9911796707
TMI Blog1965 (4) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ement between the company and the erstwhile Jaipur State whereby the company was exempted from the payment of all taxes including taxes on income for a period of 15 years from the date the company started the manufacture of cement from April, 1953. The petitioners proceed to say that in spite of this agreement the Income-tax Officer assessed the company to income-tax. Aggrieved of this the petitioner-company filed a writ petition before this court whereby it challenged the assessment order on the ground that on account of the immunity of taxes conferred by the Ruler of the former Jaipur State the income-tax department had no jurisdiction to assess the company. This writ petition was, however, dismissed by this court on November 21, 1963. Against that decision, of course, the petitioner-company has obtained a certificate from this court for appealing to the Supreme Court. The company continued to file its income-tax returns and the position about the assessment of these years will be clear from the subjoined statement: Assessment year Returned figure Assessed figure Rs. Rs. 1954-55 Loss 61,24,270 Loss 22,53,457 1955-56 Profit 4,59,963 Profit 19,84,447 1956-57 Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by it in computing its total income. The petitioners submit that the company filed representations to higher authorities against the provisional assessment made by the Income-tax Officer and it also filed a revision application before the Commissioner of Income-tax under section 264 of the Act, but without any success. The order of the Commissioner of Income-tax has also been placed on record. The Commissioner in his order observed that as the claim for carry-forward loss had not been determined in pursuance of the return filed under section 139 of the Act, section 80 of the Act forbade the set-off in respect of such a carry-forward loss under sub-section (1) of section 71 or sub-section (2) of section 73 or sub-section (1) of section 74 of the Act. The respondents contest the writ petitions and the stand taken by the Commissioner of Income-tax in his order, annexure "N", is reiterated. Before we deal with the rival contentions of the parties, it will be convenient to refer to the relevant provisions of the Act and the Rules thereunder. The procedure for assessment is contained in Chapter XIV of the Act. Section 139 provides for the filing of a return and this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made under section 139, proceed to make, in a summary manner, a provisional assessment of the tax payable by the assessee, on the basis of his return and the accounts and documents, if any, accompanying it. (2) In making any assessment under this section due effect shall be given to- (a)the allowance referred to in sub-section (2) of section 32 ; and (b)any loss carried forward under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) of section 74 . . . . (5) After a regular assessment has been made, any amount paid or deemed to have been paid towards the provisional assessment made under sub-section (1) shall be deemed to have been paid towards the regular assessment; and where the amount paid or deemed to have been paid to wards the provisional assessment exceeds the amount payable under the regular assessment, the excess shall be refunded to the assessee. (6) Nothing done or suffered by reason or in consequence of any pro visional assessment made under this section shall prejudice the determination; on the merits, of any issue which may arise in the course of the regular assessment. (7) There shall be no right of appeal against a prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on." Section 80 on which reliance was placed for the respondents may also be reproduced hereunder : "80. Submission of return for losses.-Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed under section 139, shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) of section 74." The learned counsel for the petitioner has, as observed above, placed reliance on the plain language of section 141, sub-section (1), and submitted that a provisional assessment could be made only on the basis of return and the accounts and documents accompanying it. This provision was enacted, submits the learned counsel, with a view to enabling the revenue to collect the tax which was admittedly payable in terms of the returns. It is claimed that even where an assessee has made a wrong return or has put forth wholly untenable claims the provisional assessment has to be made only on the basis of the claims made in the return though su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said that these were allowed out of generosity and contrary to the provisions of law and consequently it did not mean that the petitioners were entitled to the carry-forward loss of ₹ 1,03,03,935 as claimed by the company in the return. The sole question that falls for consideration, in the facts and circumstances of the present case, is whether an undetermined business loss could be carried forward and set off for the benefit of an assessee in the subsequent assessment years. The learned counsel for the petitioner did not dispute the position that section 80 of the Act will have full play so far as regular assessments were concerned, but his main contention was that at the stage of provisional assessment the Income-tax Officer has to proceed on the basis of liability to tax, as has been admitted in the return and it is not open to the Income-tax Officer to travel beyond the return or for that matter to reject the same. The underlying object in enacting section 141 of the Act is obviously one to secure expedition of the process of realisation of tax dues as regular assessments might take long time. There at a regular assessment, the officer is required to be satisfied abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays down that a loss shall be carried forward to the following assessment year subject to the other provisions of this Chapter, namely, Chapter VI, and section 80 occurs in Chapter VI. The combined effect of the two sections, namely, sections 72 and 80 of the Act, is that a business loss can be carried forward to the subsequent assessment years only when it has been determined in pursuance of a return filed under section 139 of the Act, In these circumstances we are unable to hold that the petitioners are entitled to the benefit of carry-forward losses of previous years merely because they have shown such losses in the returns. It cannot be said that the Income-tax Officer is not acting on the basis of the return, the accounts and documents accompanying it for the purposes of making the provisional assessments merely because he is applying the relevant provisions of the Act to the uncontroverted facts found in the return or the documents accompanying it. Consequently, to our mind, the provisional assessment in the present case cannot be said to be one contrary to law. The argument of the learned counsel for the petitioner was that an over-zealous Income-tax Officer might very well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y determining the losses, when the assessee has filed his returns regularly, the Income-tax Officer should take advantage of his own inaction and put the assessee in a difficult position. In the present case, however, for the 3 out of the 6 assessment years, losses were determined, namely, for the years 1956-57, 1957-58 and 1958-59, though the appeals were pending in respect of those assessments. As for the other three assessment years, 1959-60 and 1960-61 and 1961-62, the assessments had not been finalised. In the circumstances we do not think it was improper on the part of the Income-tax Officer to take note of these losses while making provisional assessment for the assessment year 1963-64. As observed by us, all the three writ petitions present common features and the only difference in them is that they relate to different assessment years. The imposition of the penalty in the assessments was also challenged but the ground for the challenge being the same as for challenging the assessment itself and also for the reason that an appeal could have been filed against the imposition of penalty, we are not inclined to interfere with the orders for the imposition of penalty as well. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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