Carry-forward loss claims survive procedural omission where statutory notice is not issued by the tax department.

The right to carry forward and set off losses under Section 24(2) of the Indian Income-tax Act, 1922 was treated as a substantive entitlement, and the Income-tax Officer's failure to notify the losses under Section 24(3) did not extinguish it. Section 24(3) was regarded as a machinery provision meant to compute and record the loss, so the department's omission could not defeat the assessee's relief. Earlier assessment orders showing nil income did not amount to a computation of loss or bar the claim by finality or failure to appeal. The losses for 1944-45, 1945-46 and 1946-47 could therefore be set off against the profits of 1948-49.

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Issues: Whether the assessee was entitled to carry forward and set off the losses of the assessment years 1944-45, 1945-46 and 1946-47 against the profits of the assessment year 1948-49 despite the Income-tax Officer not having notified those losses under Section 24(3).

Analysis: The right to carry forward and set off losses arose under Section 24(2) of the Indian Income-tax Act, 1922. Section 24(3) only required the Income-tax Officer to compute and notify the loss in writing, and was a machinery provision intended to crystallise the amount of loss. The omission of the departmental to perform that statutory duty could not destroy the assessee's substantive right. The earlier assessment orders stating that the income was nil did not amount to a computation of loss so as to bar the claim on the ground of finality or absence of appeal. The assessee's right to claim set-off arose in the year in which profits were earned and could not be defeated by the department's own default.

Conclusion: The assessee was entitled to set off the losses of the assessment years 1944-45, 1945-46 and 1946-47 against the profits of the assessment year 1948-49.

Ratio Decidendi: A substantive statutory right to carry forward and set off losses under Section 24(2) cannot be defeated by the Income-tax Officer's failure to comply with the procedural duty of notifying the loss under Section 24(3); a department cannot rely on its own default to deny the assessee's relief.

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