Assessment Defective Return When Can Be Treated as Invalid Return—Recent Supreme Court Decision

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers Income Tax--Assessment Defective Return When Can Be Treated as Invalid Return--Recent Supreme Court Decision Akhilesh Kumar Sah It is the duty of the assessing officer to give notice to the assessee for removing defect(s), if any, found in the return furnished by him. If the assessee does not remove such defect(s) the return furnished may be treated as invalid. The author also points out the outcome of the decision that taking course to reassessment is not allowed merely on the basis of change of opinion and it is a settled law. 1. Introduction In a recent case, Mangalam Publications v. CIT (Civil Appeal No. 8580-8582 with Ors. of 2011) decided by the Supreme Court of India on 23-1-2024, Supreme Court has extracted that the wrong reassessment was tried as well as no declaration was made by Assessing Officer(AO) that return filed for captioned years was defective. The perennial question in income tax jurisprudence that whether reopening of a concluded assessment, i.e., reassessment under section 147 of the Act following issuance of notice under section 148 of the Act was legally sustainable or bad in law, again came before the Supreme Court in the above mentioned case. The Income Tax Appellate Tribunal, Cochin Bench, Cochin (for short, 'ITAT') decided in favour of the assessee by setting aside the orders of reassessment. The High Court of Kerala in appeals filed by Revenue under section 260A of the Act reversed the findings of ITAT by deciding the appeals preferred by Revenue in its favour. The civil appeals pertained to assessment years 1990-91, 1991-92 and 1992-93. 2. Facts of the above mentioned case in brief The assessee, being a partnership firm at the relevant point of time though it got itself registered as a company since the assessment year 1994-95, was carrying on the business of publishing newspaper, weeklies and other periodicals in several languages under the brand name 'Mangalam'. Prior to assessment year 1994-95 including assessment years under consideration, the status of the assessee was that of a firm, being regularly assessed to income-tax. AO worked out the escaped income for the three assessment years 1990-91, 1991-92 and 1992-93 at Rs.50,96,041. This amount was further apportioned between the three assessment years in proportion to the sales declared by the assessee in the aforesaid assessment years as under: SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Assessment

Defective Return When Can Be Treated as Invalid Return--Recent Supreme Court Decision

Akhilesh Kumar Sah

It is the duty of the assessing officer to give notice to the assessee for removing defect(s), if any, found in the return furnished by him. If the assessee does not remove such defect(s) the return furnished may be treated as invalid. The author also points out the outcome of the decision that taking course to reassessment is not allowed merely on the basis of change of opinion and it is a settled law.

1. Introduction

In a recent case, Mangalam Publications v. CIT (Civil Appeal No. 8580-8582 with Ors. of 2011) decided by the Supreme Court of India on 23-1-2024, Supreme Court has extracted that the wrong reassessment was tried as well as no declaration was made by Assessing Officer(AO) that return filed for captioned years was defective.

The perennial question in income tax jurisprudence that whether reopening of a concluded assessment, i.e., reassessment under section 147 of the Act following issuance of notice under section 148 of the Act was legally sustainable or bad in law, again came before the Supreme Court in the above mentioned case. The Income Tax Appellate Tribunal, Cochin Bench, Cochin (for short, 'ITAT') decided in favour of the assessee by setting aside the orders of reassessment. The High Court of Kerala in appeals filed by Revenue under section 260A of the Act reversed the findings of ITAT by deciding the appeals preferred by Revenue in its favour. The civil appeals pertained to assessment years 1990-91, 1991-92 and 1992-93.

2. Facts of the above mentioned case in brief

The assessee, being a partnership firm at the relevant point of time though it got itself registered as a company since the assessment year 1994-95, was carrying on the business of publishing newspaper, weeklies and other periodicals in several languages under the brand name 'Mangalam'. Prior to assessment year 1994-95 including assessment years under consideration, the status of the assessee was that of a firm, being regularly assessed to income-tax.

AO worked out the escaped income for the three assessment years 1990-91, 1991-92 and 1992-93 at Rs.50,96,041. This amount was further apportioned between the three assessment years in proportion to the sales declared by the assessee in the aforesaid assessment years as under: