COMMISSIONER OF Income Tax vs JANATA FILM EXCHANGE (P.) LIMITED.

AJIT K. SENGUPTA J. - In this reference u/s 256(2) of the Income Tax Act, 1961, for the assessment year 1985-86, the following question of law has been referred to this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing the authorities to allow the benefit of carry forward of loss determined for the assessment year 1985-86 in terms of section 80 of the Income Tax Act, 1961 ?"

The facts relating to this reference are stated hereinafter :

The assessee is a private limited company. The assessment year involved in 1985-86.

The return for the aforesaid assessment year was due on or before June 30, 1985. The assessee made an application in Form No. 6 on June 29, 1985, September 30, 1985, December 31, 1985, and March 31, 1986, praying for extension of time up to September 30, 1985, March 31, 1986, and April 13, 1986, respectively. The return was ultimately filed on April 4, 1986, showing a loss of Rs. 71,059 which was determined at Rs. 67,205 in the assessment framed by the Assessing Officer. He, however, did not allow the benefit of carry forward of loss on the ground that the assessee failed to file the return within the time allowed or extended time. The Commissioner of Income Tax (Appeals) found that the assessee failed to show that the return had been filed within the time duly allowed by the Income Tax Officer. According to him, filing applications for extension of time was not sufficient. Specific order of the Income Tax Officer allowing extension of time was necessary to get the benefit of carry forward of loss. He, therefore, directed the Assessing Officer not to allow the benefit of carry forward of loss.

The Tribunal observed that the assessee filed four applications for extension of time, the last one of which being made on March 31, 1986. seeking extension of time up to April 13, 1986. No order allowing extension of time was passed by the Assessing Officer and the return was filed by the assessee had been accepted by him. It, therefore, held that the presumption drawn by the assessee was fair and that, therefore, the assessee filed the return within the extended period and the assessee was entitled to carry forward of loss. Accordingly, the Assessing Officer was directed to allow the benefit of carry forward of loss determined during the year under reference.

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 non est 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.

For the reasons aforesaid, we answer this question in the affirmative and in favour of the assessee.

There will be no order as to costs.

NURE ALAM CHOUDHARY J. - I agree.