Income Tax Appellate Tribunal - Kolkata
Burrakur Coal Co. Ltd. vs Income-Tax Officer on 28 February, 1986
Equivalent citations: [1986]16ITD475(KOL)
ORDER
S.K. Jain, Judicial Member
1. In this appeal of the assessee-company against the order of the Commissioner (Appeals) in respect of the assessment year 1973-74 an interesting question regarding carry forward of business loss and long-term capital loss arises under these facts and circumstances.
2. The assessment proceedings had a long chequered carrier. Previous year of the assessee ended on 30-6-1972. No return was filed by it under Section 139(1) of the Income-tax Act, 1961 ('the Act') though certain applications seeking extension of time were filed. Eventually a notice dated 11-2-1974 under Section 139(2) was served by the ITO upon it on 15-3-1974. Even then no return in compliance thereof was filed, though again certain applications seeking extension of time were filed. Ultimately, the ITO made ex parte assessment under Section 144 of the Act on 12-2-1976 but it was short lived. It was cancelled at the instance of the assessee under Section 146 of the Act on 26-4-1976. But even thereafter no return of income was filed by the assessee and the assessment proceedings again went through the round of ex parte assessment under Section 144 on 22-3-1979 and cancellation thereof under Section 146 on 25-10-1979. Then the return was filed by the assessee on 30-9-1980 but that too was defective since it was not accompanied with a copy of audited accounts. However, that was not the end of the matter. The assessment proceedings yet went through the third round of ex parte assessment under Section 144 on 28-3-1981 and cancellation thereof under Section 146 on 31-3-1981. Nearly two years thereafter the assessee filed on 24-1-1983 another return with a copy of audited accounts claiming the same as revised return. The ITO framed the assessment on 29-3-1983 and thereby determined the business loss of Rs. 91,23,842 with the remark that loss could not be carried forward as the return was not filed in pursuance of Section 139.
3. The assessee unsuccessfully appealed before the Commissioner (Appeals). He held that the return having been filed after the period prescribed by Section 139(4)(b) could not be a valid return from any aspect.
4. Mainstay of the learned counsel for the assessee is that despite the assessment proceedings travelled through chequered path, the notice under Section 139(2) served upon the asssessee remained in operation and, therefore, the return filed on 30-9-1980 should be taken as a valid return under Section 139(2). The learned departmental representative, on the other hand, fully relied upon the order of the Commissioner (Appeals).
5. We do agree with the learned counsel for the assessee that there was a valid notice under Section 139(2) served upon the assessee but therefrom the assessee is not benefited. The ITO has discretion to extend the date for furnishing the return under Section 139(1) and (2) but such discretion cannot be exercised by him for any length of time. He has to complete the assessment within the time limit prescribed by Section 153 of the Act, and in computing that period of limitation the time extended by the ITO cannot be excluded. It was the assessment year 1973-74 and the ITO was bound to complete the assessment by 31-3-1976 in view of Section 153(l)(iii). The ITO could, therefore, extend the time for furnishing the return only up to such date as to enable him to complete the assessment by 31-3-1976. A valid return under Section 139(4) for the assessment year 1973-74 could be filed only by 31-3-1976. For completion of the assessment on the basis of such return the time limit is only one year from the date of filing the return. No return for the assessment year 1P73-74 filed beyond 31-3-1976 can, therefore, be taken as a valid return. An ex parte assessment can well be set aside by the ITO on being satisfied that the assessee was prevented by sufficient cause from making the return required under Section 139(2) but such satisfaction of the ITO cannot help the assessee enlarging the period of limitation prescribed by subsections of Section 139. Sections 144 and 146 are procedural in nature and they cannot affect the mandatory provisions of Section 139. As noticed above, there is a limitation on the discretion of the ITO in the matter of extending date for furnishing the return. He cannot extend the date beyond the date by which he has to complete the assessment though he may be of the opinion that there is sufficient cause for extension of time for furnishing the return. On parity of this reasoning, it must be taken that the finding of the ITO under Section 146 that the assessee was prevented by sufficient cause from making the return cannot enlarge the time limit for furnishing the return under Section 139. Service of the notice under Section 139(2) was itself sufficient warning to the assessee that despite any adverse situation, it would not get extension of time beyond 31-3-1976 by which the assessment was to be completed by the ITO. Then there was further concession to the assessee in Section 139(4) that on failure to file the return under Section 139(2) it could file the return up to the maximum period of two years from the end of the assessment year, i.e., to say by 31-3-1976. Under such circumstances, the assessee does not get any benefit from the proceedings setting aside ex pane assessment. In the event of success in those proceedings the assessee is relegated to the stage of Section 143 of the Act and certainly not to the stage of Section 139. Section 146 mentions that the ITO shall, if satisfied about the existence of sufficient cause, cancel the assessment and proceed to make a fresh assessment in accordance with the provisions of Section 143 or Section 144. At that stage if there is still time for filing the return the assessee may avail of it and if that time has expired the assessee cannot file a valid return.
6. It is also argued by the learned counsel for the assessee that since the ITO has determined the loss on the basis of return filed by it, it should be taken that it was a valid return. The argument is fallacious. It is not that in absence of a return the ITO loses jurisdiction to frame the assessment. Ther return filed by the assessee can well be taken as information furnished by it to the ITO for best judgment assessment.
7. Thus, there being no valid return the assessee was not entitled to carry forward the loss. The finding of the Commissioner (Appeals) on this point is, therefore, upheld. In view of this finding, the grievance of the assessee mentioned in ground No. 6 of the appeal does not survive. The assessee cannot equally be permitted to carry forward the long-term capital loss. The Commissioner (Appeals) has, therefore, rightly directed in paragraph 11 of the order to the ITO to examine the transaction in question and record a finding as to the nature and quantum of the income or loss and to pass the order in accordance with the aforesaid finding.
8. Now only the ground of appeal that survives for our consideration is whether the assessee was entitled to carry forward of unabsorbed depreciation. It appears that the learned Commissioner (Appeals) omitted to consider this point. However, there is no restriction in law in permitting the unabsorbed depreciation to be carried forward. In this connection, reference may be made to CIT v. Kalpaka Enterprises (P.) Ltd. [1986] 157 1TR 658 (Ker.) relied upon by the learned counsel for the assessee. We hold that the assessee is entitled to carrry forward the unabsorbed depreciation despite the fact that no valid return was filed by it. The ITO shall compute the unabsorbed depreciation.
9. In the the appeal is partly allowed.