Garg, A.M - These two appeals are by the revenue against the orders of the CIT(A), for the assessment years 1984-85 and 1985-86. The dispute in these appeals is regarding the validity of the returns filed by the assessee and allowance of loss to be carried forward and set off in future years.

2. Originally the returns for these two years were filed within the time prescribed under s.139(1) of the Income-tax Act, 1961. For the assessment year 1984-85, it was filed on 29-6-1984 and for the assessment year 1985-86 on 24-6-1985. Both these returns were filed by declaring estimated losses of Rs. 70,000 and Rs. 1,20,000 respectively. The returns were without the support of audited balance-sheet and profit & loss account. The ITO, therefore, did not consider these two returns as valid returns. According to him, they were mere pieces of paper which could not even be rectified under s. 139(9) of the Act. The returns filed by the assessee subsequently on 15-10-1985 for assessment year 1984-85 and on 3-2-1986 for assessment year 1985-86, since filed beyond the prescribed time limit provided under s. 139, the loss computed in the assessments in pursuance thereto, was refused to be carried forward.

3. The CIT (A) held that the original returns filed by the assessee for the two years under consideration were not invalid but mere defective returns and, therefore, the loss determined could not be denied to be carried forward. Reference in this connection was made to the decision of the Calcutta High Court in the case of CIT v. Garia Industries (P.) Ltd. [1983) 140 ITR 636. He accordingly directed the ITO to carry forward the loss determined and to allow the same subject to other provisions of the Act. Feeling aggrieved, the revenue is in appeal before us.

4. The learned Departmental Representative, Sri Keshav Prasad, submitted that after introduction of section 139(9) of the Act with effect from 1-9-1990, the returns, unless annexed with the audited accounts and other statements of accounts, would not be valid returns and were, therefore, rightly ignored by the ITO. No extension was sought for by the assessee. The subsequent returns filed by the, assessee, it was submitted, were beyond the prescribed time limit under s. 139(1) of the Act. Section 80, therefore, applies to the facts of the case and the loss determined in pursuance to the delayed returns would not be eligible to be carried forward and set off against the income of the subsequent years. He further submitted that the estimated loss returns, without the support of the financial accounts, would not-, be returns in the eye of law. According to him, such returns would be invalid and not merely defective, which could be cured. He referred to the decision of the Supreme Court in the case of Industrial Trust Ltd. v. CIT [1973) 91 ITR 550. The returns filed by declaring estimated losses, he submitted, were not meant for any purpose but for avoidance of the applicability of the provisions of sec. 80 of the Act, which should not be permitted. He further submitted that the loss was determined by the ITO in pursuance of the delayed returns and not in pursuance of the original returns and. therefore, it was not eligible for being carried forward and set off.

5. Sri N.A. Dalvi, the learned counsel for the assessee, on the other hand, submitted that the returns filed originally were valid returns in the eye of law. The accounts of the assessee were neither audited nor finalised due to deteriorating health, leading to heart attack and hospitalization of the accountant and the reluctance of the auditors, M/s. P.D. Desai & Co. to conduct the audit and, therefore, the assessee was left with no option but to file the returns on estimate basis. A return filed, he submitted, was a return the eye of law and cannot be ignored except as provided under sec. 139(9) of the Act. This section, according to him, requires a notice to be given by the ITO to rectify the defect and only when the assessee does n