TMI Blog1988 (12) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Officer made an addition of Rs. 5,10,921 being hundi loans and interest paid and for the assessment years 1964-65 to 1966-67, the Income-tax Officer disallowed the interest payment on the hundi loans. The petitioner filed appeals against the said orders of assessments. The Appellate Assistant Commissioner set aside the assessments and directed the Income-tax Officer to redo the assessments for the assessment years 1963-64 to 1966-67. Subsequently, the assessment for the assessment year 1962-63 was reopened under section 147 of the Income-tax Act on the ground that the hundi transactions were not genuine and the income returned had to be enhanced. The petitioner preferred appeals to the Appellate Assistant Commissioner against the reopening of the assessment for the assessment year 1962-63 and the de novo assessments for the assessment years 1963-64 to 1966-67 and the additions made in the reassessments for the above years. The Appellate Assistant Commissioner, by his order dated February 24, 1972, set aside the assessments for the said years with a direction to redo the assessments after giving the petitioner an opportunity of being heard. In the meanwhile, the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/Mds/1977-78, for the assessment years 1962-63, 1963-64 and 1964-65, respectively, were disposed of by the Appellate Tribunal by its common order dated July 31, 1978. The Tribunal allowed the appeals of the petitioner and dismissed the appeals of the Department. After the passing of the order of the Appellate Tribunal dated July 31, 1978, the respondent herein, on September 30, 1978, passed an order purporting to give effect to the order of the Appellate Tribunal for the assessment years 1962-63 to 1966-67. In the said order for the assessment year 1966-67, the respondent computed the income at nil and determined the balance of loss for the assessment year 1963-64 to be carried forward at Rs. 18,041, The Income-tax Officer did not carry forward this loss and adjust it in the subsequent years' income, in accordance with section 72 of the Income-tax Act, 1961, and by his letter dated November 24, 1978, directed the petitioner to pay the alleged arrears of tax for the assessment years 1970-71 and 1971-72. Thereafter, on December 16, 1973, the petitioner sent a reply giving the computation of income and loss for the assessment years 1962-63 to 1971-72 and stated that no tax was pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8,940 (2) 1969-70 ... Rs. 3,360 (3) 1970-71 ... Rs. 2,590 The balance of Rs. 3,151 is to be given set off against the income of Rs. 24,786 for the assessment year 1971-72. After adjusting the loss of Rs. 18,041, it is stated that the respondent is bound to give set off to the loss of Rs. 13,162 for the assessment year 1967-68 against the balance income of the assessment year 1971-72. It was also stated that the respondent is not correct in adjusting the loss of Rs. 13,162 for the assessment year 1967-68 against the income of the assessment years 1968-69 and 1970-71 without first adjusting the loss for the assessment year 1963-64. According to the petitioner, the assessment for the assessment years 1970-71 and 1971-72 were completed before the assessment for the assessment years 1962-63 to 1967-68 were finalised which resulted in loss to be carried forward to the following year up to 1971-72 and hence the respondent cannot refuse to revise the assessments for the assessment years 1970-71 and 1971-72 on the ground that they have become final and the revision could be done only in accordance with the provisions of section 154 of the Income-tax Act. According to the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or carrying forward the loss as contended by the petitioner. We have heard counsel appearing on both sides. We have set out the facts in detail. The fact remains that while giving effect to the order of the Appellate Tribunal in I.T.A. Nos. 1419 to 1423 (Mds)/1977-78 and I.T.A. Nos. 1503 to 1505 (Mds)/1977-78, dated 31st July, 1978, the assessment was revised as under : Business : income as admitted Rs. 1,78,402 Less : Business loss of 1963-64 set off Rs. 1,78,402 ----------------------- Total income Nil ----------------------- Losses to be carried forward : 1963-64 Business loss Rs. 18,041 The question that arises for consideration in these two writ petitions is whether the assessee is entitled to carry forward and set off the business loss as determined by the Income-tax Officer in the consequential order passed by him on September 30, 1978, as the alleged computation of the amount of loss does not become final unless the Income-tax Officer notifies in writing the amount of loss as computed by him to the assessee. If no such notice in writing was given to the assessee, the assessee would be entitled to have the loss redetermined in the subsequent year though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. [1971] 82 ITR 87 (Mys), CIT v. Manmohan Das [1966] 59 ITR 699, 702 (SC)). It might be that the loss suffered by the assessee may not have been realised or may be the subject-matter of a pending litigation. If the assessee is maintaining his accounts on the mercantile system, the authorities cannot deny set off of the loss on ground of pendency of litigation (Laxmi Ginning and Oil Mills v. CIT [1971] 82 ITR 958 (P H)). In an appeal for a subsequent year, the Appellate Tribunal has jurisdiction to direct the Income-tax Officer to quantify the losses for earlier assessment year(s) and allow set off thereof against the income of such subsequent year. In the case of CIT v. Dalmia Cement (Bharat) Ltd. [1976] 104 ITR 337, while dealing with a similar question, the Madras High Court held as under (headnote) : "That the Tribunal while dealing with the appeals for 1960-61 and 1961-62 has to actually determine the taxable income of the assessee for those years and for this purpose it has necessarily to find out whether the assessee is entitled to carry forward the losses and set them off against the profits of the years in question and if in law the assessee is entitled to carry forwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set off the loss of the earlier years in the subsequent years. According to the facts in the present case, after the passing of the order of the Tribunal on July 31, 1978, the Income-tax Officer has given effect to the said order of the Tribunal on September 30, 1978. In the consequential order, the Income-tax Officer determined the loss. Thereafter, it is not open to the Income-tax Officer to say that he cannot carry forward and set off the business loss already determined by him in the subsequent assessment years. The Income-tax Officer is duty bound to rectify the assessments already completed by him after the Appellate Tribunal rendering its order on July 31, 1978. Thus, considering the facts appearing in this case in the light of the judicial pronouncements cited supra, we hold that the petitioner is entitled to carry forward and set off the business loss as prayed for in these writ petitions. In that view of the matter, the respondent herein is directed to carry forward the unabsorbed business loss of Rs. 18,041 and set off the same against the business income of the petitioner in the assessment years 1970-71 and 1971-72, in accordance with law. Accordingly, the two writ pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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