COMMISSIONER OF INCOME TAX Vs. JOSEPH RAJAPPAN DECD

JUDGEMENT

(1.) IN obedience to the direction of this court under Section 256(2) of the INcome-tax Act, 1961 (briefly, "the Act"), the INcome-tax Appellate Tribunal referred the following question, relating to the assessment year 1983-84, for the opinion of this court :

(2.) THE facts, as found by the Appellate Tribunal, are that the assessee did not file a return under Section 139(1) of the Act. Notice under Section 148 was issued and served on the assessee on May 8, 1984. Pursuant to the notice he filed a return declaring a loss of Rs. 5,13,820 on January 8, 1985. THE assessment was completed under Section 143(3) on May 13, 1985, determining the loss at Rs. 3,11,166. As according to the Assessing Officer no return was filed under Section 139 and as no loss was determined pursuant to any return under Section 139, the loss determined was not allowed to be carried forward for set off.

(3.) THE question for consideration is whether loss determined pursuant to the return filed after service of the notice issued under Section 148 but within the time stipulated under Section 139(4) will be allowed to be carried forward for the purpose of set off. THE Tribunal, relying on the decisions of the Madhya Pradesh and the Calcutta High Courts, held that the assessee was entitled to carry forward the business loss. THE submission of learned senior standing counsel before us is that Section 148(1), as it stood in the relevant assessment year, simply deemed that the notice issued thereunder will be deemed as if it were a notice issued under Section 139(2) and that there was no deeming provision thereunder that a return filed pursuant to the notice issued under Section 148(1) will be deemed to have been filed under Section 139, which deeming provision was enacted by a subsequent amendment not relevant for the purpose of the assessment year relevant herein. THE Appellate Tribunal clearly found that pursuant to the notice issued under Section 148, the assessee filed the return showing loss on January 8, 1985, and that return falls under Section 139(4), inasmuch as that was filed within the period of two years, which would have expired on March 31, 1986. THE only submission of learned senior standing counsel is that Section 148(1) does not deem that any return filed pursuant to the notice issued under Section 148 would be treated to have been filed under Section 139 and that the deeming provision, as contained in Section 148, will be restricted only to the notice as if it were a notice under Section 139(2). He, therefore, submits that the return filed by the assessee pursuant to the notice issued under Section 148 could not be taken to have been filed under Section 139 at all. We are not at all impressed by the submission of learned senior standing counsel. This question came up for consideration before a Full Bench of the Karnataka High Court in Kareemsons Pvt. Ltd. v. CIT, 1992 198 ITR 543. In this case, the Full Bench was concerned with the assessment year 1978-79. Before the Full Bench, the assessee contended that the return filed pursuant to the notice under Section 148 should be treated as a return under Section 139(4) as the same was filed prior to the making of the assessment order and as that was filed within the period prescribed under Section 139(4), THE Full Bench held that the return filed by the assessee within limitation as prescribed for the purpose of Section 139(4) would be deemed to be a return under Section 139(4) despite the fact that the same was filed pursuant to the notice issued under Section 148. Similar view was taken by this court in CIT v. R. Chandran, 1991 191 ITR 329. This court held that under the law, as it stood in the assessment year 1976-77, a return filed or deemed to have been filed under Section 139(4) of the Act before the assessment is made should be considered and the assessee is entitled to carry forward the loss determined by the Assessing Officer. Similar view was taken by the Madhya Pradesh High Court in Co-op. Marketing Society Ltd. v. CIT, 1983 143 ITR 99 and by the Calcutta High Court in Burdwan Wholesale Consumers' Co-op. Society Ltd. v. CIT, 1991 191 ITR 570. All these High Courts in turn relied on CIT v. Kulu Valley Transport Co. P. Ltd., 1970 77 ITR 518. THEre are some other High Courts as well which have taken the same view. THErefore, the legal position seems to be well settled that when a return is filed pursuant to the notice issued under Section 148 within the time limit prescribed under Section 139(4), it will be taken to have been filed under that provision and if any loss is determined by the Assessing Officer pursuant to such return, that will be allowed to be carried forward for the purpose of set off. THE position will not change simply because there was no deeming provision under Section 148(1) as it stood in the relevant year that a return filed pursuant to the notice under Section 148(1) will be deemed to have been filed under Section 139. THE submission of senior standing counsel that a return filed pursuant to the notice under Section 148 can be taken to have been filed under Section 139 only after the amendment made under Section 148 and not prior to that, does not seem to be persuasive at all. Simply because the amendment was made after the assessment year 1983-84, it does not mean that the position which stood after the amendment, could not exist at all prior to that. THE catena of authorities clearly indicate that if a return is filed within the time limit prescribed under Section 139(4) pursuant to the notice issued under Section 148, then that will be deemed to have been filed under Section 139(4) and the loss determined pursuant to such return will be allowed to be carried forward and we fully share that view.