The Commissioner Of Income-Tax, Madurai v. M/S.s.rangasamy Nadar & Co., Dindigul

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 02/12/2002 CORAM THE HONOURABLE MR.JUSTICE N.V.BALASUBRAMANIANandTHE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN T.C.No.36 of 1999 The Commissioner of Income-tax,Madurai. ... Applicant. -Vs- M/s.S.Rangasamy Nadar & Co.,Dindigul. ... Respondent Reference arising out of the order of Income-tax AppellateTribunal, Bench-B, Madras, in ITA.No.4185(Mds)/89, dated 30.5.1997, at theinstance of Revenue. !For applicant :: Mrs.Pushya Sitharaman. ^For respondent :: No appearance. :JUDGMENT (JUDGMENT of the Court was delivered by N.V.BALASUBRAMANIAN,J.)The respondent herein is a firm and it filed the return ofincome on 6.11.1986 claiming that it sustained a loss of Rs.5,27,420/- for theassessment year 1986-87. The assessing officer lodged the return undersection 139(10) of the Income-tax Act, 1961 (hereinafter referred to as 'theAct') on the ground that the return was a non-est return and the assessee wasnot entitled to the benefit of carry forward of loss for the assessment year1986-87. The assessee challenged the order of the assessing officer denyingthe benefit of carry forward of loss by filing appeal before the Commissionerof Income-tax ( Appeals), Madurai. The Commissioner of Income-tax (Appeals)held that there was no delay in filing the return by the assessee and thereturn filed was within the time prescribed under the Act. He therefore heldthat the assessee was entitled to the benefit of carry forward of loss,particularly, the depreciation loss. He was of the view that the order passedby the assessing officer was really passed under section 143(3) of the Act andaccordingly, he held that the appeal was maintainable.2. The Revenue challenged the order of the Commissioner ofIncome-tax (Appeals) before the Appellate Tribunal. The Appellate Tribunalalso held that the appeal was maintainable in law. The Appellate Tribunalalso held that the assessee was entitled to the benefit of carry forward of its business loss. The Appellate Tribunal dismissed the appeal preferred bythe Revenue and the order of the Appellate Tribunal is the subject matter ofchallenge in the tax case and at the instance of the Revenue, the AppellateTribunal has stated a case and referred the following question of law:-"Whether on the facts and in the circumstances of the case,the Appellate Tribunal is correct in law in holding that the assessing officerhas to entertain the return which was filed belatedly and to allow carryforward of loss for the assessment year 1986-87?" 3. We heard Mrs.Pushya Sitharaman, learned senior standing counsel for the Revenue. We are of the view that the Appellate Tribunal hasfound as a matter of fact that for the assessment year 1986-87, though thereturn ought to have been filed on or before 30.6.1986, the assessee appliedfor extension of time by filing an application in Form No.6 under section139(10) of the Act seeking extension of time to file the return till31.12.1986. It was also found by the Commissioner of Income-tax (Appeals)that the assessee applied for extension of time by filing Form No.6 on 10.9.1986 and the return was filed on 6.11 .1986. 4. The submission of Mrs.Pushya Sitharaman, learned senior 3. We heard Mrs.Pushya Sitharaman, learned senior standing counsel for the Revenue. We are of the view that the Appellate Tribunal hasfound as a matter of fact that for the assessment year 1986-87, though thereturn ought to have been filed on or before 30.6.1986, the assessee appliedfor extension of time by filing an application in Form No.6 under section139(10) of the Act seeking extension of time to file the return till31.12.1986. It was also found by the Commissioner of Income-tax (Appeals)that the assessee applied for extension of time by filing Form No.6 on 10.9.1986 and the return was filed on 6.11 .1986. 4. The submission of Mrs.Pushya Sitharaman, learned senior standing counsel is that a contention was raised before the Appellate Tribunalthat the assessee has not sought for extension of time for filing the returnand therefore, the entire order of the Appellate Tribunal proceeds on theassumption that the assessee has actually applied for the extension of timefor filing the return of income. We are unable to accept the submission ofthe learned senior standing counsel for Revenue as the Appellate Tribunal hasfound as a matter of fact and recorded the finding that 'it is not disputedthat the assessee has applied for extension of time and the return wastherefore a valid return filed within the time allowed'. The Revenue has notchallenged the said finding. Moreover, it was also found by the Commissionerof Income-tax (Appeals) that the assessee sought for extension of time byfiling Form No.6 on 10.9.1986. Therefore the submission of the learned seniorstanding counsel for the Revenue that the assessee has not sought forextension of time for filing the return is bereft of force and accordingly, itis rejected. 5. The next submission of the learned senior standing counsel is that though the assessee had applied for extension of time, there was nocommunication from the assessing officer extending the time to file the returnand in the absence of any such communication from the assessing officer, theassessee could not presume that time as sought for was granted. We are unableto accept the submission of the learned senior standing counsel for theRevenue. We find that the uniform view taken by several High Courts is thatif the assessee has applied for extension of time, when the Income-tax Officerhas not rejected the said application and failed to communicate his view onthe question of extension of time, it is open to the assessee to presume thatthe time sought for has been granted to the assessee. 6. This Court in C.I.T. v. TAMIL NADU AGRO INDUSTRIES CORPN. (255 ITR 473) has held that when a request had been made by theassessee for extension of time and the request for time had not been refused,in the absence of such refusal, the assessee was entitled to assume that thetime sought for had in fact been granted. In KARAM SINGH v. CIT (110 ITR726), SUNDERDAS THACKERSAY & BRO S. v. CIT (137 ITR 646) and HARMANJIT TRUSTv. CIT (148 ITR 214) the Punjab and Haryana High Court as well as calcutta High Court has taken the view that the application for extension of time canbe made even after the expiry of the prescribed date and once the applicationhas been preferred, a duty is cast on the Income-tax Officer to intimate theassessee whether its request for extension of time for furnishing the returnhad been granted or refused. The Courts have also taken the view that ifthere is no reply within a reasonable time from the Income-tax Officer, theassessee could presume that his request for extension of time had beengranted. 7. The same view has been taken by the Bombay High Court in High Court has taken the view that the application for extension of time canbe made even after the expiry of the prescribed date and once the applicationhas been preferred, a duty is cast on the Income-tax Officer to intimate theassessee whether its request for extension of time for furnishing the returnhad been granted or refused. The Courts have also taken the view that ifthere is no reply within a reasonable time from the Income-tax Officer, theassessee could presume that his request for extension of time had beengranted. 7. The same view has been taken by the Bombay High Court in LACHMAN CHATURBHUJ JAVA v. R.N. NITSURE (132 ITR 631) wherein the BombayHigh Court held that if the department chooses not to reply to the assessee'sapplication within the time applied for by the assessee, the time is deemed tobe extended as prayed for by the assessee and he would be justified inassuming that his application has been granted by the department. A similarview has been taken by the Punjab and Haryana High Court in C.I.T. v.SURINDER KUMAR PARMODKUMAR (193 ITR 71). 8. We are of the view that the ratio of the decision of this Court in C.I.T. v. TAMIL NADU AGRO INDUSTRIES CORPN. (255 ITR 473) wouldapply and following the said decision, we hold that the Appellate Tribunal wasright in holding that in the absence of any order passed by the assessingofficer on the application for extension of time filed by the assessee, it isopen to the assessee to presume that the time sought for by the assessee hadbeen granted . Moreover, it is also relevant to mention here that section139(10) of the Act came into force only from 1.4.1986. We are of the viewthat the power to grant extension of time under section 139(3) of the Act wasavailable up to 1.4.1987. Since the application for extension of time wasfiled on 10.9.1986 and the assessing officer did not choose to reply withinthe time applied for by the assessee, we hold that it is open to the assesseeto presume that the time sought for had been granted by the assessing officer.Under the circumstances, we hold that the Appellate Tribunal wascorrect in holding that the time sought for by the assessee had been grantedand therefore the return filed on 6.11.1986 is within the time limitprescribed under the Act. 9. Moreover, the Central Board of Direct Taxes (CBDT) has considered the difficulties that were faced by the assessees in filing lossreturn for the assessment year 1986-87 and the CBDT has issued a circulardated 23.9.1986 saying that if a return of loss was filed by the assessee forthe assessment year 1986-87 or earlier years within the prescribed period asper the existing provisions the assessee would not be deprived of the benefitof carry forward of loss. The circular was the subject matter ofconsideration in SIRIGERI KANAKAPPA SHETTY & SONS v. DY. CIT (198 ITR 711)wherein the Karnataka High Court considered a similar question and afternoticing the circular issued by the CBDT, held that the requirement to filereturn within the prescribed time is for the benefit of carry forward of lossand therefore the circular would bind the Income-tax Department. The KeralaHigh Court in C.I.T. v. PIGMENTS INDIA LTD. (230 ITR 518) has also heldthat since section 139(3) of the Act was amended with effect from 1.4.1 987,the Income-tax Officer had the power to grant extension of time invoking thepower under section 139(3) of the Act for the assessment year 1986-87. TheKerala High Court in Pigments India Ltd. case also held that if the returnwas filed within the time, the assessee was entitled to the benefit of carry forward of loss. forward of loss. 10. We therefore hold that the return filed by the assesseeis within the time prescribed under section 139(3) of the Act and once we holdthat the return, though it is a loss return, was filed within the timeprescribed, the assessee is entitled to the benefit of carry forward of loss.We therefore hold that the view of the Appellate Tribunal that the assesseewas entitled to carry forward of loss for the assessment year 1986-87 does notsuffer from any infirmity and the view of the Appellate Tribunal is justifiedin law. Accordingly, we answer the question of law referred to us in theaffirmative, in favour of the assessee and against the Revenue. Since theassessee is not represented, there will be no order as to costs. Index: YesWebsite: Yesna. To 1. The Assistant Registrar,Income-tax Appellate Tribunal,Rajaji Bhavan, Besant Nagar,Chennai 600 090 (five copies with records) 2. The Secretary,Central Board of Direct Taxes, New Delhi (3 copies) 3. The Commissioner of Income-tax,Madurai. 4. The Commissioner of Income-tax (Appeals),Madurai. 5. The Deputy Commissioner of Income-tax,�