JUDGMENT
P.A. MOHAMMED, J
These reference cases are coming up before us at the instance of the Revenue. The questions referred to us for decision are as follows:
‘I. Whether, on the facts and in the circumstances of the case and in view of the fact that the assessee filed the return only on 7th Jan., 1986, the Tribunal is factually right in assuming that the assessee filed the return within the time allowed under s. 139(4) and in deciding the question accordingly?
2. Whether, on the facts and in the circumstances of the case, the assessee is entitled to carry forward the loss?
3. Whether, on the facts and in the circumstances of the case and considering the grounds raised and the return having been filed only on 7th Jan., 1986, did the Tribunal consider the real question that arose for consideration in its correct perspective?
4. Whether, on the facts and in the circumstances of the case and also in the light of the decision reported in Burdwan Wholesale Consumers Co-operative Society vs. CIT (1991) 94 CTR (Cal) 259: (1991) 191 ITR 570 (Cal), the decision reported in CIT vs. R. Chandran (1991) 191 ITR 328 (Ker), has application to the facts of the case?”
2. The assessment years involved in these cases are 1979-80 and 1980-81. A notice has been issued by the AO under s. 148 of the IT Act on 1st Oct., 1981, and the assessee filed returns of income for the asst. yrs. 1979-80 and 1980-81 on 7th Jan., 1986. The assessee returned a loss of Rs. 1,53,683 for the asst. yr. 1979-80 and Rs. 7,01,371 for the asst. yr. 1980-81. However, the AO accepted the loss for the year 1979-80 and determined the loss at Rs. 1,44,215. The AO also found that the assessee did not file return of income as provided under s. 139 of the Act and the loss determined could not be carried forward. Appeals were filed before the CIT(A) for both the years. The disallowances were confirmed by the CIT(A), but he directed the AO to allow carry forward of loss for both the assessment years in a sum determined by him, against which the Revenue filed appeals. The Tribunal, however, following the decision of this Court in CIT vs. R. Chandran (supra) sustained the order of the CIT(A). Though, a Misc. Petn. was filed before the Tribunal for rectification of the mistake that was also dismissed by the Tribunal. These reference cases arise in the aforesaid background.
3. Learned senior standing counsel submitted that the Tribunal grossly erred in applying the decision of this Court in CIT vs. R. Chandran (supra) against the Revenue. Though notice was issued by the AO under s. 148 of the Act on 1st Oct., 1981 the assessee filed returns for the years 1979-80 and 1980-81 only on 7th Jan., 1986. This factual situation has been lost sight of by the Tribunal while deciding the case in favour of the assessee on the basis of the decision aforesaid. This Court in Chandran’s case, (supra), observed that the accounting period in respect of the year 1976-77 involved in that case ended on 31st March, 1976 and the return was due on or before 31st July, 1976. The assessee filed the return on 22nd March, 1978. The short question that arose for consideration in that case was whether, in the return filed by the assessee, which could only be a return filed under s. 139(4) of the Act, it was open to the assessee to insist that the loss incurred in the previous years must be determined and allowed to be carried forward. In the aforesaid circumstances this Court allowed the claim of the assessee for carrying forward the loss. As far as the present case is concerned, s. 139(4) will apply- But as per the above provision in a case where the assessee filed return pursuant to a notice under s. 148, the return ought to have been filed within a period of two years from the end of the assessment year in question. That has not been done in this case. Therefore, the decision of this Court in Chandran’s case, (supra), will not apply to the facts of the present case. The decision of the Calcutta High Court in Burdwan Wholesale Consumers’ Co-operative Society Ltd. vs. CIT (supra) will apply to the facts of the present case. A contention was advanced in that case that if the taxpayer had a right to file a return and claim carry forward or set off of losses, then such right is not brought to an end by the issue of a notice under s. 148 which is merely a machinery section. In answer to the contention the Court observed that in the instant case, the returns of loss for the asst. yrs. 1970-71 and 1971-72 were ultimately furnished by the assessee on 9th Aug., 1974. This was beyond t(e period of time prescribed by s, 139(1), s. 139(2) or s. 139(4). The losses incurred in the accounting years relevant to the asst. yrs. 1970-71 and 1971-72 could not, therefore, be carried forward and set off against profits of a subsequent year.
4. In view of the discussion hereinabove; we are of the view that the Tribunal has committed an error in observing that the question involved in this case is squarely governed against thJ, Revenue in view of the decision of this Court in Chandran’s case, (supra).
5. Out of the four questions referred to us, question No. 2 is the main question which requires to be answered in this reference. That question is:
‘Whether, on the facts and in the circumstances of the case, the assessee is entitled to carry forward the loss?”
ln view of what is said above, this question is answered in the negative, that is to say, against the assessee and in favour of the Revenue. In view of this answer, we are of the view that the other questions need not be answered since they are unnecessary.
OPEN