TMI Blog1989 (8) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... loss to be carried forward to the subsequent year. For the assessment year 1975-76, the assessee did not file any return in terms of section 139, but he did file a return in compliance with the notice issued under section 148. The ITO while completing the assessment for the year 1975-76 adjusted the speculative loss of ₹ 7,25,607 against the speculative profit. But he was of the opinion that as the speculative loss for the assessment year 1974-75 was determined in the assessment in pursuance of the return filed under section 148 and not the return filed under section 139, the assessee was not entitled to the benefit of carry forward and set off of speculation loss for the assessment year 19,74-75 against the speculation profit for the assessment year 1975-76. According to him, there was a mistake apparent on the face of the record and he invoked the provisions of section 154 of the Act. The contention before the ITO was that section 154 could not be invoked inasmuch as the assessee filed return under section 148 and that must be deemed to be a return filed under section 139. Accordingly, section 80 of the Act will have no application. It was also pointed out that it was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of a return filed under section 139, shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) of section 74 or sub-section (3) of section 74A. Section 148(1) provides as follows : 148. Issue of notice where income has escaped assessment.-(1) Before making the assessment, reassessment or recomputation under section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. 9. The ITO and the Commissioner (Appeals) have held that the provisions of section 80, as they stood at the material time, gave a clear mandate to the authorities to deny the benefit of carry forward unless the loss had been determined in pursuance of a return filed under section ich has not been determined in pursuance of a return filed under section 139. 10. If the return filed for the assessment year 1974-75 in response to a notice under section 148 has to be treated as a ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment made under section 143 is concerned, one cannot import a distinction as between a return made in response to notice under section 148(1) and that made under section 139. What section 148 enacts is to treat the reassessment proceedings as assessment proceedings and proceed accordingly under section 139 and other provisions of the Act. To hold otherwise would be destructive of the very object and purpose of the reassessment proceedings. 13. The above being the position, it follows that a return made in response to notice under section 148(1) has to be treated as a return filed under section 139 within the meaning of not only section 143 but also section 80. If it is not a return under section 139 within the meaning of section 143, no action for assessing or reassessing the income where a return has been made in pursuance to the notice under section 148(1) can ever be taken. If, therefore, the return is a return under section 139 within the meaning of section 143, there is no reason why the return should not logically be construed as the return referred to in section 80. Under that section no loss which has not been determined in pursuance of a return filed under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 where he said : If you are bidden to treat an imaginary state of affairs as real, you must also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed must inevitably have followed from or accompanied it; and if the statute said that you must imagine certain state of affairs, it cannot be interpreted to mean that having done so, you must cause or presume or allow your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. If it is deemed to be a notice under section 139, then all consequences must follow and the benefit of carry forward as provided under section 80 cannot be denied to the assessee. 16. The assessee, therefore, cannot be denied the benefit of carry forward of loss. Accordingly, the ITO did not commit any mistake in allowing the benefit of carry forward loss in the assessment made under section 147, read with section 143(3). The ITO did not have any jurisdiction to make the proceedings of section 154. The question which was before the authorities was whether in a case like this where the interpretation of a section is involved, that is to say, sections 80 and 148(1), ..... X X X X Extracts X X X X X X X X Extracts X X X X
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