Allahabad High Court
Commissioner Of Income-Tax vs Rohit Organics (P.) Ltd. on 15 April, 2005
Equivalent citations: (2006)202CTR(ALL)512, [2006]281ITR194(ALL)
Bench: R.K. Agrawal, Rajes Kumar
JUDGMENT
1. The Income-tax Appellate Tribunal, New Delhi, has referred the following question of law under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for opinion to this Court :
1. Whether on the facts and in the circumstances of the case, the learned ITA was legally correct in directing the Assessing Officer to allow carry forward of business loss in the assessment year 1988-89 in contravention of the provisions of Sections 80 and 139(3) in this regard ?
2. The brief facts of the case are that the assessee/opposite party (hereinafter referred to as "the assessee"), is a company incorporated under the Companies Act. The assessee filed a return of loss on August 25, 1988. The claim of loss was disallowed on the ground that the return was filed beyond time prescribed under Section 139(1) of the Act. The assessee filed an appeal before the Commissioner of Income-tax (Appeals), which was allowed. Before the Commissioner of Income-tax (Appeals), the assessee contended that the time specified for tiling the return of loss in this case was July 31, 1988, but the application in Form No. 6 was filed on July 30, 1988, vide receipt No. 6 requesting therein that the time for furnishing the return may be extended up to September 30, 1988, and the return was filed on August 25, 1988, much before September 30, 1988. It was contended that the application for extension of time, had not been rejected and nothing had been communicated in this regard, therefore, it was deemed to have been allowed. The Commissioner of Income-tax (Appeals) accepted the plea of the assessee and allowed the appeal. The Revenue filed an appeal before the Tribunal which has been dismissed. The Tribunal accepted the claim of the assessee relying upon the decision in the case of Harmanjit Trust v. CIT .
3. Heard learned standing counsel appearing on behalf of the Revenue, and Sri V. Gulati appearing on behalf of the assessee. We do not find any error in the order of the Tribunal. Admittedly, the assessee had sought extension by moving an application in Form No. 6 on July 30, 1988, seeking time up to September 30, 1988, and the return was filed on August 25, 1988. A duty was cast on the officer to intimate to the assessee whether its request for extension of time for furnishing of return had been granted or refused. Application for extension of time had not been rejected and nothing had been communicated in this regard, therefore, the assessee cannot be held responsible for inaction on the part of the Assessing Officer and the application for extension of time is deemed to have been allowed. In this way, the return filed by the assessee is deemed to be within time specified under Section 139(1) of the Act.
4. In the case of Harmanjit Trust v. CIT the Punjab and Haryana High Court held as follows (pages 216 and 218) :
As is plain from the proviso to Section 139(1) of the Act, the assessee has been conferred a right to make an application in the prescribed manner to the Income-tax Officer praying for extending the date for furnishing the return and the Income-tax Officer may, in his discretion, extend such date. Rule 13 of the Income-tax Rules, 1962, prescribed that for the said purpose, Form No. 6 be employed. In the text of Form No. 6 there is an option exercisable by deleting inappropriate words to suit the assessee's needs. The option is between that it is not possible for the assessee or has not been possible for the assessee to file the return before the said date. It is plain therefrom that extension of time can be prayed for before or even after the expiry of the date fixed for filing the return. Specifically in Karam Singh v. CIT , a Division Bench of this Court has held that the proviso to Section 139(2) which pariateria is the same as the proviso to sub-section (1) of Section 139 does not contain any limitation to the effect that an application for extension of time should be filed within the time originally prescribed and that such an application can be made even after the expiry of the prescribed date....
Duty was cast on the Income-tax Officer to intimate to the assessee whether its request for extension of time for furnishing the return had been granted or refused. Thus, the predominant view in various High Courts is that the assessee can well presume that his request for extension of time for furnishing the return had been granted, unless the Income-tax Officer well in time communicates to the assessee his refusal. And it is precisely for this reason that Form I.T.N.S. (annexure 'F with the statement) has been provided for use of the Income-tax Officer to convey grant or refusal of extension of time." In the case of CIT v. Janata Film Exchange (P.) Ltd. reported in [1993] 202 ITR 532 (Cal), the assessee has filed a return of loss. Time was sought for extension in filing the return. No decision was rendered or communicated by the Income-tax Officer about the extension or its rejection. The return was filed within the extended period. However, the assessing authority disallowed the claim of loss on the ground that the return was not filed within the time prescribed under Section 139(1). The Tribunal allowed the claim in the reference filed by the Commissioner of Income-tax, the Division Bench of the Calcutta High Court held as follows (page 534) :
In our view, the Tribunal was right in allowing the benefit of carry forward of loss. If the assessee had filed the return within the time allowed by the Income-tax Officer, the assessee would be entitled to get the benefit of carry forward of loss as determined in the assessment. In this case, four applications were made by the assessee for extension of time. The Income-tax Officer neither dealt with those applications nor disposed of such applications. The assessee was not communicated any decision of the Income-tax Officer on these applications. But, at the time of assessment, the Income-tax Officer proceeded to deny the benefit of carry forward of loss determined in the assessment presumably on the ground that no extension was granted. When an application is made by the assessee for extension of time and no decision is rendered on such application, it must be presumed that the Assessing Officer has allowed time to the assessee to file the return within the extended period as asked for by the assessee. Even if the application for extension is rejected but the order of rejection is not communicated, such order will be treated as nonest and the assessee will be entitled to presume that the application for extension has been allowed.
We are, therefore, of the view that the assessee not having been communicated of the fate of its extension application and having filed the return within the time asked for in the last of such applications, the Income-tax Officer cannot deny the assessee the benefit of carry forward of loss determined in the assessment.
7. In the case of Lachman Chaturbhuj Java v. R.G. Nitsure , the Bombay High Court has held that where the application for extension of time for filing the return was filed, it is the duty of the officer concerned to reply. In the absence of any reply, it is held that the time is deemed to have been granted.
8. In the case of CIT v. Ajanta Electricals , extension of time for filing the return had been ignored on the ground that it was not filed within the period allowed originally. The apex court held that mere absence of a specific provision authorizing the Income-tax Officer to entertain an application made beyond time, it was not proper to hold that it was not open to the assessee to make an application under Section 139(2) for extension of time after the time allowed had expired and that such an application could not be entertained by the Income-tax Officer. It has been further held that if an application could be made even after the time allowed had expired, it became the duty of the Income-tax Officer either to grant it or reject it. Once the assessee called upon the Income-tax Officer to exercise his discretion, it was not open to him to ignore that request and not to pass any order thereon.
9. The Allahabad High Court in the case of Jan Daood and Co v. ITO reported in [1978] 113 ITR 772, a case which arose in writ jurisdiction in the backdrop of a prayer for extension of time for furnishing the return and for continuance of registration of a firm, it was held that when the Income-tax Officer had not communicated any order to the firm. On receipt of application for further extension, the assessee can well have presumed under the belief that its request for extension of time for furnishing the return had been granted and since the Commissioner of Income-tax had not applied his mind to such relevant aspect of the matter, the Commissioner of Income-tax refusing such manifest error of law was quashed.
10. For the reasons stated above, the question referred to us, is answered in the affirmative in favour of the assessee and against the Department. There shall be no order as to costs.