Calcutta H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing the authorities to allow the benefit of carry forward of loss determined for the asst. yr. 1985-86 in terms of s. 80 of the IT Act, 1961 ?

AJIT K. SENGUPTA, J.:

In this reference under s. 256(2) of the IT Act, 1961, for the asst. yr. 1985-86, the following question of law has been referred to this Court : “Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing the authorities to allow the benefit of carry forward of loss determined for the asst. yr. 1985-86 in terms of s. 80 of the IT Act, 1961 ?” The facts relating to this reference are stated hereinafter :

2. The assessee is a private limited company. The assessment year involved is 1985-86. The return for the aforesaid assessment year was due on or before 30th June, 1985. The assessee made an application in Form No. 6 on 29th June, 1985, 30th Sept., 1985, 31st Dec., 1985, and 31st March, 1986, praying for extension of time up to 30th Sept., 1985, 31st March, 1986, and 13th April, 1986, respectively. The return was ultimately filed on 4th April, 1986, showing a loss of Rs. 71,059 which was determined at Rs. 67,205 in the assessment framed by the Assessing Officer. He, however, did not allow the benefit of carry forward of loss on the ground that the assessee failed to file the return within the time allowed or extended time. The CIT (A) found that the assessee failed to show that the return had been filed within the time duly allowed by the ITO. According to him, filing applications for extension of time was not sufficient. Specific order of the ITO allowing extension of time was necessary to get the benefit of carry forward of loss. He, therefore, directed the Assessing Officer not to allow the benefit of carry forward of loss.

3. The Tribunal observed that the assessee filed four applications for extension of time, the last one of which being made on 31st March, 1986, seeking extension of time up to 13th April, 1986. No order allowing extension of time was passed by the Assessing Officer and the return was filed on 4th April, 1986, presuming that the applications filed by the assessee had been accepted by him. It, therefore, held that the presumption drawn by the assessee was fair and that, therefore, the assessee filed the return within the extended period and the assessee was entitled to carry forward of loss. Accordingly, the Assessing Officer was directed to allow the benefit of carry forward of loss determined during the year under reference.

4. In our view, the Tribunal was right in allowing the benefit of carry forward of loss. If the assessee had filed the return within the time allowed by the ITO, the assessee would be entitled to get the benefit of carry forward of loss as determined in the assessment. In this case, four applications were made by the assessee for extension of time. The ITO neither dealt with those applications nor disposed of such applications. The assessee was not communicated any decision of the ITO on these applications. But, at the time of assessment, the ITO proceeded to deny the benefit of carry forward of loss determined in the assessment presumably on the ground that no extension was granted. When an application is made by the assessee for extension of time and no decision is rendered on such application, it must be presumed that the Assessing Officer has allowed time to the assessee to file the return within the extended period as asked for by the assessee. Even if the application for extension is rejected but the order of rejection is not communicated, such order will be treated as non est and the assessee will be entitled to presume that the application for extension has been allowed.

5. We are, therefore, of the view that the assessee not having been communicated of the fate of its extension application and having filed the return within the time asked for in the last of such applications, the ITO cannot deny the assessee the benefit of carry forward of loss determined in the assessment.

For the reasons aforesaid, we answer this question in the affirmative and in favour of the assessee. There will be no order as to costs.

NURE ALAM CHOWDHURY, J.:

I agree.

[Citation : 202 ITR 532]