1997 (10) TMI 54 - HC - Income Tax

Issues Involved:
1. Entitlement to carry forward of unabsorbed depreciation and investment allowance.
2. Non-issuance of assessment orders for the years 1986-87 and 1987-88.
3. Rejection of loss returns for the years 1986-87 and 1987-88 due to belated filing.
4. Rectification petition for the assessment year 1988-89.
5. Revision petition under Section 264 of the IT Act.

Detailed Analysis:

1. Entitlement to Carry Forward of Unabsorbed Depreciation and Investment Allowance:
The petitioner filed loss returns for the assessment years 1986-87 and 1987-88, claiming unabsorbed depreciation and investment allowance. Despite the belated filing, the petitioner argued that under the provisions of law, unabsorbed depreciation and investment allowance should be allowed to be carried forward. The court noted that even if a loss return is filed belatedly, the petitioner is still entitled to carry forward any unabsorbed depreciation and/or investment allowance.

2. Non-issuance of Assessment Orders for the Years 1986-87 and 1987-88:
The petitioner contended that no assessment orders were passed for the years 1986-87 and 1987-88. The second respondent, however, claimed that the assessments for these years were completed on 29th Jan., 1988, but there was no specific noting on whether the loss was allowed to be carried forward. The court found that the petitioner had not been informed of any such assessment orders, and there was no proof of service of these orders on the petitioner.

3. Rejection of Loss Returns for the Years 1986-87 and 1987-88 Due to Belated Filing:
The second respondent rejected the petitioner's loss returns for the years 1986-87 and 1987-88 on the grounds that they were filed belatedly. The court held that the petitioner should have been afforded an opportunity to be heard before rejecting the loss returns. The court also noted that the petitioner had not received any intimation regarding the completion of the assessment for these years.

4. Rectification Petition for the Assessment Year 1988-89:
For the assessment year 1988-89, the petitioner filed a rectification petition pointing out that the losses from the previous years had not been considered. The second respondent rejected this petition, stating that the losses for the years 1986-87 and 1987-88 were not carried forward due to belated filing. The court found that the second respondent was bound to communicate the order for these years to enable the petitioner to file objections.

5. Revision Petition under Section 264 of the IT Act:
The petitioner filed a revision petition under Section 264 of the IT Act, which was dismissed by the first respondent. The court held that the first respondent was not justified in rejecting the revision petition on the grounds that the petitioner should have pursued action for the assessment years 1986-87 and 1987-88. The court emphasized that the petitioner was entitled to have the loss redetermined in a subsequent year if the ITO did not notify the amount of loss by order in writing.

Conclusion:
The court quashed the orders (Exts. P-4, P-6, and P-10) and directed the second respondent to afford an opportunity to the petitioner to show cause against the rejection of the loss returns for the years 1986-87 and 1987-88. The second respondent was instructed to complete the assessments for the years 1986-87, 1987-88, and 1988-89 after considering the objections raised by the petitioner. The court directed that these proceedings be completed within two months from the date of receipt of a copy of the judgment. The Original Petition was allowed to the extent specified.

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