced compliance burden. Having introduced draconian provisions under the newly inserted section 270A dealing with the element of penalty for under-reporting and misreporting of income, the provision of filing revised return under the newly staged revision lawcontained in section 139(5) read with section 139(4) of the Income Tax Act, 1961, will certainly and surely charm the interest of assesse in furnishing revised and impeccable particulars of return free from the chagrin and blot of any penalty that might operate from whatever corner of the statute provided the filing is voluntary and confirms to the limitation mandates. The time constraint for filing belated return has now been preponed and the same can be subjected to revision under the benevolent and tolerant parasol of tax friendly governance. In all, the entire revision machinery can now be tagged as a matured step in the non-adversarial tax regime.
(Article by – Advocate Sameer Bhatia, R/o, 158/2, Guru Teg Bahadur Nagar, Opposite Mata Gujri Park, Jalandhar – 144003, Punjab Contact Nos:- 9041304900 Email Address: firstname.lastname@example.org)