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High Court Of Calcutta
SUBHAS CHANDRA SEN, BHAGABATI PRASAD BANERJEE
BURDWAN WHOLESALE CONSUMERS CO-OPERATIVE SOCIETY LTD - Appellant
Versus
COMMISSIONER OF INCOME-TAX - Respondent
Income-Tax Reference 22 Of 1985
Decided On : 01/09/1990
INCOME TAX - Loss - Carry forward and set off - Whether assessee entitled to claim - Return of income filed in response to notice under Section 148 - Whether deemed to be return filed under Section 139 - Provisions of Section 80 of the Income-tax Act, 1961.
Fact of the Case:
The assessee filed returns of loss for the assessment years 1970-71, 1971-72, and 1972-73 in response to notices issued by the Income-tax Officer under Section 148 of the Income-tax Act, 1961. The assessee had not previously filed any returns nor was it assessed before the notices under Section 148 were received. The Income-tax Officer declined to allow the benefit of carry forward and set off of the losses on the ground that the returns of income for those assessment years were not furnished in terms of Section 139 although they were furnished in terms of notice under Section 148. The assessee challenged the order before the Tribunal and the High Court.
Finding of the Court:
The High Court held that the returns of loss filed by the assessee in response to the notices issued under Section 148 were deemed to be returns filed under Section 139 and, therefore, the assessee was entitled to claim the benefit of carry forward and set off of the losses for the assessment year 1972-73. However, the assessee was not entitled to claim the benefit for the assessment years 1970-71 and 1971-72 as the returns of loss for those years were filed beyond the period of time prescribed by Section 139 (1), Section 139 (2), or Section 139 (4).
Issues: Whether the assessee was entitled to claim the benefit of carry forward and set off of the losses for the assessment years 1970-71, 1971-72, and 1972-73.
Ratio Decidendi: The provisions of Section 80 of the Income-tax Act, 1961, make it clear that in order that loss could be carried forward and set off under Section 72 (1) or Section 73 (2) or Section 74 (1), such loss should have been determined in pursuance of a return filed under Section 139. The provisions of Section 148 make it clear that the provisions of the Act shall, so far as may be, apply to notices issued under the section as if the notices were issued under Section 139 (2). Sub-sections (1) and (4) of Section 139 are to be read together and an assessee would be entitled to carry forward the loss if he had filed a return after the period prescribed by Sub-section (1) of Section 139 of the Act but within the time allowed under Sub-section (4) of Section 139 of the Act.
Final Decision: The question referred by the Tribunal was answered in the affirmative and in favor of the Revenue for the assessment years 1970-71 and 1971-72, and in the negative and in favor of the assessee for the assessment year 1972-73.
( 1 ) THE Tribunal has referred the following question of law to this court under Section 256 (1) of the Income-tax Act, 1961 :"whether, on the facts and in the circumstances of the case, the Tribunal was justified in declining to allow the benefit of carry forward and set off of the losses for the earlier assessment years on the ground that returns of income for those assessment years were not furnished in terms of Section 139 although they were furnished in terms of notice under Section 148 ?"
( 2 ) THE facts of the case, as stated by the Tribunal, are as follows : "for the assessment years 1970-71, 1971-72 and 1972-73, income-tax assessments were completed under Section 143 (3) determining losses as stated below: Assessment year Loss Rs.
1970-71 29,656
1971-72 14,072
1972-73 41,819
( 3 ) THERE was no assessment for the assessment year 1974-75. For the assessment year 1975-76, the Income-tax Officer, A-Ward, Burdwan, made an assessment determining an income of Rs. 74,828. On a prayer of the assessee, the said officer declined to set off the losses for the years mentioned above against the above income for this year on the ground that the assessments for the said years were completed in pursuance of alleged notices under Section 148 of the Income-tax Act, 1961. On appeal, the Appellate Assistant Commissioner confirmed the order of the Income-tax Officer in this respect The assessee preferred a second appeal before the Tribunal. The Tribunal upheld the order of the Appellate Assistant Commissioner by observing as under :"we have heard the rival submissions and gone through the facts on record. A perusal of the assessment orders would show that the assessee filed returns for the assessment years 1970-71, 1971-72 and 1972-73 in compliance with the notice under Section 148 and no returns of income for those three years were filed under Section 139. In accordance with the clear provision of Section 80, no loss which has not been determined in pursuance of a return filed under Section 139 shall be carried forward and set off against future profits. We are unable to concede to the submissions of the assessee's counsel that there is no difference between a return filed under Section 148 inasmuch as Section 148 is to apply in a case where income has escaped assessment whereas Section 139 (2) empowers the Income-tax Officer to issue notice to any person who, in the opinion of the Income-tax Officer, has taxable income. Viewed thus, we would hold that the assessee was not entitled to the benefit of carry forward of losses for the aforesaid three assessment years. "
( 4 ) AFTER the order of the Tribunal, there were two miscellaneous applications filed by both the assessee and the Revenue in which the Tribunal had passed the following order :"we have considered the submission made by both the sides and it is seen that the Appellate Tribunal referred to the statement of the Income-tax Officer that, for the assessment years 1973-74 and 1974-75, the assessee filed a return under Section 139 but not within the time prescribed under Section 139 (1 ). But, as indicated earlier, the reference application related to the assessment years 1975-76 and 1976-77. After taking into account the findings of the Appellate Tribunal and its directions and after considering the submissions made by both the sides before us, we are of the opinion that the question as framed by the Appellate Tribunal in the draft statement of the case requires no modification. We are also of the opinion that, in drafting that question, the Tribunal has taken into account the questions proposed by the assessee as set out at para 1 above. In this view of the matter, the question as drafted and as being reproduced in the following paragraph is referred to the Hon'ble High Court under Section 256 (1) for the esteemed opinion of the Hon'ble High Court. "
( 5 ) THE provisions for set off and carry forward of losses are contained in Sections 70 to 79
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