Income Tax Appellate Tribunal - Kolkata
Associated Excavators And Dozers (P.) ... vs Income-Tax Officer on 10 December, 1986
Equivalent citations: [1987]20ITD351(KOL)
ORDER
S.N. Rotho, Accountant Member
1. These two appeals filed by the assessee are heard together and disposed of by this common order for the sake of convenience.
2. The assessee is a limited company. It follows the calendar year as its previous year. For the assessment year 1978-79 assessment was made under Section 144 of the Income-tax Act, 1961 ('the Act') on 12-1-1981 for non-filing of the return. This assessment was cancelled under Section 146 of the Act on 18-3-1981. Thereafter, the return was filed on 20-4-1982 disclosing a loss of Rs. 1,25,760. The ITO made the assessment determining the business loss at Rs. 71,244 and depreciation at Rs. 21,518. The ITO, thus, determined the total loss for the year at Rs. 92,762 which was the sum of the aforesaid two figures. The ITO states that the return filed on 20-4-1982 was beyond the period of two years prescribed under Section 139(4)(b)(iii) and so it was not a valid return under Section 139 of the Act. Consequently, the ITO recorded in the assessment order that the assessee was not entitled to carry forward the loss computed by him.
3. The assessee appealed to the Commissioner (Appeals) and contended that the loss of Rs. 92,762 determined by the ITO should have been allowed to be carried forward. The Commissioner (Appeals) did not agree on the ground that the loss computed by the ITO was not entitled to be carried forward in view of Section 80 of the Act which says that no loss which has not been determined in accordance with a return filed under Section 139 shall be carried forward. Hence, he dismissed the appeal.
4. For the assessment year 1979-80 the assessee filed the return on 20-4-1982 disclosing a loss of Rs. 1,61,482. It may be mentioned that this return was filed after the earlier ex parte assessment was reopened under Section 146. Hence, the return filed on 20-4-1982 was beyond the period of two years reckoned from 31-3-1980. As stated earlier, Section 139(4)(b)(iii) states that the return must be filed latest by the end of two years from the end of the assessment year under consideration and so the ITO treated the return to be invalid and determined the income at nil ignoring the returned loss.
5. The assessee appealed to the Commissioner (Appeals) who, however, confirmed the action of the ITO. He observed that the return was not filed within the time prescribed under Section 139 and so it could not be treated as return under Section 139. Consequently, no loss determined on such return could be carried forward because of the provision of Section 80.
6. Aggrieved by the above orders of the Commissioner (Appeals) the assessee is in appeal before us on one common ground for both the assessment years. The case of the assessee before us, as stated by the learned representative for the assessee, is that the assessee was prevented by sufficient cause from filing the returns and so the assessments were re-opened under Section 146. If the assessee was prevented by sufficient cause from filing the returns earlier and if the ITO was satisfied about the same, he urged that the returns filed before the assessments were completed should be treated as valid returns even for the purpose of carry forward of the losses. He urged that the returns could not be valid for the purpose of making assessments and invalid for the purpose of carry forward of the losses. According to him, as long as the assessments were open, it was permissible for ths assessee to file valid returns. He sought to draw support for this argument from the provision of Section 153(2A) of the Act which extends the period for completing the assessment by one year from the date of filing the return even in cases where the return is filed after the assessment is reopened under Section 146.
7. Shri S.K. Lahiri, the learned representative for the department, on the other hand, supported the orders of the revenue authorities. He stated that Section 153(2A) merely authorises the ITO to complete the assessment within one year from the date of filing the return. According to him, that section is an enabling section available to the ITO and has nothing to do with the question as to whether the returns filed were or were not returns under Section 139. He stated that Section 139(4)(b)(iii) is very clear. It lays down a limit beyond which no return under Section 139 can be filed. In the instant case, the returns have been filed beyond the limit for both the years under consideration. Hence, those returns are not the returns envisaged in Section 80. Consequently, the assessee was rightly held as having foregone its right to carry forward the losses. In this connection, he relied on the decision in the case of ITO v. Kolhapur Central Co-op. Consumers Stores Ltd. [1983] 4 ITD 243 (Pune). In this case, it was held that the return filed beyond the statutory period prescribed under Section 139(4) is not a valid return and so it cannot be taken into account for carry forward of loss because of Section 80. Further, he referred to the decision in the case of Smt. Parbati Devi v. CIT [1970] 75 ITR 625 (All.). In this case, it was held that the voluntary return filed after the statutory period of four years was not a valid return. Shri S.K. Lahiri relied on this decision for the proposition that the return was filed beyond the period prescribed under Section 139(4) and the same principle applied to the instant case.
8. We have considered the contentions of both the parties as well as the facts on record. The question raised in these appeals is as to whether the returns filed after re-opening the assessments under Section 146 can be regarded as returns under Section 139. If it can be so regarded, then the losses determined on the basis of such returns have to be carried forward because of Section 80 which refers only to a return under Section 139. On the other hand, if it cannot be so regarded, then the losses determined on the basis of such returns cannot be carried forward because of the express provision enacted in Section 80. We have considered the argument based on the provision of Section 153(2A) but we find that it is relevant for completing the assessment. That section extends the period of limitation for completing the assessment. This has nothing to do with the question as to whether the returns of the type under consideration can be regarded as returns under Section 139. The provision of Section 139(4)(b)(iii) is indeed clear. It states that any person who has not furnished the return within the time allowed under Section 139(1) or Section 139(2) may file a return within two years from the end of the relevant assessment year. In the instant case, the returns have not been filed within this statutory period. So, on a bare reading of Section 139(4) we come to the conclusion that the returns under consideration for both the years cannot be said to be returns under Section 139 envisaged under Section 80. These returns may enable the ITO to make assessments but the law does not permit the assessee to ask the department to carry forward the losses determined on the basis of these returns because of the express provision of the statute under Section 80. We find support for this decision of ours in the case of Kolhapur Central Co-op. Consumers Stores Ltd. (supra). In that case, it was held that the return filed beyond the statutory period is non est in law. Similarly, the principle laid down by the Allahabad High Court in the case of Smt. Parbati Devi (supra) also applied to the facts of this case. In that case, it was held that the return filed voluntarily beyond the statutory period is not a valid return. The fact that the return was filed voluntarily in that case whereas the returns in the instant case were filed in Section 146 proceedings does not make any difference to the aforesaid basic principle. Finally, in fairness to the learned representative for the assessee we must say that he has placed a copy of the order dated 20-2-1986 of the Tribunal in IT Appeal No. 1339 (Cal.) of 1984 before us wherein this issue has been considered. In that case also, the return was filed during period prescribed under Section 146 but beyond the statutory period prescribed under Section 139. On a consideration of the law on the point the Tribunal came to the conclusion that the filing of the return during period prescribed under Section 146 beyond the time limit prescribed under Section 139 cannot extend the time limit under Section 139 and so the said return could not be said to be a return under Section 139 for the purpose of Section 80. We are in respectful agreement with the argument given and the conclusion arrived at in that case. Further, we find that in that case the Tribunal has allowed the carry forward of unabsorbed depreciation as distinct from business loss. In that case, the Commissioner (Appeals) had not considered the point. Even so, the Tribunal directed the ITO to carry forward the unabsorbed depreciation relying on the decision in the case of CIT v. Kalpaka Enterprises (P.) Ltd. [1986] 157 ITR 658 (Ker.). We are also in agreement with this decision of the Tribunal on this point. In the two instant cases, we find that the assessee claimed the carry forward of the business loss as well as the unabsorbed depreciation. It is true that the sum of these two figures is stated in the grounds of appeal without mentioning them separately. However, separate figures are available in the assessment order.
9. For the above reasons we hold that the revenue authorities were justified in refusing to carry forward the business loss on the basis of the returns filed by the assessee but they were not justified in refusing to carry forward the unabsorbed depreciation as Section 80 does not speak of unabsorbed depreciation. We direct the ITO to allow the carry forward of the unabsorbed depreciation only.
10. In the result, the two appeals are partly allowed.