1993 (8) TMI 120 - AT - Income Tax

Summary

Issues Involved:
1. Allowance of carry forward of loss under section 72 of the Income-tax Act, 1961.
2. Timeliness of filing the return under section 139 of the Income-tax Act.
3. Validity and consideration of extension applications filed in Form No. 6.

Issue-Wise Detailed Analysis:

1. Allowance of Carry Forward of Loss:
The primary issue in this appeal is whether the assessee, a private limited company, is entitled to carry forward the business loss for the assessment year 1985-86 under section 72 of the Income-tax Act, 1961. The assessee declared a loss of Rs. 2,22,174, which the Assessing Officer later computed at Rs. 1,38,427. The Assessing Officer denied the carry forward of the loss on the grounds that the return was not filed within the time allowed under section 139, invoking section 80 of the Income-tax Act. The CIT (Appeals) upheld this decision, rejecting the assessee's claim that it had filed extension applications in a timely manner.

2. Timeliness of Filing the Return:
The return for the assessment year 1985-86 was due by June 30, 1985, under section 139(1). The assessee filed an application for extension on June 24, 1985, seeking an extension up to September 30, 1985, which was within the permissible time. However, subsequent applications for further extensions were filed after the expiry of the initially extended deadlines. The CIT (Appeals) and the Assessing Officer both held that these belated applications did not entitle the assessee to presume an extension, thus affecting the allowance of the carry forward of loss.

3. Validity and Consideration of Extension Applications:
The crux of the matter is whether the Assessing Officer is obligated to consider the belated extension applications filed by the assessee. The Tribunal noted that while the assessee cannot presume an extension for applications filed after the expiry of the time allowed under section 139(1), the Assessing Officer is still duty-bound to consider these applications on their merits before deciding on the carry forward of the loss. The Tribunal cited several judicial precedents, including decisions from the Calcutta High Court and Punjab and Haryana High Court, which support the view that the Assessing Officer must dispose of such applications judiciously, even if they are filed after the due date.

The Tribunal highlighted that the proviso to section 139(1) does not specify a time limit for filing extension applications and that Rule 13 of the Income-tax Rules and Form No. 6 allow for applications to be filed either before or after the expiry of the time allowed, provided they are submitted before the completion of the assessment. The Tribunal concluded that the Assessing Officer should have considered the applications filed by the assessee before making a decision on the carry forward of the loss.

Conclusion:
The Tribunal remitted the issue back to the Assessing Officer with directions to judiciously dispose of the extension applications filed by the assessee in Form No. 6 and to reconsider the issue of carry forward of loss afresh after disposing of these applications. The appeal of the assessee was allowed, emphasizing the duty of the Assessing Officer to consider all relevant applications before making a final determination on the carry forward of loss under section 72 of the Income-tax Act, 1961.