Per Shri S. Grover, Judicial Member - In this second appeal, the contention is that the ITO after determining the loss of Rs. 62,856 regarding which figure their is no dispute, should have given further specific directions that it shall be carried forward for adjustment in the succeeding years. The assessment year involved is 1977-78 and the order under appeal is of 22-2-1983 passed by the AAC, C-Range, Bombay.
2. For the appellant, Shri J. I. Patel, advocate, very vehemently argued that in view of the provision of sections 157 and 72(1) of the Income-tax Act, 1961 (the Act), it was mandatory for the ITO to have recorded in the order than the loss shall be carried forward. Alternatively, Shri Patil submitted that the whatever may be the rationale/merits/effects of the ITOs non-recording the said words, the AACs order contained some observation which may adversely affect the assessees rights inasmuch as his directions that unless the loss returns had been filed in time, it would be open to the ITO not to carry forward the loss damaging. For the revenue, we were assisted by Shri D. Agarwala, the senior departmental representative.
3. The quantum of loss determined being not in dispute and keeping in close focus the provisions of sections 157 and 72(1), which are reproduced below, in our considered view, the cause of the action for the assessees appeal flows from his unfounded apprehension that the revenue authorities shall not follow the relevant statutory provisions :
'Section 157. When, in the course of the assessment of the total income of any assessee, it is established that a loss has taken place which the assessee is entitled to have carried forward and set off under the provisions of sub-section (1) of section 72, sub-section (2) of section 73, sub-section (1) of section 74 or sub-section (3) of section 74A, the Income-tax Officer shall notify to the assessee by an order in writing the amount of the loss as computed by him for the purposes of sub-section (1) of section 72, sub-section (2) of section 73, sub-section (1) of section 72, sub-section (3) of section 74A.
Section 72(1). Where for any assessment year, the net result of the computation under the head Profits and gains of business of profession is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set off against income under any of the loss as had not been so set off or, where the assessee has income only under the head Capital gains relating to capital assets other than short-term capital assets and has exercised the option under sub-section (2) of that section or where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and -
(i) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year :
Provided that the business or profession for which the loss was originally computed contented to be carried on by him in the previous year relevant for that assessment year; and
(ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on :
Provided that where the whole or any part of such loss is sustained in any such business as is referred to in section 33B which is discontinued in the circumstances specified in that section, and, thereafter, at any time before the expire of the period of three years referred to in that section such business is re-established, reconstructed or revived by the assessee, so much of the loss as is attributable to such business shall be carried forward to the assessment year relevant to the previous year in which the business is so re-established, reconstructed or revived, and -
(a) it shall be set off against the profits and gains, if any, of that business of any other business carried on by him and assessable for that assessment year; and
(b) if the loss cannot be wholly so set off, the amount of loss not so set off shall, in case the business so re-established, reconstructed or revived continues to be carried on by the assessee, be carried forward to he following assessment year and so on for seven assessment years immediately succeeding.'
4. According to us, such situation, whatever may be in the mind of the assessee, should not be allowed to become agitational issues by the Tribunal. If we are to believe the assessee, then we must also presume that the statutory enactments are not followed by the revenue authorities intentionally to cause inconvenience to the taxpayers, a presumption we are not prepared to make.
5. Apprehensions if aired and are adjudicated shall lead to absurd results. Holding that there is no valid cause of action for the present appeal, there being no adverse finding against the assessee from which any grievance could be made and it being a well settled law that observations of the tax authorities in a given assessment year are not binding for future assessments, we dismiss the appeal.