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TMI Blog1991 (1) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The ITO, therefore, did not take cognisance of the said return and did not make any computation of profit or loss for the assessment year 1982-83. Since the loss for the assessment year 1982-83 was not computed by the I.T.O. in the hands of the appellant, he did not allow to carry forward and set off of the said loss in the year under consideration. The I.T.O. took recourse to the provisions of section 80 and came to the conclusion that no loss which has not been determined in pursuance of a valid return filed, cannot be carried forward and set off under the provisions of section 72(1) or 72(2) of the Income-tax Act. He accordingly held that since the return filed by the appellant for the assessment year 1982-83 was outside the time limit and since no loss was determined, the appellant is not entitled to set off of the loss of Rs. 6,93,532 contained in the return filed by the appellant for assessment year 1982-83. On being aggrieved, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) who held : "According to section 80, notwithstanding anything contained in Chapter VI, dealing with aggregation of income and set off of carry forward of losses, no los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry forward and set off of share of loss of the assessment year 1982-83, merely for the reason that he did not file the return which was valid in law. I, therefore, direct the ITO to set off the share of loss of the appellant in the firm of M/s. Nagarjuna Construction Corporation for the assessment year 1982-83 as determined in the firm's assessment against the share income shown by the appellant for the assessment year 1983-84." The assessee's appeal was accordingly allowed by the CIT(A). 2. Before us the learned Departmental Representative has argued that the order of CIT(A) is erroneous on facts and in law. It is contended that the CIT(A) erred in holding that the loss determined to assessee's share in the assessment of the firm for assessment year 1982-83 is allowable to be set off against the assessee's income for assessment year 1983-84. He points out that for assessment year 1982-83, the assessee filed the return of loss which was non est in the eye of law. The said return was submitted by the assessee beyond time allowed by provisions of section 139(4) of the Income-tax Act. Since the return of loss filed by the assessee beyond the prescribed time was invalid return, the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the firm. In the opinion of the teamed counsel these two provisions support the case of the appellant. 5. Our attention has also been drawn by the learned counsel to the provisions of section 182 of the Income-tax Act. He argues that the said section stipulates that if there is a loss allocated to a partner such a share of loss of a partner shall be set off against his other income or carried forward and set off in accordance with the provisions of sections 70 to 75. The learned counsel emphasizes that section 182 being the specific section which deals with the assessment of the registered firms, has not made any mention of section 80 of the Income-tax Act. The learned counsel therefore, argues that the set off and carry forward of losses allocated to the partners arc governed by the provisions of section 182 read with sections 70 to 75 and not by section 80 of the Income-tax Act. 6. Regarding the application of section 80 of the Income-tax Act, the learned counsel contends that loss of a registered firm is governed by the provisions of section 182 and not by the provisions of section 80 of the Income-tax Act. He further points out that in the case of a registered fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unless the valid return of loss has been filed by an assessee, no set off or carry forward of the said loss may be allowed to such an assessee. 8. The scheme of the Act also suggests that an assessee should furnish the return of income before the expiry of the period mentioned in sub-section (4) of section 139. A return filed by an assessee after the expiry of the period mentioned in the said section is non est in law and invalid. In the case of the assessee as mentioned above, the return for assessment year 1982-83 was filed on 3-5-1985 which was outside the time limit provided under section 139(4) of the Income-tax Act. In our view, no assessment can be made on the basis of the return furnished after the time limit prescribed under section 139(4) of the Income-tax Act. The I.T.O., therefore, rightly did not take cognisance of the said return and did not quantify the loss of the assessee for assessment year 1982-83. It has been held by Calcutta High Court in the cases of CIT v. Smt. Minabati Agarwalla [1971] 79 ITR 278 and CIT v. Bissessar Lal Gupta [1976] 105 ITR 684 that an assessment made on the basis of invalid return would be invalid and without jurisdiction. The Allahabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he return of income or loss has been furnished the assessee cannot take advantage of the beneficial provisions of set off and carry forward of the losses. 11. It may also be mentioned that the order under section 158 is not the final word in computing the income or loss in the hands of the partner. Had it been so the tax would have been charged on the income of the partner during the course of the assessment proceedings of the firm itself. We are, therefore, of the view that it is mandatory for the partner also to file his return of income or loss. 12. It is true that in case of a partner the loss has been determined in pursuance to a return filed in the case of the firm itself. The provisions of section 80 therefore, have limited scope to deal with such cases. However, in our view the "quantification" of loss, as distinguished from "determination" of loss, has to be made in the hands of the partner alone. As mentioned above, an assessee may be partner in more than one firm, also may have some income from sources other than the share of profit or loss from the registered firm. The partner, therefore, has to necessarily furnish the return of income within the statutory time with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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