COMMISSIONER OF INCOME TAX Vs. SATYANARAYAN BHALOTIA

JUDGEMENT

(1.) IN this application under S. 256(1) of the IT Act, 1961 ('the Act') for the asst. yr. 1975-76, the following question of law has been referred to this Court?

(2.) THE facts as are relevant to the dispute are that the assessee suffered a loss of Rs. 7,25,607 from speculative business for the asst. yr. 1974-75. No return was filed by the assessee under s. 139 of the Act for that year. No notice under S. 139(2) was issued either. Subsequently, the assessee filed return for the asst. yr. 1974-75 in response to a notice under S. 148 of the Act. The assessment was completed on 30th June, 1977 on a total income of Rs. 63,850. He also determined the speculative loss at Rs. 7,25,607 and directed the loss to be carried forward to the subsequent year. For the asst. yr. 1975-76, the assessee did not file any return in terms of S. 139, but he did file a return in compliance with the notice issued under S. 148. The ITO while completing the assessment for the year 1975-76 adjusted the speculative loss of Rs. 7,25,607 against the speculative profit. But he was of the opinion that as the speculative loss for the asst. yr. 1974-75 was determined in the assessment in pursuance of the return filed under S. 148 and not the return filed under S. 139, the assessee was not entitled to the benefit of carry forward and set off speculation loss for the asst. yr. 1974-75 against the speculation profit for the asst. yr. 1975-76. According to him, there was a mistake apparent on the face of the record and he invoked the provisions of S. 154 of the Act. The contention before the ITO was that S. 154 could not be invoked inasmuch as the assessee filed return under S. 148 and that must be deemed to be a return filed under S. 139. Accordingly, S. 80 of the Act will have no application. It was also pointed out that it was mistake apparent from the record and, accordingly, the ITO should not proceed any further with the proceedings. The ITO, however, did not agree with the submission and disallowed speculation loss.

(3.) AT the hearing before us, the same contentions have been reiterated. There is no dispute that the assessee did not file any return under S. 139 and that for both the asst. yr. 1974-75 and 1975- 76 returns were filed pursuant to the notices issued under S. 148.