9911796707
TMI Blog1984 (4) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 144B of the Act. He duly heard the assessee and on 18-2-1982 gave the following directions : " 4. Declining to carry forward the loss determined : The assessee's contention was that it has filed the return under section 139(4). Therefore, the loss claimed/determined had to be carried forward and set off against profits of subsequent years. It is also the contention of the assessee that no notice under section 148 was received by it or if it had been issued, it had not been served on the proper person. The assessee had filed a note dated 16-1-1982 as also 6-1-1982 to urge that the return filed on 13-5-1980 should be considered as one filed under section 139(4) and the same return cannot be ignored or the loss claimed therein cannot be denied the benefit of carry forward. I have considered the note as well as the contentions raised by Mr. Nangoji Rao who strenuously argued that section 80 relied upon by the Income-tax Officer does not apply inasmuch as the return has been filed under section 139 only and the income-tax Officer has determined the loss under section 143(3). I have considered the objections taken by the assessee. The fact remains that the return has been fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther notices also. He had also received the assessment order, the demand notice, etc., for the earlier year, i.e., the assessment year 1977-78. He had also received the ITO's letter dated 16-3-1979 fixing the hearing of the petition under section 146 of the Act for that year as also the order under section 146. The assessee filed an appeal on the basis of that order. In the circumstances, the Commissioner (Appeals) held that Abdul Wahab was authorised to receive notices on behalf of the assessee regularly and further in the circumstances the contention of the assessee that while all other notices served by registered post and received by Abdul Wahab were made over to the assessee, the notice under section 148 for the assessment year 1978-79 alone was not made over, was unrealistic and difficult to believe. No evidence supporting the assessee in this behalf was filed either before the ITO or before the IAC. He, accordingly, declined to accept the contention that the notice under section 148 was not received by the assessee and, consequently, the return filed by it was not a return under section 139(4). As the loss was declared in a return filed in response to notice under section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid ground to say that the ITO could not have formed a reasonable belief that the assessee had taxable income on the day he decided to serve notice under section 148. As stated earlier, we are not concerned with the adequacy of reasons for reopening the assessment but on the existence or absence of reasons for the same. We have gone through the reasons recorded and we are satisfied that the assessment is reopened for valid reasons. On the facts, we are satisfied that the ITO could form a reasonable belief on 27-11-1979 and that the assessee's income had escaped assessment because of its failure to file a return of income. 6. We now consider the ground that there was no proper service of the notice. The facts narrated by the Commissioner (Appeals) clearly show that Abdul Wahab was receiving notices regularly on behalf of the assessee. Therefore, service on Abdul Wahab was a valid service. Moreover, as pointed out by the learned departmental representative, the assessee had never raised this contention before the ITO and the IAC under section 144B. We, therefore, reject the assessee's contention that there was no valid service of notice under section 148. 7. We next consider the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1980, the assessment could at best have been made on 12-5-1981 if it was a return under section 139(4). We find, actually the assessment is made on 20-4-1982. This could be done only under section 148. Therefore, the fact that there was a prior notice under section 148 before filing of the return and there are no grounds to believe that the assessee was not aware of the service of notice under section 148 and further the assessment has been completed beyond the time limit for ordinary assessments under section 143(3) to which apparently the assessee has not raised any objection before the authorities below, prove that there is no merit in the assessee's contention that the return was filed under section 139(4). An argument was also advanced that for the ITO's failure to complete the assessment under the normal time limit relatable to returns under section 139(4), the assessee should not be penalised. We hold that this argument is untenable as the ITO has issued a notice under section 148 before the assessee filed the return. This is not a case where the ITO ignored the return under section 139(4) and finding that the time limit for completion of the assessment was over, tried to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 139. The Tribunal also rejected the contention of the assessee that the returns were filed under section 139(4)(a) and, hence, dismissed the appeal of the assessee. On a reference, it was held by the Madhya Pradesh High Court : " ....that the returns had been filed within the time allowed under sub-section (4) of section 139. Hence, the loss determined by the ITO for the relevant assessment years could be said to be loss determined in pursuance of the returns filed under section 139. Therefore, the Tribunal was not justified in declining to allow the benefit of carry forward and set off of the losses computed by the ITO in respect of assessment years 1972-73 and 1973-74. " This case, no doubt, seems to squarely support the assessee's case. On behalf of the revenue, reliance was placed on the decision of the Mysore High Court in the case of S. Natarajan v. CIT [1964] 52 ITR 882. In that case, notices under section 34 of the Indian Income-tax Act, 1922 ('the 1922 Act') were issued for reassessment of the income of the assessee for the assessment years 1953-54, 1954-55 and 1955-56. The assessee made returns in response to the notices showing loss of Rs. 17,266, Rs. 36,012 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or gains or recompute the loss or depreciation allowance ; 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.' On a plain reading of section 34, it is clear that an enquiry under that provision is confined to such income, profits or gains which has escaped assessment, or which was under-assessed or which was assessed at too low a rate or was the subject of excessive relief under the 'Act'. A proceeding under that section cannot be used for finding out the true total income of the assessee afresh. In other words, in an enquiry under section 34, no duty is cast upon the Income-tax Officer to start an enquiry with reference to the total income of the assessee during the assessment year. The Income-tax Officer has no such power. Nor has the Income-tax Officer any power to revise the original assessment except to the limited extent to which such power is recognised under section 34. " It, therefore, appears that the notice under section 148 is wholly for the purpose of roping in escaped income and not for the benefit of the assessee including carry forward of losses. Since this is the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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