TMI Blog1990 (1) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... 973, respectively. The facts of the case as narrated by the Tribunal in the statement of case are as under : "The assessee is a limited company. Returns of income for the assessment years 1973-74 and 1974-75 were not filed by it suo motu within the time prescribed under section 139(1) or for that matter in the financial years concerned, namely, financial years 1973-74 and 1974-75. The Income-tax Officer, therefore, initiated proceedings against the assesseecompany under section 148 by issuing notices under the said section in respect of the aforesaid two years on May 12, 1975. The notices in question came to be served on the assessee-company on June 21, 1975. The assessee-company filed its returns of income in compliance with the aforesaid notices declaring losses of Rs. 64,699 and Rs. 30,644 in respect of the two years referred to above. The Income-tax Officer called for the account books of the assessee-company in respect of the two years and, after examination thereof, he was convinced that the net result of the assessee's business in respect of the aforesaid two years was loss as declared by the assessee-company. He, therefore, refused to proceed further and accordingly he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case are the assessment years 1973-74 and 1974-75. The returns of income could be filed by the assessee in respect of these two assessment years showing loss by March 31, 1976, and March 31, 1977, respectively. But, on May 12, 1975, the Income-tax Officer issued notices under section 148 for both the assessment years. In other words, on the date on which the Income-tax Officer issued the notices under section 148 calling upon the assessee to file the returns in the prescribed form, the assessee still had time to file the returns voluntarily showing the loss for these two assessment years 1973-74 and 1974-75. On November 18, 1977, the Income-tax Officer came to the conclusion that : " After examination of accounts, I find that the net result of the business was loss. As, under section 147, loss cannot be determined, the proceedings started with the issue of notice under section 148 are hereby dropped." The question is whether, in such circumstances, the assessee can claim computation of the loss for these two years and also carry forward of the losses. This controversy was gone into and decided in the case of Burdwan Wholesale Consumers' Co-operative Society Ltd. v. CIT [199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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. (2) The Income-tax Officer shall, before issuing any notice under this section, record his reasons for doing so." Mr. Bagchi has contended that under section 147, the Income-tax Officer may only recompute the loss or depreciation allowance or he can assess or reassess the income that has escaped assessment. His contention is that the language of the section is quite clear, namely, that if the loss has been already assessed, then the Income-tax Officer has got the power to recompute the same under section 148 but if there was no assessment or if there was no computation of loss, there cannot be any question of recomputation of the loss. According to him, recomputation pre-supposes earlier computation of loss. Therefore, Mr. Bagchi has contended that section 147 cannot be utilised for computation of loss and carry forward of the same. In our view, this argument cannot be sustained in view of the clear language of the section itself. The Income-tax Officer has been empowered to assess or reassess such income or compute the loss or the depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 22 the previous underassessment is set aside and the whole assessment proceedings start afresh." The above principle has been reiterated by the Supreme Court recently in the case of ITO v. Mewalal Dwarka Prasad [1989] 176 ITR 529. In the case of CIT v. Assam Oil Co. Ltd. [1982] 133 ITR 204 (Cal), it was held by Sabyasachi Mukharji J. (as His Lordship then was) as follows (at pages 219 and 220): "It was urged that upon the assessment being reopened the entire assessment was at large. It appears to us that it is so. Once an assessment is reopened, a notice is given for a fresh return in respect of all the items. This view is corroborated by the observations of the Supreme Court, though it was made in a different context, in the case of V. Jagan Mohan Rao v. CIT[1970] 75 ITR 373, where at page 380, the Supreme Court, inter alia, made the following observations : `Section 34 in terms states that once the Income-tax Officer decides to reopen the assessment he could do so within the period prescribed by serving on the person liable to pay tax a notice containing all or any of the requirements which may be included in a notice under section 22(2) and may proceed to assess or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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