1986 (7) TMI 153 - AT - Income Tax

Summary

Issues Involved:
1. Whether the return filed on 15-12-1982 should be treated as a return under section 139(4) or section 148 of the Income-tax Act, 1961.
2. Whether the assessee is entitled to carry forward the loss determined in the return filed on 15-12-1982.

Issue-wise Detailed Analysis:

1. Treatment of Return Filed on 15-12-1982:
The assessee contended that the return filed on 15-12-1982 should be treated as a return under section 139(4) of the Income-tax Act, 1961. The Income Tax Officer (ITO) and the Appellate Assistant Commissioner (AAC) treated it as a return filed in response to a notice under section 148, issued due to the non-filing of the original return. The Tribunal examined the provisions of section 139, which prescribes various eventualities for filing returns. It was noted that the return was not filed under section 139(1) or section 139(2). However, it was filed within two years from the end of the assessment year and before the assessment was made, fitting the criteria under section 139(4). The Tribunal concluded that the return should be treated as a return under section 139(4), allowing the assessee to carry forward the loss.

2. Entitlement to Carry Forward the Loss:
The Tribunal analyzed the implications of section 148, which allows the ITO to issue a notice for assessing or reassessing income that has escaped assessment. The Tribunal observed that section 148 should not negate the assessee's right to file a return under section 139(4). The Tribunal referred to the Bombay High Court decision in Telster Advertising (P.) Ltd. v. CIT, which held that a return filed under section 139(4) should be treated as if it were filed under section 139(1), entitling the assessee to carry forward the loss. The Tribunal also considered the provisions of section 148, which state that a notice under section 148 should be treated as a notice under section 139(2). Consequently, the return filed in response to a notice under section 148 should be deemed a return under section 139(2), allowing the loss to be carried forward.

The Tribunal rejected the department's contention that the benefit of carrying forward the loss should be denied due to the late filing of the return. The Tribunal emphasized that the right to file a return within two years under section 139(4) cannot be taken away by issuing a notice under section 148. The Tribunal further noted that if the notice under section 148 is deemed invalid due to no income escaping assessment, the return should be treated as filed under section 139(4).

Analysis of Department's Reliance on Case Laws:
The Tribunal examined the cases cited by the department, including Kevaldas Ranchhodas v. CIT, S. Natarajan v. CIT, and Sun Engg. Works (P.) Ltd. v. CIT. The Tribunal found that these cases did not support the department's position as they dealt with different factual scenarios where returns were already filed, or the losses were not computed in the original assessments. The Tribunal concluded that these cases did not address the specific issue of denying the carry forward of loss determined in a return filed under section 139(4) or in response to a notice under section 148.

Conclusion:
The Tribunal allowed the appeal, holding that the return filed on 15-12-1982 should be treated as a return under section 139(4) and that the assessee is entitled to carry forward the loss determined in that return. The Tribunal emphasized that the provisions of section 148 do not override the assessee's right to file a return under section 139(4) and carry forward the loss.