Ranjitsing Virk vs Mrs. Pramila Srivastav

S.H. Kapadia, J.—The petitioner was engaged in the production of Cinema Feature Film. The petitioner filed returns of losses in respect of the assessment years 1977-78 up to 1982-83. Pursuant to the said returns filed by the petitioner, in respect of previous year ending on 30-6-1981 for the assessment year 1982-83, the ITO, after considering the said return, passed an order on 29-3-1985 assessing the income of the petitioner at Rs. 2,91,645. It is the case of the petitioner that in respect of the assessment year 1980-81, the previous year which ended on 30-6-1979, notice u/s 148 of the income tax Act, 1961 (''the Act'') was issued on 30-9-1981 and the same was received by the petitioner on 15-10-1981. Another notice u/s 148 was issued on 22-11-1982 and the same was received by the petitioner on 26-2-1983. However, the petitioner filed his loss return declaring losses in respect of assessment year 1980-81 on 30-3-1983, i.e., within the time limit allowed by section 139(4) of the Act. Similarly, in respect of the assessment year 1981-82, notice u/s 148 was issued on 22-11-1982 and the said notice was received on 26-2-1983. The petitioner filed his loss return for the assessment year 1981-82 on 15-2-1984, i.e., within time prescribed u/s 139(4). Against the income of Rs. 2,91,645 in respect of the assessment year 1982-83 the petitioner claims, inter alia, determination of the petitioner''s losses for the assessment years 1980-81 and 1981-82 after hearing the petitioner and on such determination to carry forward such losses and set off the same against income assessed for the assessment year 1982-83. The department has rejected the petitioner''s claim on the ground that once notice u/s 148 is issued, the petitioner is not entitled to claim the benefit of carry forward of the above losses. The issue involved in this petition is covered by a large number of various decisions of the various Courts. In the case of Kareemsons (P.) Ltd. Vs. Commissioner of Income Tax , the Full Bench of Karnataka High Court, after considering section 139(4) in the context of sections 80 (as it then stood), 139(4) and 148, has held that the right given to the assessee u/s 139(4) cannot be lost merely because the revenue instituted proceedings u/s 147 of the Act in the meanwhile. In the present case, we have seen from the record that the petitioner filed returns indicating losses well within the time prescribed u/s 139(4). It is contended on behalf of the respondents that the petitioner filed his returns u/s 139(4) after issuance of notice u/s 148 and in the circumstances, the petitioner was not entitled to apply for carry forward of the losses. We do not find any merit in the said contention. The right given to the assessee u/s 139(4) cannot be lost merely because the revenue instituted proceedings u/s 147. In the above circumstances, the petitioner was entitled in respect of the assessment years 1980-81 and 1981-82 to apply to the income tax Department for determination of the losses and on such determination to carry forward such losses and set off.

In respect of the petitioner''s claim for determination of the losses for assessment year 1979-80, the ITO by his order dated 29-3-1985 determined the loss at Rs. 23,691 but there was no order to carry forward the loss. The petitioner preferred the appeal to the Assistant Commissioner which was dismissed. The petitioner did not pursue the matter further. The petitioner did not prefer further appeal which was available to him in law and, therefore, the order of ITO has attained finality in respect of the assessment year 1979-80. In the circumstances, it is not possible to disturb the order passed by the ITO in respect of the assessment year 1979-80.

In the circumstances, petition is partly allowed. In respect of the assessment years 1980-81 and 1981-82, the ITO will determine the returns claiming losses and also decide the question of carry forward and set off of losses, if any, in accordance with law. On the facts and circumstances of the case, there will be no order as to costs.