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TMI Blog1986 (3) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment revised return which filed ------------------------------------------------------------------------------------------------ 1975-76 30-6-1975 31-10-1979 139(4) 2,41,885 23-2-1981 4,75,000 ---------- ------ -------- 30-06-1980 139(5) 4,81,033 1976-77 30-6-1976 31-10-1979 139(4) 1,10,686 23-2-1981 1,80,000 ---------- ------ -------- 01-07-1980 139(5) 2,26,691 1977-78 30-6-1977 31-10-1979 139(4) 3,25,775 23-2-1981 1,45,000 ---------- ------ -------- 30-06-1980 139(5) 1,55,972 1978-79 30-6-1978 03-11-1979 139(4) 12,86,480 23-2-1981 9,54,000 ---------- ------ --------- 30-06-1980 139(5) 10,30,504 1979-80 30-6-1979 08-07-1981 139(4) 11,81,883 19-2-1982 11,66, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo years from the last day of each of the assessment years. Under the circumstances the ITO held that the loss returns filed for all the assessment years under consideration should be deemed to have been filed under section 139(4) of the Act. The ITO further found that none of the returns were filed within time allowable under section 139(3). No petition for extension of time in Form No. 6 was applied for any of the assessment years. The ITO held that the provision under section 139(3) is restrictive in the sense that it requires a loss return to be filed within the time allowed under section 139(1) if the assessee wants the benefit of carry forward of the loss. The assessee relied upon the decision of the Andhra Pradesh High Court in C. P. Sarathy Mudaliar v. CIT [1978] 114 ITR 687 and also the wording of section 80 of the Act. It was argued to the assessee that the words used in section 80 of the Act clearly disclose that a loss-return can be filed under any of the sub-sections of section 139 and in order to get the benefit of carry forward and set off of loss the return need not necessarily be filed within the time allowed under section 139(1) or (3). However, the ITO considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 1922 Act'). For this purpose he relied on the decision of the Hon'ble Supreme Court in CIT v. Kulu Valley Transport Co. (P.) Ltd. [1970] 77 ITR 518. Ultimately, he directed the ITO to carry forward losses for the assessment years 1975-76 to 1980-81 to the assessment year 1981-82 and held also ordered that the loss computed for the assessment year 1981-82 should be carried forward to the next assessment year 1982-83 as it obviously remains unabsorbed. 4. Aggrieved against the impugned order of the Commissioner (Appeals) dated 29-11-1984, the present second appeal is filed before us. 5. We have heard Shri B. Kailashnath and Shri P. Radhakrishna Murthy, the learned departmental representatives and Shri D. Suryanarayana Murthy, then learned counsel for the assessee. It is contended on behalf of the revenue that in the impugned orders it should have be held that the assessee was not entitled to carry forward of business losses of earlier years. The learned Commissioner (Appeals) ought to have held that the decision in Presidency Medical Centre (P.) Ltd.'s case is not applicable to the facts of the assessee's case. It is also argued that in the impugned orders it should have been h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years. Section 139(4) (b) reads as follows : "(4) (b) The period referred to in clause (a) shall be - (i) where the return relates to a previous year relevant to any assessment year commencing on or before the 1st days of April, 1967, four years from the end of such assessment year; (ii) where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1968, three years from the end of the assessment year; (iii) where the return relates to a previous year relevant to any other assessment year, two years from the end of such assessment year." As can be seen from the above provision the income-tax returns from the assessment year 1969-70 onwards should be filed within two years from the end of the assessment year even under section 139(4). When the income-tax return was filed beyond two years from the end of the assessment year can it still be held to be a return filed under section 139(4) is a question which falls for our determination. 8. In Chaturvedi and Pithisaria's Income-tax Law, Third edn., Vol. 3, the following is stated : "A return filed by an assessee after the expiry of the period mentioned in section 139(4) (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 148 is confined to such income, profits or gains which has escaped assessment or which was under-assessed or which was assessed at too low a rate or was the subject of excessive relief under the Act. A proceeding under that section cannot be used for finding out the true total income of the assessee afresh. In other words, in an enquiry under section 34 of the Act, no duty is cast upon the ITO to start an enquiry with reference to the total income of the assessee during the assessment year. The ITO has no such power. They have also held that the notice under section 148 is only for the purpose of roping in escaped income and not for the benefit of the assessee including carry forward of losses. 10. In Kalpan Lok Ltd. v. ITO [1984] 10 ITD 361, the Bombay Bench held as follows as per the head-note : "..... Even a person who has not furnished a return within the time allowed under section 139(1) or 139(2) can furnish a return before the assessment is made, but then the returns had to be filed before the expiry of two years from the end of the assessment years in question. The assessee, in the instant case, had not obviously filed the returns within any of these time limits and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready found that for the assessment years 1977-78 and 1978-79 the returns were filed within two years from the last day of the respective assessment years and so they should be deemed to be returns filed under section 139(4) though the time limit set out under section 148 notice (viz., 8-9-19 79) was transgressed. No notice under section 148 was issued so far as assessment years 1980-81 and 1981-82 are concerned. Obviously, the returns for those two assessment years are filed within two years from the last day of each of those assessment years and so the returns should be deemed to be returns filed under section 139(4) though the returns were filed beyond the time limit prescribed under section 139(1). When the returns were filed under section 139(4), in our opinion, the losses should be computed and they should be carried forward and set off in view of the fact that the provisions of section 80 do not mention any particular section 139 but mention section 139 in general. 11. In this connection, we should do not better than citing the Madhya Pradesh High Court decision in Co-operative Marketing Society Ltd. v. CIT [1983] 143 ITR 99. In that case the facts as well as the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax returns were filed under section 139(4) with reference to those two assessment years. 12. In ITO v. Ratanlal Bhangadia [1984] 10 ITD 182 (Hyd.), we have already held that provisions regarding determination and carry forward of losses are in pair materia under the 1922 Act and under the 1961 Act. We have also held that the decision of the Supreme Court in Kulu Valley Transport Co..(P.) Ltd.'s case holds good even under the 1961 Act. We have also held following the Andhra Pradesh High Court decision in C. P. Sarathy Mudaliar's case that a loss return filed beyond the time limit under section 139(3) can be entertained. We have further held that the circular of the CBDT dated 28-8-1970 and, not the one dated 20-9-1983 represents the correct legal position and ultimately, we held that though the loss return was filed beyond the time limit prescribed under section 139(3) provided if it is filed within the time limit prescribed under section 139(4) the loss can be validly determined and can be carried forward and set off to the later years. We hold that our previous decision noted above applies fully to the assessment years 1977-78 to 1980-81. 13. The consequence of our above ..... X X X X Extracts X X X X X X X X Extracts X X X X
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