1982 (10) TMI 123 - AT - Income Tax

Summary

Issues:
1. Whether the assessee is entitled to carry forward past losses for the assessment years 1970-71 to 1973-74.
2. Whether the returns filed by the assessee beyond the statutory time limit are valid for the purpose of carrying forward losses.
3. Interpretation of provisions under section 80 of the Income-tax Act, 1961 regarding the entitlement to set off and carry forward losses.
4. Determining the tax liability of the assessee based on real income and previous losses.

Detailed Analysis:
1. The appeals involved a common ground related to the decision of the Commissioner (Appeals) directing the Income Tax Officer (ITO) to carry forward losses for the assessment years 1970-71 to 1973-74 and set them off against the income for the assessment years under appeal. The assessee, a consumer co-operative society, contended that it should be allowed the benefit of carrying forward losses based on voluntarily filed returns. The Commissioner (Appeals) agreed with the assessee's claim, citing relevant case laws to support the decision.

2. The revenue, being aggrieved, argued that the returns filed beyond the statutory time limit were not valid in law, thus rendering the claim for carry forward of losses untenable. The revenue emphasized the importance of strict compliance with the statutory provisions for filing returns within the prescribed time limit under section 139(3) or 139(4) of the Act. The revenue also highlighted the benefit nature of carry forward of losses and referred to a Supreme Court decision to support its contention.

3. The assessee's representative argued that the tax liability should be determined based on 'real income,' which includes setting off previous losses. The representative contended that the assessee was not aware of its claim for recognition of losses until the ITO issued notices under section 148, prompting the assessee to press its claim. The representative distinguished between losses claimed voluntarily and losses set off during regular assessments under section 143(3) versus losses set off when action was taken under section 148.

4. The Tribunal analyzed the submissions and held that the returns filed beyond the statutory time limit were non est in law and, therefore, void ab initio. The Tribunal emphasized the importance of complying with the provisions of section 80 for determining losses based on filed returns. The Tribunal rejected the distinction made by the assessee's representative and concluded that the Commissioner (Appeals) erred in allowing the carry forward and set off of past losses. The Tribunal reversed the decision and restored the orders of the ITO for all years, allowing the appeals filed by the revenue.