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It is an acceptable law that a letter or application to the Assessing Officer requesting for either adding some income to the returned income or withdrawing a claim would not be like furnishing a revised return within the meaning of section 139(5) of the Income tax Act, 1961.  The Allahabad High Court in Gopaldas Parshottamdas v. Commissioner of Income-tax (1941) 9ITR130 held that there is a distinction between a revised return and a correction of the return. If the assessee files some application for correcting a return already filed or making amends therein, it would not mean that he has filed a revised return. It will still retain the character of an original return, but once a revised return is filed, the original return must be taken to have been withdrawn and to have been substituted by a fresh return for the purpose of assessment.

In Waman Padmanabh Dande v. Commissioner of Income-tax (1952) 22ITR339 during the course of the proceedings the assessee sent a letter to the ITO informing that due to some misunderstanding an item of income was omitted from the return and that it may be treated as income. The Nagpur bench of the High Court held that this letter did not amount to a revised return and that such application cannot therefore be treated as a revised return. Further it observed that there is no provision in the Income-tax Act to seek permission to revise a return. As per the Court it is a right of the assessee to submit such return. The application has therefore to be ignored in such a case, inferred the Court in this case. The High Court further in their answer on the question of levy of penalty in such cases held that where an assessee seeks permission to revise the return as originally filed after the assessee’s dishonesty has come to the notice of the ITO a penalty for concealment can be imposed.

The Gujarat High Court not very long ago in Rotary Club of Ahmedabad v. Assistant Commissioner of Income-tax (2011) 336ITR585 also held that as per the  decision of Gopaldas Parshottamdas v. CIT [1941] 9 ITR 130 (All) and  Waman Padmanabh Dande v. CIT [1952] 22 ITR 339 (Nagpur) an  application or letter to the Assessing Officer for correcting or making  amendments in original return already filed would not constitute  revised return. In this case the Assessing Officer had raised certain queries under section 142(1) of the Act, pursuant to which the assessee had submitted a revised computation indicating a lower income than what was shown in the original return, which came to be accepted by the Assessing Officer while framing assessment under section 143(3) of the Act. But for the fact that in terms of the aforesaid twin decisions such revised computation could not be treated a revised return the AO initiated action for reopening which did not survive since upon perusal of the assessment order it was found that this was the only issue before the Assessing Officer while framing assessment under section 143(3) of the Act so that it cannot be said that the Assessing Officer has not applied his mind to this aspect. For these facts the Court held that the reopening has been on account of the change of opinion only hence it failed. Thus the Court held the view that an opinion having been formed on the very issue on which the  assessment is sought to be reopened, and that too the only issue, it can  only be viewed as a change of opinion on the part of the successor-Assessing Officer.

Another important aspect on which the Court placed importance has been that in this case scenario if the revised computation had not been accepted, the assessee would have been taxed as per the original computation given in the return filed by it, which would be on a higher amount. Perhaps therefore in that situation one could not target such situation as an instance of escapement of income.

It so happened that in CIT v. Amitabh Bachchan (2012) 74DTR (Bom) 314 Bachchan is given to have filed a revised return of income in which he claimed expenses at 30 per cent ad hoc. When the AO questioned such 30% claim the assessee preferred to file a letter to withdraw the revised return along with his claim of adhoc deduction of 30 per cent from his total income and the matter ended. Later the AO sought to reopen the assessee’s case to interrogate the issue of adhoc expenses with reference to sourcing of such expenditure that he initially claimed. In paragraph 3 the Court has narrated the facts as under:

“3. On 13the Oct., 2002, the respondent assessee had filed his return of income declaring his income at Rs. 14.99 crores for the asst. yr. 2002-03. Thereafter, on 31st March 2002 (sic), the respondent assessee filed a revised return of income declaring his total income for the asst. yr. 2002-03 wherein he claimed expenses at 30 per cent as hoc amounting to Rs. 6.31 crores and determining his income at Rs. 8.11 crores. However, before the assessment for the asst. yr. 2002-03 could be completed, the respondent assessee by a letter dt. 13th March, 2004 withdrew the revised return along with his claim of deduction of 30 per cent ad hoc expenses from his total income. On 29th March 2005, the AO completed the assessment for the asst. Yr. 2002-03 determining the respondent income at Rs. 56.41 crores.”

The Bombay High Court however quashed the notice of reopening on the ground that the AO had examined the assessee’s claim before as well as pursued the assessee’s application for withdrawal of such claim so that the two having been considered what therefore is intended is to review the case under the garb of reassessment.

In Amitabh case (supra) if the AO would have ignored the letter of withdrawal of claim of the assessee under the law the assessee would have been taxed as per the revised computation given in the revised return filed by it, which would be on a lower amount thereby directly resulting in escapement of income thereby requiring action u/s 147. And it is not that the AO has accepted the assessee’s claim on merits as in Rotary case (supra) where the AO accepted the claim as per application after due examination.

Further on the perusal of the returned and assessed figures in Amitabh Bachchan case it is apparent that there are perhaps other issues apart from the subject of revision of return by such letter. Following the ratio of the decision of the Gujarat High Court in Rotary Club (supra) it is thus apparent that the reopening is justified in Amitabh Bachchan case as only then that the AO would be able to exercise his duty of imposing of penalty for concealment in such a case apart from investigation on the subject matter of revised computation by sourcing information on the source of expenditure claimed in revised return.

In all this exercise neither authority impressed the position that the withdrawal of claim by a letter is not a revision proper under the law so that the assessee cannot get away with his wrong claim in the original/revised return proper without explaining the source of an item of expenditure or income claimed in such return. This is for the reason that as part of the return of income the assessee submits a statement in verification which if turned wrong could invite implications under 277 of the Act.

Thus it is widely apparent that in the instant case of Amitabh Bachchan the reopening is not based on a mere change of opinion but for the tangible material meaning the law that advocate that a revision by way of a letter does not fulfill the requirement of section 139 (5) in which case any amendment or correction in the income filed in the original/revised return at higher level is an admittance of escapement of income. It is like a situation where the assessee files a return pursuant to notice u/s 148 at a value higher that the value offered in the original return. There is thus a self pointing case of escapement of income and there is no valid ground to quash reassessment in this case situation.



Gopal Nathani


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