DELHI CLOTH & GENERAL MILLS CO. LID. versus STATE OF U.P. & ORS.

Citation: [1979] 2 S.C.R. 109 · Decided: 18-10-1978 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Appeal(s) allowed

Judgment (excerpt)

\ 
109 
DELffi CLOTH & GENERAL MILLS CO. LID. 
v. 
STATE OF U.P. & ORS. 
October 18, 1978 
[P.'N. BHAGWATI, V. D. TuLZAPURKAR AND R. S. PATHAK, JJ.] 
U.P. Ag[icultural Income tax Act, 1948-S. 6(1) scope of-Assessee given 
option to select one of the two alternative methods of computarion of agricul-
tural income-Option exercised with the return changed when 
filing revised 
return-If permissible. 
A 
B 
Section 6(1) of the U.P. Agricultural Income tax Act, 1948 gives an option 
C 
to an assessee to select one of the two alternative methods of computation of 
agricultural income as provided ins. 6(2), whichever is more advantageous 
to him. Such option is required to be indicated along with his return submitted 
under s. 15 of the Act. 
While submitting its return for the assessment year 1954-55 the assessee 
chose the option to be assessed under s. 6(2)(b) of the Act. It later sub-
D 
mitted a revised return under s. 15(4) but stuck to the option to be assessed 
under s. 6(2)(b). The assessing authority, notwithstanding the filing of these 
two returns by the assessee, cailled upon it to file a return of the income com-
puted under s. 6(2) (a). Thereafter the assessing authority served a notice on 
the assessee requiring it to produce evidence in support of it rsetum. After 
the assessee produced the required evidence, the assessing authority issued a 
notice to tho effect that certain income escaped assessment and called for its 
E 
objections, if any. The assessee asked for inspection of records; but it was 
refused. At the ins1ance of the assessee the Revision Board dtrected the assess-
ing authority to permit inspection of the record. After inspection of the record 
the assessee filed a fresh (third) return. 
At this stage the assessee preferred 
the method of computation of income provided under s. 6(2) (a) instead of 
s. 6 (2 J (b) which it chose earlier. 
Without deciding the question as to whether the assessee was entitled to 
change the option, the oosessing authority made a best judgment assessment 
under s. 6(2)(b). On appeal the Commissioner directed the assessing authority 
to first decide the question rel21ting to change of option whereupon the assessing 
authority held that the assessee had no right to change its earlier option. On 
further appeal the Revision Board upheld the order of the assessing authority. 
In the assessee's writ petition challenging the order of the assessing authority 
a single Judge of the High Court held that it was open to the assessee to 
change its option at the time of filing a subsequent or fresh return. But the 
Division Bench was of the view that the assessee had no right to change its 
option. 
In its appeal the assessee contended before this Court that (I) it is open 
to the assessee to change its oplion not merely every year but during the year 
by filing a fresh return or a revised return provided it is done before the 
assessment is completed (2) although the assessee filed its fit>! return and the 
F 
G 
H 
A 
B 
c 
D 
E 
F 
G 
fl 
110 
SUPREME COURT REPORTS 
[1979] 2 S.C.R. 
revised return, the assessing authority issued a notice under s. 15(3) along with 
a statement of provisional estimate computed in accordance with s. 
6(2)(~) 
pursuant to which the assessee filed the t'hird return exercising the option for 
computation in accordance withs. 6(2) (a) and, therefore, the assessing authority 
had to make the assessment in accordance with s. 6 (2 )(a) and ( 3) in any 
event since the assessing authority had proceeded to make a best judgment 
assessment under s. 16(4) it had no option but to make the assesstne!lt with 
due regard to the provisional estimate served under s. 15(3B) not\VithstanOirig 
any option exercised under s. 6(1) of the Act. 
Allowing the appeals, 
HELD : The Division Bench of the High Court was wrong in holding that 
when once the option is exercised by an assessee by filing the ~equisite declaration 
he will have no right to change the option by filing a fresh return or revised 
return before the assessment is made for that year. 
[121 C] 
1. V\.'hatever restrictions had been imposed on the change of option by the 
original proviso to s. 6(1) had been removed arul the concept of "fi~st return" 
was deleted from r. 5. That being so, the expression "his return of income" 
cccurring in r. 5 would app)y to any of returns contemplated under s. 15, 
In fact r. 5 is obligatory and makes it incumbent upon an assessce to file, along 
with his return, a

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