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income-tax Officer Vs. Shalimar Rope Works Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberI. T. APPEAL NO. 874 (CAL.) OF 1983 [ASSESSMENT YEAR 1979-80]
Reported in[1986]17ITD918(Cal)
Appellantincome-tax Officer
RespondentShalimar Rope Works Ltd.
Cases ReferredLachman Chaturbhuj Java v. R. G. Nitsure
Excerpt:
- .....the return filed on 31-12-1979 was a valid return under section 139(1) as it was filed within the time extended by the ito. it was thus submitted that for this simple reason alone, the ito should have given direction for carry forward of the business loss computed by him. the second limb of the arguments advanced before us by the assessee was that even if it is assumed for the sake of argument that the time for filing the return was not extended, in that even the return filed by the assessee was a valid return under section 139(4) with the result, that by virtue of the ratio of the decision of the calcutta high court in presidency medical centre (p.) ltd.s case (supra) the loss had to be determined and carried forward as a matter of course under section 72(1), read with section 80, of.....
Judgment:
ORDER

Per Shri D. N. Sharma, Judicial Member - This appeal filed by the department relates to the assessment year 1979-80. The two effective grounds raised in this appeal are as follows :

'1. That, on the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in law in directing the ITO to carry forward the business loss computed for the assessment year 1979-80.

2. That the learned Commissioner (Appeals) has erred in not applying the provisions of section 139(3) of the Income-tax Act, 1961.'

2. For the assessment year 1979-80, the assessment submitted Form No. 6 of 29-6-1979 and sought extension of time for filing the return up to 31-12-1979. The return was filed by the assessee on 31-12-1979 claiming loss of Rs. 1,08,69,070. The ITO vide his order dated 8-9-1982 computed the business loss at Rs. 1,01,33,687 but did not pass any order for carry forward of the business loss computed by him.

3. On appeal, the Commissioner (Appeals), following the decision of the Calcutta High Court in the case of Presidency Medical Centre (P.) Ltd. v. CIT : [1977]108ITR838(Cal) , directed the ITO to carry forward the business loss computed by him. Aggrieved, the department has come up in appeal before the Tribunal.

4. Shri R. R. Bajoria, the learned departmental representative, has contended before us that the return filed by the assessee on 31-12-1979 could not be treated as a valid return under section 139(1) of the Income-tax Act, 1961 (the Act), with the result that no direction could have been given for carry forward of the business loss computed by the ITO. It was further submitted that the return filed by the assessee fell within the provision of section 139(4) with the result that the provisions contained in section 139(3) were not applicable in this case. While conceding that the ratio of the decision of the Calcutta High Court in Presidency Medical Centre (P.) Ltd.s case (supra) was in favour of the assessee, it was submitted that in view of the observations made by the Honble Supreme Court in the case of Brij Mohan v. CIT : [1979]120ITR1(SC) , the decision in the Presidency Medical Centre (P.) Ltd.s case (supra) should not have been followed by the lower appellate authority as the observations of the Honble Supreme Court was binding upon him. It was further submitted that though an application for extension of time for filing the return had been made on behalf of the assessee, no orders were passed on it and so, it could not be said that the time for filing the return was extended by the ITO.

5. The learned authorised representative of the assessee has, on the other hand, submitted that since no orders were passed by the ITO on the application made by the assessee for extension of the time for filing the return, the time for filing the return shall be deemed to have been extended up to 31-12-1979. It was thus submitted that the return filed on 31-12-1979 was a valid return under section 139(1) as it was filed within the time extended by the ITO. It was thus submitted that for this simple reason alone, the ITO should have given direction for carry forward of the business loss computed by him. The second limb of the arguments advanced before us by the assessee was that even if it is assumed for the sake of argument that the time for filing the return was not extended, in that even the return filed by the assessee was a valid return under section 139(4) with the result, that by virtue of the ratio of the decision of the Calcutta High Court in Presidency Medical centre (P.) Ltd.s case (supra) the loss had to be determined and carried forward as a matter of course under section 72(1), read with section 80, of the act. It was further contended that the observations of the Honble Supreme Court in the case of Brij Mohan (supra), relied upon by the department was made in a different context and did not apply to the facts of the instant case.

6. We have given our careful consideration on the rival contentions and the facts on record. We have also gone through the authorities cited before us. From the assessment order framed by the ITO it is apparent that the assessee submitted Form No. 6 on the 29-6-1979, seeking extension of time for filing the return up to 31-12-1979. The assessment orders framed by the ITO does not say that the application was allowed or rejected by him. As a matter of fact, it has been stated before, us by the learned departmental representative that on the application seeking extension of time filed by the assessee no order was passed by the ITO. Thus, as the application submitted in Form No. 6 by the assessee seeking extension of time was neither rejected nor allowed by the ITO, he shall be deemed to have allowed the time prayed for by the assessee with the result that the return filed on 31-12-1979 must be treated as a valid return filed under section 139(1) within the time extended by the ITO. In taking this view we stand fortified by the decision of the Bombay High Court in the case of Lachman Chaturbhuj Java v. R. G. Nitsure 1981 Tax LR 542. It was held in this case that if the department does not desire to grant the assessees application for extension of time, it is the duty of the department to inform the assessee accordingly well in advance so that the assessee is put on his guard that unless he files his return within the prescribed time, the penal consequences are liable to follow. If the department chooses not to reply to the assessees application within the time applied for by the assessee, time is deemed to be extended as prayed for by the assessee and he would be justified assuming that his application has been granted by the department.

7. Even assuming that in the instant case time for filing the return shall not be deemed to have been extended by the ITO, the contention made on behalf of the department must be repelled for the reasons to be stated presently. If it is to be held that time for filing the return was not extended by the ITO in that even the return filed by the assessee would be a valid return under section 139(4). The Calcutta High Court has held in Presidency Medical Centre (P.) Ltd.s case (supra) following the decision of the Supreme Court in the case of CIT v. Kulu Valley Transport Co. (P.) Ltd. [1970] ITR 518, that the return could be filed within the time specified in sub-section (4) of section 139 and once that return is filed within that time it would be deemed to be in accordance with law and then loss had to be determined under the relevant provisions of the Act which embodies provision similar to that in section 24(2) of the Indian Income-tax Act, 1922 in this respect. It was further held that the assessee was entitled to demand that the loss should be determined and carried forward as a matter of course. This authority is applicable to the facts of the case in hand in all fours and is binding upon us. The observations made by the Honble Supreme Court in the case of Brij Mohan (supra) relied upon by the department are as under :

'... A return filed within the extended period is a good return in the sense that the ITO is bound to take into consideration. But nowhere does section 139 declare that where a return is filed within the extended period it will be deemed to have been filed within the period originally prescribed by the statute. On the contrary, the section contains a provision for payment of interest where the return is filed beyond the prescribed date even though within the extended period. That is evidence of the fact that the return filed during the extended period is not regarded by the statute as filed within the time originally prescribed....' (p. 5)

8. The above observations were made by the Honble Supreme Court in an entirely different context in the case arising our of the penalty proceedings drawn up under section 271(1) of the Act. These observations, in our opinion, do not go to support the contention put forth on behalf of the department that in case of a return filed under section 139(4) the business loss computed by the ITO cannot be allowed to be carried forward. For the reasons given above, we hold that the Commissioner (Appeals) was justified in directing the ITO to carry forward the business loss computed by him.

9. In the result, the departmental appeal fails and is hereby dismissed.


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