1990 (1) TMI 310 - HC - Income Tax

Summary

Issues:
1. Justification of non-allowance of carry forward of assessed loss as a mistake under s. 154 of the IT Act.
2. Entitlement of the assessee to carry forward the loss despite filing the return beyond the allowed time under s. 139(1)/139(3) of the IT Act.

Analysis:
1. The Tribunal referred questions regarding the non-allowance of carry forward of assessed loss as a possible mistake under s. 154 of the IT Act. The assessee, a private limited company, filed a petition claiming the benefit of carrying forward a loss of Rs. 45,419 for the assessment year 1977-78. The ITO rejected the petition as the return was filed after the allowed time. However, the CIT(A) accepted the contention, stating that the non-carry forward of loss was a rectifiable mistake under s. 154, directing the ITO to allow the carry forward.

2. The Tribunal, on further appeal, held that the assessee was entitled to the benefit of carry forward of loss under s. 154. The Tribunal highlighted that the return was filed after seeking an extension, which was granted until 15th August 1977, but the return was filed on 19th September 1977. Citing the decision in Presidency Medical Centre vs. CIT (1977) 108 ITR 838 (Cal), the Tribunal emphasized that the law pronounced by the Calcutta High Court was binding on all cases unless reversed by a superior court. Therefore, the officers under the jurisdiction of the Calcutta High Court were obligated to follow the precedent set by the Court, leading to a legal mistake in the ITO's order rectifiable under s. 154.

3. It was established that an obvious glaring mistake of law could be corrected under s. 154 of the IT Act, 1961. The judgment of the Calcutta High Court had settled the point of law in dispute, and since the Department did not challenge or set aside the judgment, the ITO was bound to apply the principles laid down by the Court. Failure to do so constituted a glaring mistake of law, rectifiable under s. 154. Consequently, both questions were answered in the affirmative and in favor of the assessee, with the judgment of Presidency Medical Centre Pvt. Ltd. vs. CIT serving as a precedent.

4. The judgment was delivered by Suhas Chandra Sen and Bhagabati Prasad Banerjee, JJ., with the latter concurring with the decision. The Court did not order any costs in this matter.