2018 (8) TMI 200 - HC - Income Tax

Assessment u/s 153A - Whether a loss return filed within the time specified in the notice under Section 153A(1)(a) is required to be treated as a return filed in accordance with the provisions of Section 139(3) for the purpose of carrying forward of the loss in terms of Section 72 read with Section 80? - Held that - A definitive final order cannot be passed without being sure of the date of issuance of the notice under Section 153A(1)(a) of the Act and the time afforded by such notice for the assessee to file the return. For such purpose, the orders impugned passed by the Appellate Tribunal require to be set aside and the matters remitted back to the Tribunal for the Tribunal to ascertain the details as to the date of the notice and the time afforded to file the return and pass an order in the light of the views expressed herein on the questions of law and it is ordered accordingly. The first question of law indicated above is answered thus - For the purpose of carrying forward the loss in terms of Section 72 read with Section 80 of the Act, in a case where search operations have been conducted under Section 132 of the Act, the time to file the return within the meaning of Section 139(3) of the Act has to be regarded as the reasonable time afforded by the consequent notice under Section 153A (1)(a) of the Act. Where Section 153A applies, whether a return filed in response to the notice under Section 153A(1)(a) is required to be treated as a return under Section 139 and that any other return is of no consequence and non est - Held that - When search operations are conducted under Section 132 of the Act, the obligation of the assessee to file any return remains suspended till such time that a notice is issued for such purpose under Section 153A(1)(a) of the Act. If the return is filed by the assessee within the reasonable time permitted by such notice under Section 153A(1)(a) of the Act, such return would then be deemed to have been filed within the time permitted under Section 139 (1) of the Act for the benefit under Section 139(3) of the Act to be availed of by the assessee.

Summary

Issues Involved:
1. Interpretation of provisions regarding the filing of returns in the context of search and seizure operations under Section 132 of the Income Tax Act, 1961.
2. Determination of the impact of filing a return in response to a notice under Section 153A(1)(a) on the provisions of Section 139 and the subsequent assessment.
3. Clarification on the authority responsible for deciding the carry-forward of losses from one year to the next.

Detailed Analysis:

Issue 1: Filing of Returns in the Context of Search and Seizure Operations
The judgment addresses the scenario where search and seizure operations were conducted under Section 132 of the Income Tax Act. It highlights that the obligation to file a return remains suspended until the assessee receives a notice under Section 153A(1)(a) of the Act. The filing of the return within the reasonable time specified in the notice is crucial for availing the benefit of carrying forward any loss, as per Section 139(3) of the Act.

Issue 2: Impact of Filing a Return under Section 153A(1)(a) on Section 139 Provisions
The judgment clarifies that when search operations are conducted under Section 132, the return filed in response to a notice under Section 153A(1)(a) is deemed to have been filed within the time permitted under Section 139(1) of the Act. This interpretation ensures that the assessee can benefit from the provisions of Section 139(3) regarding the carry-forward of losses to subsequent years.

Issue 3: Authority for Deciding Carry-Forward of Losses
The judgment emphasizes that the decision on whether a loss from a previous year can be carried forward and set off against profits in a subsequent year is the responsibility of the assessing officer handling the assessment for the subsequent year. This decision is not to be made at any other stage, as confirmed by a previous judgment cited in the case.

The judgment concludes by setting aside the orders of the Appellate Tribunal and remitting the matters back for further clarification on the date of issuance of the notice under Section 153A(1)(a) and the time provided for filing the return. The final orders are expected to be passed by the Income Tax Appellate Tribunal within three months of receiving a copy of this judgment, with no costs imposed on any party involved.