Smt. Ashima Hariharan vs Commissioner of Income Tax

V.V. Kamat, J.—The subject-matter of these two references relates to the assessment years 1980-81 and 1982-83, respectively. The following questions are referred by the Income Tax Appellate Tribunal, Cochin Bench, for our consideration and consequent answers in regard thereto :

Question proposed for the year 1980-81 :

" Whether, on the facts and in the circumstances of the case, the return filed by the assessee after receipt of notice u/s 148 of the Income Tax Act, 1961, can be treated as return filed u/s 139(2) of the Income Tax Act, 1961, and the benefit of the loss assessed be allowed to be carried over for future set-off ?"

Question proposed for the year 1982-83 :

"Whether, on the facts and circumstances of the case, the Tribunal was right in law in not allowing carry forward and set-off of loss of the earlier year ?"

On hearing learned counsel for the parties and the Department, there is no controversy with regard to the legal position. If the return as filed on November 10, 1983, with regard to the assessment year 1980-81 could be considered as having been legally and properly filed within the grant of extension of time for filing the return, then the assessee can get the benefit of carrying forward the loss which is in question in these references. On the other hand, if the position is that the return is filed in pursuance of notice u/s 148 of the Income Tax Act, 1961, in pursuance of which the assessment is carried out u/s 143(3) of the said Act, then the assessee would not have any legal claim to carry forward the loss for the subsequent assessment year.

The necessary and restricted factual matrix is essential. For the assessment year 1980-81, the assessee incurred a loss of Rs. 6,05,500. It is her case that she had applied for extension of time for filing the return and it was within the time extended that the return in question was filed on November 10, 1983.

It is on record undisputedly that Section 148 notices came to be issued by the Income Tax Officer on October 21, 1983. On the basis of the return filed on November 10, 1983, the Income Tax Officer, on completion of the assessment by an order u/s 143(3) of the Act dated February 26, 1985, accepted the loss, but holding that it is not possible to permit carrying forward of the said loss because the filing of the return could not be said to have been done under the provisions of Section 139(3) of the Act.

Two appeals were carried to the Commissioner of Income Tax (Appeals), Ernakulam, which came to be dismissed, holding that the filing of the return of the assessment year 1980-81 on November 10, 1983, being beyond the period of two years, from March 31, 1981 (two years expired on March 31, 1983), the return could not be said to have been filed under the provisions of Section 139(4) of the Act. As a consequence the claim for carrying forward of the loss was not accepted confirming the decision of the Income Tax Officer.

Further appeals to the Income Tax Appellate Tribunal, Cochin Bench, received a further endorsement to the conclusion that the return could not be said to have been filed under the provisions of Section 139(4) of the Act.

The Tribunal has elaborately considered the basic question as to whether the return filed on November 10, 1983, could be said to have been filed under a legal and proper order of extension of time, apart from the statutory provision of filing the return after the period of two years therefrom. The Tribunal has considered the question, in fact on the basis of the material sought to be laid before it for the first time, reaching the conclusion that on the basis thereof, it cannot be said that the extension of time that was applied was for the assessment year 1980-81 and not for any other assessment year.

In fact it would not be a burden on this judgment if the discussion in regard thereto in paragraph 9 of the order of the Tribunal is reproduced and verbatim as follows :

" The first issue to be decided is whether the assessee had asked for extension of time in Form No. 6. Sri Ramamani had placed before us xerox copies of the pages in the despatch register of the chartered accountant to prove that the applications were furnished. We have no reason to reject these xerox copies as not authentic. We have also no reason to treat them as materials furnished for the first time. We find an application was received on June 30, 1980, the second application was received on September 3, 1980, the third one on October 1, 1980, and fourth one on December 1, 1980. Again on December 31, 1980, another application had been submitted on June 2, 1981, for extension of time. The next application was submitted on June 2, 1981. The records show that other applications were filed on July 31, 1981, September 30, 1981, January 30, 1982, February 27, 1982, July 12, 1982, August 28, 1982, December 31, 1982, March 16, 1983, June 30, 1983, and July 30, 1983. The last one was on September 30, 1983. Although these applications have been filed before the Income Tax Officer, these are not evidences on two vital issues. First the time for which the extension was required and second the assessment year for which the extension was required. Let us assume that it is not very material regarding the time required because the next application for extension must have been presumably filed after the time requested for had expired. However, the real difficulty arises in the absence of any noting regarding the assessment year. As far as the applications for extension of time up to June, 1981, are concerned, we can accept the assessee''s contention that all these applications would refer to the assessment year 1980-81. But applications after June, 1981, cannot be assumed to be in respect of the assessment year 1980-81 alone. It could be for 1981-82. Similarly, the applications received after June, 1982, may relate to the assessment year 1982-83. Therefore, on this issue, i.e., whether the applications were in respect of the assessment year 1980-81 or 1981-82 or 1982-83, the evidence led is not at all conclusive. Therefore, even if we can accept the premise that the absence of a response from the Income Tax Officer would amount to granting of extension of time, it cannot be stated that the extension of time was for the assessment year 1980-81 and not for any other assessment year."

It would appear from the discussion in regard to the material on record that even though the assessee was looked after with reference to the function of filing returns before the tax authorities by a registered chartered accountant, the material that is placed on record is not copies of application for extension of time, but xerox copies of the pages in the despatch register of the office of the said chartered accountant. No wonder then, the Tribunal could not accept any kind of particulars with regard to the contents of the applications, the relevant assessment year in regard to which the applications are made and other necessary particulars in regard thereto. Added to these, the statutory provisions are clear that with regard to the year in question--1980-81--the year ends on March 31, 1981, and the assessment in regard thereto is to be completed within a period of two years thereafter, ending on March 31, 1983. There is no dispute that the due date for filing a regular return for the year in question would be June 30, 1980. Even on probabilities an application for extension could be understood to have been made some time in the month of June, 1980. The application dated June 2, 1981, and that too only on the basis of the xerox copies of the despatch register in regard thereto, could be the one that could be contemplated. It is seen that the return is filed on November 10, 1983. The above extract would show that the last date would be September 30, 1983. Suffice it to state that even from this half-hearted and haphazard attempt, the Tribunal cannot be blamed that the evidence is not in any manner conclusive in regard thereto. On a careful consideration of the order of the Tribunal in the above context, there cannot be any confusion that the Tribunal did not record a finding or rather it was more than difficult for the Tribunal even to think of recording such a finding that the return filed on November 10, 1983, was filed within the lawful and proper extension of time granted by the Income Tax Officer.

The Tribunal considered the position yet from another legal angle. With regard to the assessment year 1980-81, the year ending on March 31, 1981, the return is filed on November 10, 1983. It would be a return after the period of two years as it is arithmetically clear that the period of completion of assessment expired on March 31, 1983. In this view also, the Tribunal is more than right in recording a consequential conclusion that the Income Tax Officer could extend time only up to March 31, 1983. In fact even otherwise in view of the state of affairs relating to the material on record regarding the extension of time and application in regard thereto, we need not travel further. This is obviously because if the return is not filed within the extended time, there is no doubt that the benefit of carrying forward the loss to the next assessment year would not be available to the assessee in view of the clear position that the assessee would not get any benefit of any of the provisions of Section 139 of the Act. On any count it cannot be considered in any way that the return in question dated November 10, 1983, could be the one u/s 139(4) of the Act on the basis of the factual material that is laid on record before us.

In fact in view of this factual position on record, there is no question of treating the return as filed u/s 139(2) of the Act ; needless to say that consequential benefits could not even be contemplated in the matter of carrying forward for set-off for the subsequent assessment year.

It is hardly necessary to specify that the question for the year 1982-83 is only in the nature of an inevitable consequence of the position discussed above.

For all the above reasons the references stand rejected. The question for the year 1980-81 is answered in the negative--in favour of the Department and against the assessee. Naturally, therefore, even the question proposed for the year 1982-83 is answered in the affirmative--in favour of the Department and against the assessee.

A copy of this judgment shall be caused to be sent under the seal of the court and the signature of the Registrar to the Income Tax Appellate Tribunal, Cochin Bench. Order accordingly.