COMMISSIONER OF INCOME TAX Vs. VISHWA BHUSHAN BANTA

JUDGEMENT

(1.) THE following question has been referred for the opinion of this Court by the Income tax Appellate Tribunal (hereinafter referred to as the Tribunal): Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was eligible for the benefit of carry forward of losses determined for the year on a return filed in pursuant to notice under Section 148?

(2.) THE brief facts necessary for decision of the aforesaid question are that the assessee is an individual. He did not file any return for the asst. yr. 1984 85. On 18th May, 1985 the AO issued a notice to the petitioner under Section 148 of the IT Act, 1961 (hereinafter referred to as the Act) requiring him to furnish return of his income in respect of the said year. The assessee filed his return in response to the notice on 25th Nov., 1987. In this return he declared a loss of Rs. 3,15,200. The AO processed the return and determined the loss at Rs. 1,280. However, the assessee was not permitted to carry forward the loss on the ground that the loss return had not been filed within the time allowed under Section 139(3) of the Act.

(3.) THE Revenue filed an appeal before the Tribunal. The Tribunal did not agree with the finding of the CIT(A) and held that the return was not a return under Section 139(4) of the Act since it was a return filed under Section 148. According to the Tribunal the return filed under Section 139(4) should be voluntary return. It further held that the voluntary return should have been filed before 31st March, 1987. In the present case the return was filed on 25th Nov., 1987 and, therefore, the return was not filed in time. However, the Tribunal decided the matter against the Revenue on different considerations. The Tribunal held that as per the provisions of Section 148 when a notice under Section 148 was issued, it would include the provisions of Section 139(2) and the law had created a fiction whereby when a notice was issued under Section 148 of the Act, all provisions of Section 139(2) shall apply. It, therefore, held that the return filed in response to notice under Section 148 should be treated a return filed under Section 139(2) of the Act and, therefore, it was a return within the meaning of Section 139 of the Act and the assessee was entitled to carry forward the loss in terms of Section 80 of the Act.