2009 (11) TMI 46 - HC - Income Tax

Belated Return Return of Loss Carry forward of loss The assessee filed return on 30.9.1985 declaring loss including carried forward loss. The time for filing return had earlier expired and extension had been allowed upto 31.8.1985 vide order dated 27.7.1985. The return was not filed within the stipulated time nor any application was made upto the stipulated date. Application made on 30.9.1985 was not considered and assessment was made ignoring the return which has been upheld by the CIT(A) as well as the Tribunal. held that - since power to extend time was available under Proviso to Section 139(1) read with Rule 13 of the Rules, the Assessing Officer was bound to consider the same and convey his decision thereon to the assessee. There may not always be automatic extension of time for failure to convey decision on the prayer for extension of time and it may depend on a fact situation whether deemed extension is to be presumed. - Ignoring the application for extension of time and the belated return, without passing any order on the said application and without considering the reasons for seeking extension of time, could not be a part of fair procedure decided in favor of assessee

Summary

Issues:
Extension of time for filing return leading to carried forward loss determination.

Analysis:
The case involves a question of law referred by the Income Tax Appellate Tribunal regarding the justification of considering a return as belated due to the application for extension of time filed on the date of return filing. The assessee filed the return on 30.9.1985 declaring loss, including carried forward loss, after the expiry of the stipulated time for filing. The application for extension of time was not considered, and the assessment was made ignoring the return. The contention raised was whether the Tribunal was justified in not considering the application for extension of time and disallowing the carried forward loss.

The counsel for the assessee argued that the application for extension of time could be filed even after the stipulated date, which should be considered on merits or deemed extended. Legal precedents from judgments in similar cases were cited to support this argument. On the other hand, the revenue's counsel contended that a mere application for extension does not automatically entitle the assessee to an extension without valid reasons. It was emphasized that valid reasons for extension must be disclosed, and in this case, no valid reasons were presented. The revenue relied on case laws to support their stance that there should not be automatic extensions without valid grounds.

The Court held that the Assessing Officer was obligated to consider the application for extension of time under the Proviso to Section 139(1) read with Rule 13 of the Rules. It was emphasized that there should not be an automatic extension without a decision on the extension application. The Court opined that the reasons put forward for seeking extension should have been considered before disregarding the return filed beyond the stipulated time. Ignoring the application for extension and the belated return without passing any order on the application was deemed unfair. The Court ruled in favor of the assessee, stating that the Tribunal was not justified in ignoring the return without examining the reasons for seeking an extension of time. The Tribunal was directed to reconsider the matter accordingly.

In conclusion, the Court disposed of the reference, emphasizing the importance of considering extension applications and reasons before disregarding returns filed beyond the stipulated time. The judgment highlighted the necessity of fair procedures and the obligation to assess extension requests before disallowing carried forward losses.