V.K.SINGHAL, J. - (1.) THIS order will dispose of the IT references listed above as the common question of law arises in both of them. For the purpose of the disposal of the references, the facts of the case of DB IT Ref. No. 38 of 1987 CIT vs. Shiv Narain shall be taken into consideration.
(2.) THE Tribunal has referred the following question of law arising out of its order dt. 30th Oct., 1985 under s. 256(1) of the IT Act, 1961 in respect of the asst. yr. 1981-82 : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing to give the benefit of carry forward of loss even though the return was not filed within the time as allowed under s. 139(3) of the IT Act, 1961 and in ignoring the provisions of s. 80 of the Act ?" The brief facts of the case are that the assessee filed a return on 25th Feb., 1982 which was due on 31st July, 1981 and in the said return the claim for carry forward of loss was made. The assessee did not attend the hearing in spite of the notice having been issued by the ITO and, therefore, the claim of the petitioner was rejected by the ITO on the ground that the return was belated and carry forward loss cannot be allowed. In the appeal filed before the AAC of Udaipur Range it was contended that since the return has been filed within time limit laid down under s. 139(4) of the IT Act the ITO was bound to determine the loss and allow the benefit of carry forward. The decision of the apex Court in the case of CIT vs. Kullu Valley Transport Co. Pvt. Ltd. (1970) 77 ITR 518 (SC) : TC 9R.269 was relied upon. The AAC allowed the appeal following the said decision. The matter was challenged by the Revenue before the Tribunal and it was contended by the Departmental Representative that the return has not been filed within time and as such the AAC was not justified in giving the direction for determining the loss and allowing the benefit of carry forward of it. It was held by the Accountant Member of the Tribunal that the AAC was justified in allowing the assessee the benefit of carried forward loss. The decision which has been given before the amendment would be applicable in respect of the period after amendment. It may be observed that this view was taken by the Accountant Member and the Judicial Member has observed as under : "Although the decision of the Calcutta High Court in Presidency Medical Centre (P) Ltd. vs. CIT (1977) 108 ITR 838 (Cal) : TC 9R.288 is based on the decision of the Supreme Court in CIT vs. Kullu Valley Transport Co. Pvt. Ltd. (1970) 77 ITR 518 (SC) : TC 9R.269 which was definitely a case under the earlier law which has been now changed and the contrary interpretation sought to be placed by the Departmental Representative is quite plausible, since any High Court has not directly decided this issue in favour of the Department, I concur with the order proposed by my learned Brother." Sec. 80 of the Act provides carry forward and set off of loss by submission of return in accordance with the provisions contained therein. By Direct Tax Laws (Amendment) Act, 1987 (4 of 1988) it is provided in this section that the (sic no) loss which has not been determined in pursuance of a return filed "in accordance with the provisions of sub-s. (3) of s. 139" shall be carried forward and set off.... By this amendment, the return of loss which is submitted in accordance with the provisions of sub-s. (3) of s. 139 alone is to be taken into consideration. Prior to this amendment, the return could have been filed "within the time allowed under sub-s. (1) of s. 139 or within such further time as may be allowed by the ITO". This position was in existence from 1st April, 1985 and earlier to that a return filed "under s. 139" was the only requirement. So during the period in dispute the return which is submitted in accordance with the provisions of s. 139 could be taken into consideration. The Supreme Court held in CIT vs. Kullu Valley Transport Co. Pvt. Ltd. (supra) that s. 22(3) of the IT Act, 1922 is merely a proviso to s. 22(1) and if s. 22(3) is complied with, s. 22(1) must also be considered to have been complied with.
(3.) IT may be noted that amendment was made by amending Act of 1953 by which sub-s. (2A) was inserted in s. 22 and it was provided that losses claimed in belated return had to be determined and carried forward. The apex Court in Kullu Valley Transport Co.'s case (supra) observed as under : "According to s. 22(1), the ITO was to give public notice on or before the first day of May in each year by publication in the prescribed manner requiring every person whose total income during the previous year exceeded the maximum amount which was not chargeable to income-tax to furnish within such period not being less than 60 days as might be specified in the notice a return of his total income and total world income during that year. The ITO could in his discretion extend the date for the delivery of the return. Under s. 22(2) if the ITO was of the opinion that income of any person was of such amount as to render him liable to income-tax he could serve a notice on him requiring him to furnish within such period not being less than 30 days a return showing his total income and total world income during the previous year. The date of delivery of the return could again be extended in the discretion of the ITO. Sec. 22(3) provided that if any person had not furnished a return within the time allowed by or under sub-s. (1) or sub-s. (2) or having furnished a return under either of those sub-sections discovered any omission or wrong statement therein, he could furnish a return or a revised return at any time before the assessment was made. Thus, the scheme of s. 22 is that a public or general notice is to be given every year by the ITO or he could even give an individual or special notice. But if a person has not furnished a return within the time allowed by or under the first two sub-sections of s. 22 he could furnish a return at any time before the assessment is made. It is well settled by now that a return can always be filed at any time before the assessment is made. The ITO had to make the assessment on that return and he could not choose to ignore it. The question that immediately arises is whether, in case of a voluntary return in which loss has been shown and determined, the ITO can decline to give the benefit under s. 24(2) of carrying forward the loss on the ground that the assessee did not comply with the provisions of s. 22(2A) of the Act. In other words, when there is an express provision in that sub-section which must be availed of if the assessee is to be entitled to the benefit of carrying forward of loss in any subsequent assessment can he take advantage of the provisions of s. 22(3) and claim that since he has filed a voluntary return before any assessment has been made, and, if it be determined that he has suffered a loss, he is entitled to carry forward that loss." "In order to get the benefit of s. 24(2) the assessee must submit his loss return within the time specified by s. 22(1). That provision must be read with s. 22(3) for the purpose of determining the time within which a return has to be submitted. It can well be said that s. 22(3) is merely a proviso to s. 22(1). Thus, a return submitted at any time before the assessment is made a valid return. In considering whether a return made is within time sub-s. (1) of s. 22 must be read alongwith sub-s. (3) of that section. A return whether it is a return of income, profit or gains or of loss must be considered as having been made within the time prescribed if it is made within the time specified in s. 22(3). In other words, if s. 22(3) is complied with, s. 22(1) also must be held to have been complied with. If compliance has been made with the latter provision the requirements of s. 22(2A) would stand satisfied." Sec. 22(3) is corresponding to s. 139(4) of the Act of 1961 and s. 22(1) of 1922 is corresponding to s. 139(1) of the Act of 1961 and, as such in view of the said decision if the provisions of s. 139(4) is complied with then, in view of the decision of Kullu Valley Transport Co. Pvt. Ltd. referred to above; the provisions of s. 139(1) will be held to have been complied with. If the compliance of s. 139(4) is made then the requirement of s. 139(3) would also be considered to be satisfied. ;