1991 (10) TMI 78 - AT - Income Tax

Summary

Issues:
1. Whether the appellant is entitled to carry forward and set off a determined loss under section 72 of the Income-tax Act, 1961.
2. Whether the provisions of section 80, which require the filing of the loss return within a specified time, are mandatory or directory in nature.
3. Whether the failure to comply with the provisions of section 80 deprives the appellant of the benefit under section 72.
4. Whether the Income Tax Officer (ITO) was required to grant a hearing to the appellant for the delay in filing the loss return.

Detailed Analysis:
1. The appellant sought direction to the ITO for the carry forward and set off of a determined loss of Rs. 2,21,381 under section 72. The appellant filed the return after the due date without seeking an extension, resulting in the ITO denying the carry forward in the assessment order. The appellant contended that the right to carry forward is a vested right and argued for the applicability of section 72 despite the delay. The CIT (Appeals) upheld the ITO's decision, leading to the appellant's second appeal before the tribunal.

2. The appellant's counsel argued that the provisions of section 80, which mandate timely filing of the loss return, should be considered directory rather than mandatory. The counsel cited a judgment from the Kerala High Court to support this argument. In contrast, the departmental representative asserted that section 80 is mandatory, overriding the provisions of section 72. The tribunal held that the right to carry forward a loss is a statutory privilege, subject to strict compliance with the law. The tribunal rejected the appellant's argument regarding the interpretation of "shall" in section 80 and emphasized the mandatory nature of compliance with section 80 for availing benefits under section 72.

3. The tribunal concluded that the provisions of section 80 are indeed mandatory, and strict compliance is necessary to avail the benefit under section 72. The failure to adhere to the requirements of section 80 deprived the appellant of the right to carry forward the determined loss. The tribunal highlighted that the adverse consequences faced by the appellant were a result of non-compliance with the mandatory provisions of section 80, emphasizing the importance of following statutory requirements for claiming benefits under section 72.

4. Regarding the necessity of a hearing by the ITO for the delay in filing the loss return, the tribunal agreed with the departmental representative that no hearing was required. The tribunal emphasized that the adverse consequences faced by the appellant were due to their own neglect in complying with the mandatory provisions of section 80. The tribunal held that the ITO's adherence to the law was appropriate, and any extension of time post-filing would have been a violation of section 80. The tribunal concluded that the ITO's actions were in line with the law and that the appellant's remedy for the grievance lay elsewhere, affirming the lower authorities' decision to deny the carry forward and set off of the determined loss under section 72.

In conclusion, the tribunal dismissed the appeal, confirming that the appellant was not entitled to the carry forward and set off of the determined loss under section 72 of the Income-tax Act, 1961.