2001 (10) TMI 274 - AT - Income Tax

Summary

Issues:
- Validity of return filed for asst. yrs. 1990-91 and 1991-92
- Allowance of set off of unabsorbed loss and depreciation from asst. yr. 1989-90

Analysis:
1. The appeals by the Revenue challenged the CIT(A)'s order for asst. yrs. 1990-91 and 1991-92, focusing on the allowance of set off of unabsorbed loss and depreciation from asst. yr. 1989-90. The Revenue contended that the return for asst. yr. 1989-90 was invalid as it was not filed within the time allowed under s. 139(3).

2. The CIT(A) ruled in favor of the assessee, stating that the return filed for asst. yr. 1989-90 was valid as the loss for that year was determined in an assessment completed under s. 143(1)(a) of the Act. The AO's reasons for disallowing the brought forward loss were based on a mistaken belief, as the return was never treated as invalid. The CIT(A) highlighted that the AO's actions lacked legal basis and that no notice under s. 139(9) was issued.

3. The Departmental Representative argued that the return was not processed under s. 143(1)(a) and emphasized non-compliance with auditing requirements. However, the authorized representative defended the assessee's position, asserting that the AO's treatment of the return as invalid was unlawful and cited relevant case law supporting the assessee's right to set off losses.

4. The Tribunal analyzed the facts and concluded that the return filed by the assessee for asst. yr. 1989-90 was valid, allowing for the carry forward and set off of losses and depreciation. The Tribunal rejected the Departmental Representative's claims regarding the processing of the return and emphasized the legal right of the assessee to claim set off benefits.

5. The Tribunal further directed the assessee to submit complete audited accounts for the entire period, as the books of account were now available. A new ground of appeal regarding the belated return under s. 139(3) was also addressed, confirming that the return was filed within the due date.

6. Ultimately, the Tribunal allowed the appeal, upholding the CIT(A)'s decision to permit the carry forward and set off of losses and depreciation from the asst. yr. 1989-90 onwards, emphasizing the importance of valid returns and legal compliance in such matters.