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C.P. Sarathy Mudaliar (Decd.) (by Lrs.) Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Case NumberCase Referred No. 103 of 1976
Judge
Reported in[1978]114ITR687(AP)
ActsIncome Tax Act, 1961 - Sections 139(1), 139(2) and 139(3)
AppellantC.P. Sarathy Mudaliar (Decd.) (by Lrs.)
RespondentCommissioner of Income-tax
Appellant AdvocateK.V. Reddy, Adv.
Respondent AdvocateP. Rama Rao, Adv.
Excerpt:
.....taxation - loss return - sections 139 (1), 139 (2) and 139 (3) of income tax act, 1961 - whether loss return filed for particular year valid or not - certain time prescribed to file loss return in case of non service of notice - assessee voluntarily filed loss return in prescribed manner within time period - return validly filed and assessee can be taxed on that ground. - - it was urged before the appellate assistant commissioner, on behalf of the assessee, that since the assessee filed the return voluntarily on february 17, 1966, showing a loss and no notice has been served on him either under section 22(2) of the indian income-tax act, 1922, or under section 148 of the income-tax act, 1961, the assessment made by the income-tax officer under section 143(3) of the income-tax act..........the following question for our opinion:'whether the tribunal was correct in holding that the loss return filed for the assessment year 1961-62 was a valid return ?' 2. the relevant facts lie in a narrow compass. the assessee is an individual. for the assessment year 1961-62, the assessee filed a return voluntarily onfebruary 17, 1966. the return showed a net loss. after the return was filed, the income-tax officer heard the assessee under section 143(2) of the act and made an assessment on march 28, 1966, determining the total income at rs. 87,710. aggrieved by the order of the income-tax officer, the assessee carried the matter in appeal to the appellate assistant commissioner. it was urged before the appellate assistant commissioner, on behalf of the assessee, that since the.....
Judgment:

Chennakesav Reddy, J.

1. The Income-tax Appellate Tribunal, Bangalore Bench, has referred the following question for our opinion:

'Whether the Tribunal was correct in holding that the loss return filed for the assessment year 1961-62 was a valid return ?'

2. The relevant facts lie in a narrow compass. The assessee is an individual. For the assessment year 1961-62, the assessee filed a return voluntarily onFebruary 17, 1966. The return showed a net loss. After the return was filed, the Income-tax Officer heard the assessee under Section 143(2) of the Act and made an assessment on March 28, 1966, determining the total income at Rs. 87,710. Aggrieved by the order of the Income-tax Officer, the assessee carried the matter in appeal to the Appellate Assistant Commissioner. It was urged before the Appellate Assistant Commissioner, on behalf of the assessee, that since the assessee filed the return voluntarily on February 17, 1966, showing a loss and no notice has been served on him either under Section 22(2) of the Indian Income-tax Act, 1922, or under Section 148 of the Income-tax Act, 1961, the assessment made by the Income-tax Officer under Section 143(3) of the Income-tax Act was bad in law. The Appellate Assistant Commissioner, holding that the loss return can be filed under Section 22(2A) of the 1922 Act or Section 139(3) of the 1961 Act, ruled that the return was not a valid return and the assessment made on an invalid return was also ab initio void. Consequently, he cancelled the order of assessment. The department aggrieved against the order of the Appellate Assistant Commissioner, preferred an appeal before the Appellate Tribunal. The Appellate Tribunal set aside the order of the Appellate Assistant Commissioner holding that the return filed by the assessee voluntarily on, February 17, 1966, was a valid one. The Tribunal directed the Appellate Assistant Commissioner to restore the case back to file and consider the case on its merits. At the instance of the assessee, this reference has been made to this court under Section 256(2) of the Income-tax Act.

3. The principal and the only contention of the learned counsel for the assessee is that the return filed by the assessee on February 17, 1966, was not a valid one, since it was filed beyond the period of four years prescribed in Section 139(4)(b) of the Income-tax Act, 1961, or beyond the limit prescribed for completion of the assessment in Section 153(1) of the Act. It is his submission that the accounting period ended on 30th of June, 1960, that the year of assessment related to 1960-61, and that, therefore, the return submitted on February 17, 1966, was beyond the period of four years prescribed in Section 139(4)(b). We do not think that the submission of the learned counsel is well founded. No doubt, the year of accounting ended with 30th of June, 1960, but the year of assessment was 1961-62. The assessment itself was completed on March 28, 1966. Thus, the assessment was completed within four years from the end of the assessment year in which the income was first assessable. The return was also submitted by the assessee on February 17, 1966. The year of assessment admittedly being 1961-62 as evidenced by the order of assessment of the Income-tax Officer, Chittoor, dated March 28, 1966, the return must be held to have been submitted within time and, therefore, a valid return.

4. Moreover, the assessee in this case submitted a loss return as contemplated under sub-section (3) of Section 139. Section 139(3) reads :

'If any person who has not been served with a notice under subsection (2), has sustained a loss in any previous year under the head 'Profits and gains of business or profession ' or under the head 'Capital gains' and claims that the loss or any part thereof should be carried forward tinder Sub-section (1) of Section 72 or Sub-section (2) of Section 73 or Sub-section (1) of Section 74, he may furnish, within the time allowed under Sub-section (1) or within such further time which, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, allow, a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this. Act shall apply as if it were a return under sub-section (1). '

5. In this case, no notice was served under Sub-section (2). On the other hand, the assessee himself voluntarily filed a loss return on February 17, 1966, in the prescribed manner. The Income-tax Officer, in exercise of his discretion, allowed the assessee to file his return. Thus, all the requirements of the sub-section have been complied with by the assessee and so the return should be deemed to be one filed under Sub-section (1) of Section 139. Therefore, it is a valid return.

6. In the upshot, we hold that the return filed by the assessee on February 17, 1966, was a valid loss return and the Appellate Tribunal was right in so holding. We, accordingly, answer the question in the affirmative and against the assessee. No costs. Advocate's fee Rs. 250.


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