1988 (3) TMI 134 - AT - Income Tax

Summary

Issues:
- Whether the ITO was justified in not dealing with the claim for carryforward and set off of loss incurred by the assessee in earlier years from the income of the assessment year 1980-81.

Analysis:
1. The appeal revolved around the question of whether the Income Tax Officer (ITO) was correct in not addressing the claim for carryforward and set off of losses from previous years by the assessee for the assessment year 1980-81.

2. The assessee had filed a petition under section 154 seeking rectification of the original assessment order for the year 1980-81. The petition included three reliefs, one of which was the carryforward of losses from the assessment year 1979-80, which was not claimed in the return for 1980-81.

3. The assessee contended that the ITO should have considered the assessment records of the previous year, where the losses were computed and set off was allowed, as part of the current assessment proceedings. The counsel cited various case laws to support this argument.

4. The CIT(A) deliberated on whether the ITO could refer to records of other years to rectify mistakes apparent from the record. Various High Courts' judgments were discussed, highlighting the interpretation of the term "record" under section 154 and the duty of the ITO to inform the assessee of entitled reliefs.

5. The High Courts of Mysore, Madhya Pradesh, and Gujarat, along with the Calcutta High Court, had differing views on whether the ITO could consider records of other years for rectification purposes. The CIT(A) had noted a conflict of decisions but did not find a mistake apparent on record.

6. The Tribunal concluded that the ITO was duty-bound to consider the assessment records of the previous year and allow the set off of losses determined for 1979-80 from the income of 1980-81. The decision was based on the interpretation of relevant provisions and the duty of the tax authorities to assist taxpayers in claiming entitled reliefs.

7. Consequently, the order of the CIT(A) was set aside, and the ITO was directed to verify the assessment records of the assessee for 1979-80 to allow the set off of losses from the total income determined for the assessment year 1980-81, subject to fulfillment of conditions under section 72.