1992 (11) TMI 129 - AT - Income Tax

Summary

Issues Involved:
1. Entitlement to carry forward and set off of the loss for the assessment years 1984-85 and 1985-86 against the income for the subsequent assessment years 1987-88 and 1988-89.
2. Condonation of delay in filing the appeal for the assessment year 1985-86.
3. Validity of the return filing and extensions sought by the assessee for the assessment year 1985-86.

Detailed Analysis:

1. Entitlement to Carry Forward and Set Off of Losses:
The primary issue was whether the assessee is entitled to carry forward and set off the losses determined for the assessment years 1984-85 and 1985-86 against the income assessed for the subsequent assessment years 1987-88 and 1988-89.

Assessment Year 1984-85:
The Assessing Officer and CIT(A) denied the right to carry forward the loss for the assessment year 1984-85 on the grounds of a belated return filing. However, the Tribunal observed that the amended section 80, effective from 1-4-1985, did not apply to the assessment year 1984-85. The section as it stood then allowed the carry forward of losses if the return was filed under any sub-section of section 139. The Tribunal held that the assessee's return under section 139(4) was valid, and thus, the right to carry forward the loss could not be denied. The Tribunal cited the Supreme Court decision in CIT v. Kulu Valley Transport Co. (P.) Ltd. [1970] 77 ITR 518 and the Board's instruction No. 210 dated 28-8-1970 to support this view.

Assessment Year 1985-86:
For the assessment year 1985-86, the Assessing Officer and CIT(A) denied the carry forward of loss due to the belated filing of the return. The Tribunal, however, found that the assessee had applied for extensions of time, and the return was filed within the extended time applied for. The Tribunal scrutinized the auditor's delivery note book and found the entries genuine, supporting the assessee's claim. The Tribunal held that the assessee had fulfilled the conditions under section 80 and was entitled to carry forward the loss for set off against subsequent years' income.

2. Condonation of Delay:
The appeal for the assessment year 1985-86 was barred by limitation by 399 days. The assessee filed a petition for condonation of delay, citing the death of the authorized representative and the assessee's absence due to personal issues. The Tribunal, considering the submissions, held that the assessee was prevented by sufficient cause from filing the appeal in time and thus condoned the delay.

3. Validity of Return Filing and Extensions:
The Tribunal examined the validity of the return filing and the extensions sought by the assessee for the assessment year 1985-86. The assessee had filed multiple applications for extension of time, and the Tribunal found the entries in the auditor's delivery note book to be genuine. The Tribunal noted that the Assessing Officer did not have the benefit of these applications on record, leading to an adverse inference. The Tribunal held that the assessee had indeed applied for and filed the return within the extended time, fulfilling the conditions under section 80.

Conclusion:
The Tribunal allowed the appeals filed by the assessee, granting the right to carry forward and set off the losses for the assessment years 1984-85 and 1985-86 against the income for the subsequent assessment years 1987-88 and 1988-89. The appeals filed by the revenue were dismissed.