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Issues Involved:
1. Whether the return filed by the petitioner in 1981 can be considered a valid return under section 139 of the Income-tax Act. 2. Whether the petitioner is entitled to carry forward the loss determined based on the return filed in 1981. Issue-Wise Detailed Analysis: 1. Validity of the Return Filed in 1981: The petitioner, a corporation owned by the Central Government, failed to file its income-tax return for the assessment year 1978-79 within the prescribed time. Despite multiple notices and opportunities provided by the Income-tax Officer (ITO), the return was not filed until April 18, 1981, along with an application under section 146 to reopen the assessment. The ITO accepted this return and made a fresh assessment, treating it as a return filed under section 139(4). The Commissioner of Income-tax, however, rejected this return, stating it was filed beyond the two-year period prescribed in section 139(4) and thus could not be considered a valid return. The Commissioner opined that any loss determined based on such a return could not be carried forward. The court disagreed with the Commissioner's view, stating that when a best judgment assessment is set aside under section 146, the return filed along with the application should be treated as a return filed under section 139. The court emphasized that section 146 allows the ITO to receive and accept such a return, and it should be deemed a return filed in response to a notice under section 139(2). 2. Carry Forward of Loss: The petitioner argued that once the return was accepted by the ITO under section 146, it should be considered a valid return under section 139 for the purpose of carrying forward the loss under section 80. The Commissioner had rejected this contention, asserting that the return filed in 1981 was not a return under section 139, and thus the loss could not be carried forward. The court held that the return filed and accepted in pursuance of an order under section 146 should be treated as a return filed under section 139 for the purpose of section 80. The court noted that section 146 expressly states that after setting aside a best judgment assessment, the ITO shall proceed to make a fresh assessment in accordance with section 143 or section 144, which implies that the return should be considered a valid return under section 139. The court concluded that the return filed by the petitioner in 1981 should be deemed a return filed under section 139, and therefore, the loss determined based on this return should be allowed to be carried forward. Conclusion: The court allowed the writ petition, directing the ITO to allow the petitioner to carry forward the loss in accordance with the law. The court also expressed concern over the inefficiency and lack of accountability in public sector undertakings, urging the concerned authorities to investigate and address the issue. Additional Observations: The court made critical observations about the inefficiency in the public sector, noting that the failure to file the return within the prescribed time was shocking and indicative of a lack of discipline and commitment. The court emphasized the need for accountability in public sector undertakings to prevent such lapses in the future.
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