TMI Blog2002 (1) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... t it was a defective return and asked the assessee, vide letter dated 1-12-1998, to rectify the defect within 15 days. A fresh acknowledgement sheet signed by the Managing Director was filed on 4-12-1998 to remove the defect. A fresh return, signed by the Managing Director, was also filed without any change in the figures of income declared in the original return. It was along with a covering letter stating that the defect was due to bona fide mistake on the part of the official looking after the income-tax matter. Taking clue from this statement of the assessee, viz., it was a bona fide mistake, the Assessing Officer took a stand that the mistake could be rectified by only filing a revised return and the second return filed on 4-12-1998 was not a revised return as it was filed after the extended period as prescribed for filing the revised return for assessment year 1996-97, viz., one year from the end of the assessment year or before the completion of assessment, whichever is earlier -- the last date expired on 31-3-1998, being one year from 1-4-1997. He accordingly passed an order under section 139(9) and held the return to be invalid and observed that the provisions of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a demand was raised thereon by making adjustment by reducing the loss of Rs.7,22,91,000 to Rs.7,22,71,000. He also stated that the Assessing Officer himself has treated the return as defective and gave an opportunity to the assessee to rectify the defect. The assessee rectified the defect as directed and required by the Assessing Officer and, therefore, the return cannot be treated as invalid. He further submitted that even if it were assumed that the acknowledgement sheet was part of the return, it was a curable procedural defect and in this connection relied on the decision of the Kerala High Court in the case of CITv. Masoneilan (India) Ltd. [2000] 242 ITR 569 against which a Special Leave Petition has been dismissed by the Hon'ble Supreme Court. He also referred to the decision of the Calcutta High Court in the case of Sheonath Singh v. CIT[1958] 33 ITR 591. On merits he submitted that the intimation by the Assessing Officer that the assessee is not entitled to carry forward the loss amounts to an order of assessment and, therefore, an appeal thereagainst lies under section 246 of the Act. 7. We have heard the rival submissions and considered the rival submissions. The first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctify the mistake as per the provisions of the Act and hence notwithstanding anything contained in any other provisions of the Act, the return for assessment year 1996-97 shall be treated as invalid return and the provisions of the Act shall apply as if the assessee has failed to furnish the return. 7. The assessee is not entitled for carry forward loss for the period under consideration." 8. An order under section 139(9) can be made only to determine whether there was defect in the return or whether it was rectified and what is effect of rectification for not removing of such defect. According to the Assessing Officer the defect was not removed as per the provisions of the Act and the explanation given was not acceptable to the Department and, therefore, the return was invalid under the provisions of the Act as if no return has been filed by the assessee. He, therefore, held that the return was invalid. To this extent only there was a scope for the Assessing Officer to observe or give a finding under section 139(9) but he did not stop there. He gave a finding in para 7 of his order stating "The assessee is not entitled for carry forward loss for the period under consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain accounts. We have noticed section 246. It appears to us that computation of loss is a part of the process of assessment in case the assessee claims set off in the year and also is a necessary process for the assessee right to carry forward that loss as provided in the Act. Therefore, that computation of loss is a part of the assessment will be evident from the provisions of section 143 of the Income-tax Act which enjoins that computation can be made both of the profits as well as of the loss which permits computation of the said total income or loss of the assessee. Therefore, the effect of the order is non-computation of the loss. Further, it amounts to computation of loss at nil Therefore, it would come within the purview of loss as nil Therefore, it would come within the purview of clause (c) of the section 246 of the Act. These are two decisions which throw light on the question which we have dealt in this reference. Therefore, in our opinion, in the facts and circumstances of the case, the effect of the order of the ITO is that there was no proper computation of loss and hence the order is appealable. Clause (c) of section 246, inter alia, provides for appeal where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the person who has signed the return. The defect was removed by filing a fresh acknowledgement sheet along with a fresh return declaring the same income on 4-12-1998 i.e., within a period of 4 days as against the, time prescribed for 15 days allowed by the Assessing Officer to the assessee as provided under the provisions of section 139(9). In these circumstances, to say that the assessee did not rectify the defect as per the provisions of the Act cannot be justified. Where the assessee gave an explanation as to why the defect or mistake occurred, though no such explanation is required for or needed under the Act, how can such an explanation of the assessee be the ground to hold that the return was invalid. 14. The second aspect is as to whether the acknowledgement sheet is a part of the return. Rule 12 of the I.T. Rules, 1962 prescribed the form of the Return. It is prescribed as "Form No. 1" for the assessees who are companies. Nowhere in the said Rule nor in the form of the Return, the acknowledgement sheet is made a part of the return of income. Acknowledgement sheet in ITS 1 is to be filled in after filling of the return and it requires that the information given in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer should have called upon the assessee to put his mark on the return and that appears to indicate that the absence of proper signature or verification is a curable one and the assessee must have an opportunity to rectify it. Section 292B provides that no return of income shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income if it is in substance and effect in conformity with or according to the intent and purpose of the Act. Section 139 also throws some light on the question. If there is any defect the Assessing Officer is required to give an opportunity to the assessee to rectify the defect within a stipulated time." 17. Though the Assessing Officer gave notice to the assessee to remove the defect and the assessee rectified also, the Assessing Officer resiled from the fact and ignored the same by stating it to be revised return filed beyond limitation prescribed. When a defect is removed it relates back to the date of original date of action and has the effect from the date when the return was originally filed. We may quote the observations of Calcutta High Court to support the view: "... and that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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