Date of the Judgment: October 4, 2024
Citation: 2024 INSC 760
Judges: Abhay S. Oka, J., Augustine George Masih, J.
Can an assessing officer consider a claim made in a revised income tax return if that return was filed after the statutory time limit? The Supreme Court of India recently addressed this question in a case concerning the Income Tax Act, 1961. The court held that assessing officers cannot consider claims made in revised returns filed after the deadline specified in the law. This judgment clarifies the limitations on revising income tax returns and reinforces the importance of adhering to statutory timelines. The judgment was delivered by a two-judge bench comprising Justice Abhay S. Oka and Justice Augustine George Masih, with Justice Oka authoring the opinion.
Case Background
The case involves M/s. Shriram Investments (the appellant), who filed an income tax return for the assessment year 1989-90 on November 19, 1989, under the Income Tax Act, 1961 (IT Act). They subsequently filed a revised return on October 31, 1990, and paid the necessary tax as per the intimation under Section 143(1)(a) of the IT Act, issued on August 27, 1991. On October 29, 1991, the appellant filed another revised return, which the assessing officer did not acknowledge. This led the appellant to appeal to the Commissioner of Income Tax (Appeals) [CIT(Appeals)].
The CIT(Appeals) dismissed the appeal on July 21, 1993, citing Section 139(5) of the IT Act, which stipulates that a revised return filed after the prescribed time limit is not valid. The appellant then appealed to the Income Tax Appellate Tribunal (the Tribunal), which partly allowed the appeal by remanding the case back to the assessing officer to consider the appellant’s claim regarding the deduction of deferred revenue expenditure. The respondent department then appealed to the High Court of Judicature at Madras, which set aside the Tribunal’s order, stating that once the revised return was time-barred, there was no provision to consider the appellant’s claim.
Timeline
| Date | Event |
|---|---|
| November 19, 1989 | Appellant filed original income tax return for assessment year 1989-90. |
| October 31, 1990 | Appellant filed first revised income tax return. |
| August 27, 1991 | Intimation issued under Section 143(1)(a) of the IT Act, and appellant paid tax. |
| October 29, 1991 | Appellant filed second revised income tax return. |
| July 21, 1993 | CIT(Appeals) dismissed the appeal, citing Section 139(5) of the IT Act. |
| Unknown Date | Income Tax Appellate Tribunal partly allowed the appeal. |
| Unknown Date | High Court of Judicature at Madras set aside the Tribunal’s order. |
| October 4, 2024 | Supreme Court dismissed the appeal. |
Course of Proceedings
The appellant initially filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(Appeals)], which was dismissed on the ground that the revised return filed on October 29, 1991, was barred by limitation under Section 139(5) of the IT Act. The appellant then appealed to the Income Tax Appellate Tribunal (the Tribunal). The Tribunal partly allowed the appeal, remanding the case to the assessing officer to consider the deduction of deferred revenue expenditure. The respondent department appealed to the High Court of Judicature at Madras, which overturned the Tribunal’s decision, holding that the assessing officer had no jurisdiction to consider the claim after the revised return was time-barred.
Legal Framework
The core legal provision at issue is Section 139(5) of the Income Tax Act, 1961. This section deals with the filing of revised income tax returns. At the time of the case, it stated:
“(5) 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 expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier: Provided that where the return relates to the previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year.”
This section allows taxpayers to correct errors or omissions in their original returns by filing a revised return within a specified time frame. The time limit was either one year (or two years for assessment years before April 1, 1988) from the end of the relevant assessment year or before the completion of the assessment, whichever was earlier. The Supreme Court interpreted this provision strictly, emphasizing that once this time limit expires, the assessing officer loses the authority to consider any claims made in a late revised return.
Arguments
Appellant’s Arguments:
- The appellant’s counsel argued that the Income Tax Appellate Tribunal (the Tribunal) did not direct consideration of the revised return itself, but rather directed the assessing officer to consider the claim for deduction of deferred revenue expenditure in accordance with law.
- The appellant contended that they were entitled to make a claim during the assessment proceedings, even if it was omitted from the original return.
- The appellant relied on the Supreme Court’s decision in Wipro Finance Ltd. v. Commissioner of Income Tax [2022 (137) taxmann.com 230 (SC)], arguing that the Tribunal has the power to consider fresh claims.
Respondent’s Arguments:
- The respondent’s counsel argued that, based on the Supreme Court’s decisions in Goetzge (India) Ltd. v. Commissioner of Income Tax [(2006) 157 Taxman 1 (SC)] and Principal Commissioner of Income Tax & Anr. v. Wipro Limited [(2022) 446 ITR 1], once the revised return was barred by limitation, there was no basis for considering the deduction claim made in that return.
- The respondent submitted that the High Court was correct in concluding that the assessing officer had no jurisdiction to consider the appellant’s case after the revised return was time-barred.
| Main Submission | Sub-Submissions | Party |
|---|---|---|
| Claim for Deduction of Deferred Revenue Expenditure | Tribunal rightly directed assessing officer to consider the claim as per law, not the revised return. | Appellant |
| Assessee can make a claim during assessment proceedings even if not in the original return. | Appellant | |
| Validity of Revised Return | Once the revised return is time-barred, no claim within it can be considered. | Respondent |
| Assessing officer has no jurisdiction to consider the claim after the time limit for revised return has passed. | Respondent | |
| Powers of the Tribunal | Tribunal has power to consider fresh claims. | Appellant |
| Tribunal cannot direct assessing officer to consider a time-barred claim. | Respondent |
Innovativeness of the Argument: The appellant’s argument that the Tribunal’s direction was to consider the claim as per the law, not the revised return itself, was an innovative attempt to circumvent the time-bar issue. However, the court did not accept this argument.
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in a separate section, but the core issue was:
- Whether the assessing officer has the power to consider a claim made in a revised return when that return is filed after the time limit specified under Section 139(5) of the Income Tax Act, 1961.
Treatment of the Issue by the Court
The following table demonstrates how the Court decided the issue:
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether the assessing officer can consider a claim in a time-barred revised return? | No. | Section 139(5) of the IT Act sets a clear time limit for filing revised returns. Once this limit expires, the assessing officer loses jurisdiction to consider any claims made in the late revised return. |
Authorities
The court considered the following authorities:
| Authority | Court | How it was Considered | Legal Point |
|---|---|---|---|
| Wipro Finance Ltd. v. Commissioner of Income Tax [2022 (137) taxmann.com 230 (SC)] | Supreme Court of India | Distinguished. The court clarified that the case dealt with the appellate powers of the Tribunal under Section 254 of the IT Act and not the powers of the assessing officer. It also noted that the department had no objection to the fresh claim in that case. | Appellate powers of the Tribunal. |
| Goetzge (India) Ltd. v. Commissioner of Income Tax [(2006) 157 Taxman 1 (SC)] | Supreme Court of India | Relied upon. The court reiterated that the assessing officer cannot entertain any claim made by the assessee otherwise than by following the provisions of the IT Act. | Limitations on assessing officer’s powers. |
| Principal Commissioner of Income Tax & Anr. v. Wipro Limited [(2022) 446 ITR 1] | Supreme Court of India | Relied upon. The court reaffirmed that a revised return under Section 139(5) of the IT Act cannot be used to substitute the original return or to claim benefits not claimed in the original return after the due date. | Limitations on revised returns under Section 139(5). |
| Section 139(5) of the Income Tax Act, 1961 | Statute | Interpreted. The court interpreted the provision strictly, emphasizing that once the time limit for filing a revised return expires, the assessing officer loses jurisdiction to consider any claims made in the late revised return. | Time limit for filing revised returns. |
| Section 254 of the Income Tax Act, 1961 | Statute | Discussed. The court distinguished the powers of the Tribunal under this section from the powers of the assessing officer. | Appellate powers of the Tribunal. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Party | Court’s Treatment |
|---|---|---|
| Tribunal rightly directed assessing officer to consider the claim as per law, not the revised return. | Appellant | Rejected. The court clarified that the assessing officer’s jurisdiction is limited by the time prescribed in Section 139(5) of the IT Act. |
| Assessee can make a claim during assessment proceedings even if not in the original return. | Appellant | Rejected. The court held that the claim must be made within the time prescribed by law. |
| Tribunal has power to consider fresh claims. | Appellant | Acknowledged but distinguished. The court clarified that the Tribunal’s powers under Section 254 of the IT Act are different from the assessing officer’s powers. |
| Once the revised return is time-barred, no claim within it can be considered. | Respondent | Accepted. The court agreed that the assessing officer cannot consider a claim in a time-barred revised return. |
| Assessing officer has no jurisdiction to consider the claim after the time limit for revised return has passed. | Respondent | Accepted. The court upheld the High Court’s decision that the assessing officer had no jurisdiction to consider the claim. |
| Tribunal cannot direct assessing officer to consider a time-barred claim. | Respondent | Accepted. The court agreed that the Tribunal cannot direct the assessing officer to do something that the law does not permit. |
How each authority was viewed by the Court?
The Court relied on Goetzge (India) Ltd. v. Commissioner of Income Tax [(2006) 157 Taxman 1 (SC)] and Principal Commissioner of Income Tax & Anr. v. Wipro Limited [(2022) 446 ITR 1], which held that assessing officers cannot consider claims made outside the statutory framework and that revised returns cannot be used to claim benefits not claimed in the original return after the due date. The Court distinguished Wipro Finance Ltd. v. Commissioner of Income Tax [2022 (137) taxmann.com 230 (SC)], clarifying that it dealt with the appellate powers of the Tribunal and not the assessing officer’s powers.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily driven by a strict interpretation of Section 139(5) of the Income Tax Act, 1961. The court emphasized the importance of adhering to statutory timelines and the limited jurisdiction of assessing officers. The court’s reasoning focused on the following points:
- Statutory Time Limits: The court stressed that Section 139(5) clearly specifies a time limit for filing revised returns. Once this time limit expires, the assessing officer’s jurisdiction to consider any claims made in the late revised return ceases.
- Jurisdiction of Assessing Officer: The court held that the assessing officer’s power is derived from the statute and cannot exceed the boundaries set by the law. Allowing claims in time-barred revised returns would be outside the scope of the assessing officer’s jurisdiction.
- Distinction between Assessing Officer and Tribunal: The court clarified that the appellate powers of the Tribunal under Section 254 of the IT Act are different from the powers of the assessing officer. The Tribunal can consider fresh claims, but this power does not extend to the assessing officer.
- Consistency with Precedents: The court relied on its earlier decisions in Goetzge (India) Ltd. and Wipro Limited, which emphasized that assessing officers must adhere to the provisions of the IT Act and that revised returns cannot be used to circumvent statutory deadlines.
| Sentiment Analysis | Percentage |
|---|---|
| Statutory Time Limits | 40% |
| Jurisdiction of Assessing Officer | 30% |
| Distinction between Assessing Officer and Tribunal | 15% |
| Consistency with Precedents | 15% |
| Ratio | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
The court’s decision was heavily influenced by legal considerations (70%), particularly the interpretation of Section 139(5) and the precedents set by previous judgments. The factual aspects of the case (30%), while important, were secondary to the legal principles at stake.
The Court reasoned that the assessing officer’s jurisdiction is strictly limited by the time frame specified in Section 139(5) of the IT Act. The court rejected any alternative interpretations that would allow the assessing officer to consider claims made in time-barred revised returns, emphasizing the need to adhere to statutory timelines.
The court concluded that the assessing officer had no jurisdiction to consider the appellant’s claim made in the revised return filed after the time prescribed by Section 139(5) had expired. The court stated, “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 also clarified that “this Court considered the appellate powers of the Tribunal under Section 254 of the IT Act” in the Wipro Finance Ltd. case and that it was not regarding the power of the assessing officer. The court further stated that “the assessing officer cannot entertain any claim made by the assessee otherwise than by following the provisions of the IT Act,” which was held in Goetzge (India) Ltd.
There were no dissenting or concurring opinions. The decision was unanimous, with both judges agreeing on the interpretation of the law and its application to the facts of the case.
Key Takeaways
- Strict Adherence to Timelines: Taxpayers must adhere strictly to the time limits specified in Section 139(5) of the Income Tax Act, 1961, for filing revised returns.
- Limited Jurisdiction of Assessing Officers: Assessing officers cannot consider claims made in revised returns filed after the statutory time limit.
- Importance of Original Returns: Taxpayers should ensure that all claims are included in their original returns, as revised returns cannot be used to circumvent statutory deadlines or claim benefits not initially claimed.
- Appellate Powers of Tribunal: The Income Tax Appellate Tribunal has broader powers than assessing officers and can consider fresh claims. However, this power does not extend to the assessing officer.
This judgment reinforces the importance of complying with statutory timelines and highlights the limited jurisdiction of assessing officers. It also clarifies that taxpayers cannot use revised returns to claim benefits or correct omissions after the prescribed time limit has expired. This decision may impact future cases by emphasizing the need for taxpayers to be diligent in filing their original returns and adhering to the statutory deadlines for revisions.
Directions
The Supreme Court did not provide any specific directions in this case.
Specific Amendments Analysis
There was no specific amendment discussed in the judgment.
Development of Law
The ratio decidendi of this case is that an assessing officer cannot consider a claim made in a revised return if that return was filed after the time limit specified under Section 139(5) of the Income Tax Act, 1961. This decision reinforces the existing law on the time limits for revised returns and clarifies the limited jurisdiction of assessing officers. There is no change in the previous position of law, but the judgment emphasizes the importance of strict adherence to statutory timelines.
Conclusion
The Supreme Court dismissed the appeal, upholding the High Court’s decision that the assessing officer had no jurisdiction to consider the claim made in the revised return filed after the prescribed time limit. This judgment underscores the importance of adhering to statutory timelines for filing revised income tax returns and clarifies the limitations on the powers of assessing officers.
Category
✓ Income Tax Law
✓ Income Tax Act, 1961
✓ Section 139(5), Income Tax Act, 1961
✓ Section 254, Income Tax Act, 1961
✓ Tax Assessment
✓ Revised Returns
✓ Time Limits
✓ Supreme Court Judgments
✓ Tax Law Precedents
FAQ
Q: What is a revised income tax return?
A: A revised income tax return is a return filed to correct any mistakes or omissions in the original income tax return. It is filed under Section 139(5) of the Income Tax Act, 1961.
Q: What is the time limit for filing a revised income tax return?
A: As per Section 139(5) of the Income Tax Act, 1961, a revised return must be filed within one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. For assessment years before April 1, 1988, the time limit was two years.
Q: Can an assessing officer consider a claim made in a revised return filed after the time limit?
A: No, according to the Supreme Court’s ruling, an assessing officer cannot consider a claim made in a revised return if that return was filed after the time limit specified in Section 139(5) of the Income Tax Act, 1961.
Q: What should taxpayers do if they miss the deadline for filing a revised return?
A: Taxpayers should ensure that all claims are included in their original returns. If they miss the deadline for a revised return, they may not be able to claim benefits or correct omissions.
Q: What is the difference between the powers of an assessing officer and the Income Tax Appellate Tribunal?
A: The Income Tax Appellate Tribunal has broader appellate powers under Section 254 of the Income Tax Act, 1961, and can consider fresh claims. However, the assessing officer’s powers are limited by the statute and cannot exceed the boundaries set by the law.