In a significant ruling, the Supreme Court of India dismissed the appeal of M/s Shriram Investments, reinforcing the limitations imposed by Section 139(5) of the Income Tax Act, 1961. The judgment, delivered by a bench comprising Justice Abhay S. Oka and Justice Augustine George Masih, reaffirmed that the Assessing Officer lacks jurisdiction to consider claims made in a revised income tax return filed after the statutory time limit.
Background of the Case
The appellant, M/s Shriram Investments, had filed a return of income on November 19, 1989, for the assessment year 1989-90. Subsequently, two revised returns were filed, one on October 31, 1990, and another on October 29, 1991. The second revised return, being beyond the time limit specified under Section 139(5), was not considered by the Assessing Officer, prompting the appellant to challenge this decision.
The Commissioner of Income Tax (Appeals) [CIT (Appeals)] upheld the Assessing Officer’s decision, dismissing the appeal on July 21, 1993, on the grounds that the revised return was time-barred. Dissatisfied, the appellant approached the Income Tax Appellate Tribunal (ITAT), which partially allowed the appeal by remanding the matter back to the Assessing Officer for reconsideration of the appellant’s claim for the deduction of deferred revenue expenditure. However, the High Court of Madras set aside the ITAT’s order, ruling that no claim could be entertained based on a time-barred return. M/s Shriram Investments subsequently moved the Supreme Court.
Legal Issues Involved
At the heart of the case was the interpretation of Section 139(5) of the Income Tax Act, 1961, which outlines the conditions for filing revised returns. Specifically, the provision allows a revised return to be filed if an omission or wrong statement is discovered in the original return. However, this can only be done within a year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.
The appellant argued that the ITAT, in its appellate capacity, was empowered to direct the Assessing Officer to consider the claim, even though the revised return was time-barred. The respondent, Commissioner of Income Tax, Chennai, contended that once the revised return was barred by limitation, the Assessing Officer had no authority to entertain any claims arising from that return.
Supreme Court’s Decision
The bench, after considering the submissions, sided with the respondent. Justice Abhay S. Oka, delivering the judgment, observed:
“The Assessing Officer had no jurisdiction to consider the claim made by the assessee in the revised return filed after the time prescribed by Section 139(5) for filing a revised return had already expired.”
The Court further clarified that the power of the ITAT under Section 254 of the Income Tax Act did not extend to directing the Assessing Officer to consider a time-barred claim. The judgment cited the case of Goetzge (India) Ltd. v. Commissioner of Income Tax, wherein the Supreme Court had previously ruled that claims made by an assessee after the filing deadline cannot be entertained unless in strict adherence to the provisions of the Income Tax Act.
The appellant’s reliance on the Supreme Court’s decision in Wipro Finance Ltd. v. Commissioner of Income Tax was found to be misplaced. The Court distinguished the facts, pointing out that Wipro Finance dealt with the appellate powers of the ITAT, which are broader than those of the Assessing Officer. Moreover, in the Wipro Finance case, the department had raised no objection to the fresh claim made by the assessee.
Important Observations
In affirming the dismissal of the appeal, the Court made crucial observations regarding the jurisdiction of tax authorities:
“The assessing officer cannot entertain any claim made by the assessee otherwise than by following the provisions of the IT Act.”
The bench further emphasized that while the ITAT possesses plenary powers under Section 254, such powers cannot be used to bypass statutory limitations on the Assessing Officer’s jurisdiction.
Parties and Legal Representation
– Appellant: M/s Shriram Investments
– Respondent: Commissioner of Income Tax III, Chennai
– Case Number: Civil Appeal No. 6274 of 2013
– Judges: Justice Abhay S. Oka and Justice Augustine George Masih
– Appellant’s Counsel: Senior Advocate representing the appellant relied heavily on precedents such as Wipro Finance Ltd. v. Commissioner of Income Tax.
– Respondent’s Counsel: The Additional Solicitor General (ASG) argued based on established precedents like Goetzge (India) Ltd. v. Commissioner of Income Tax.
