9911796707
|
Home
Issues involved: Allowance of carry forward of loss under the provisions of Section 72 of the Income Tax Act, 1961.
Issue-wise Detailed Analysis: 1. Timeliness of Filing the Return: The primary issue revolves around whether the assessee, a private limited company, filed its return within the time allowed under Section 139 of the Income Tax Act, 1961, to qualify for the carry forward of business loss under Section 72. The assessee filed the return on June 23, 1986, declaring a loss of Rs. 2,22,174 for the assessment year 1985-86, while the Assessing Officer computed the loss at Rs. 1,38,427. The Assessing Officer disallowed the carry forward of the business loss, citing that the return was not filed within the prescribed time under Section 139. 2. Applications for Extension: The assessee contended that it had filed applications for extension of time to file the return, extending up to June 30, 1986. The CIT(A) rejected this claim, stating that three out of the four applications were filed after the expiry of the allowed time, thereby not entitling the assessee to the benefit of the Patna High Court's decision in CIT vs. S.P. Vij Construction Co., which held that un-rejected extension applications amount to granting of extension. 3. Negligence of Counsel: The assessee argued that the delay in filing the return was due to the negligence of its chartered accountant, citing the Supreme Court's decision in Rafiq & Anr. vs. Munshi Lal & Anr., which held that the assessee should not suffer for the inaction or negligence of its counsel. The Madhya Pradesh High Court's decision in Mahavir Prasad Jain vs. CIT was also cited to support this claim. 4. Departmental Representative's Argument: The Departmental Representative argued that under Section 80 of the Act, a loss not determined in pursuance of a return filed within the allowed time cannot be carried forward and set off under Section 72. The Assessing Officer did not extend the time for filing the return, and the applications for extension were filed after the expiry of the allowed time. 5. Tribunal's Consideration: The Tribunal considered the rival contentions and noted that the assessee filed an application for extension on June 24, 1985, before the expiry of the time allowed under Section 139(1), entitling it to presume an extension up to September 30, 1985. However, subsequent applications for extension were filed after the expiry of the allowed time, complicating the presumption of extension. 6. Legal Precedents: The Tribunal referenced several judicial authorities supporting the view that applications filed before the expiry of the allowed time justify the presumption of extension. However, it acknowledged the difficulty in cases where applications are filed after the expiry of the allowed time, noting that some High Courts have held that belated applications do not entitle the assessee to presume extension. 7. Duty of the Assessing Officer: The Tribunal emphasized that the Assessing Officer is duty-bound to consider applications for extension, even if filed after the expiry of the allowed time, before deciding on the carry forward of loss. The proviso to Section 139(1) does not fix a time limit for filing such applications, and the Assessing Officer must dispose of these applications on merits. 8. Remand to Assessing Officer: The Tribunal remitted the issue to the Assessing Officer, directing them to dispose of the applications for extension judiciously and in accordance with the law. The issue of carry forward of loss was also set aside to be decided afresh after the disposal of the applications. Conclusion: The appeal of the assessee was allowed, with the Tribunal directing the Assessing Officer to consider the applications for extension and decide the issue of carry forward of loss afresh.
|
