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PETITIONER: COMMISSIONER OF INCOME TAX,JULLUNDUR

       Vs.

RESPONDENT: AJANTA ELECTRICALS, PUNJAB

DATE OF JUDGMENT02/05/1995

BENCH: NANAVATI G.T. (J) BENCH: NANAVATI G.T. (J) JEEVAN REDDY, B.P. (J)

CITATION:  1995 AIR 2172            1995 SCC  (4) 182  JT 1995 (7)   429        1995 SCALE  (3)336

ACT:

HEADNOTE:

JUDGMENT: (WITH C.A. NOS.2499-2501 of 1977)           J U D G M E N T NANAVATI, J.      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

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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 thereunder  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

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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,

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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

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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 thereunder  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      thereunder 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

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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.