AI Drafter 
TaxTMI 
TaxTMI 
1984 (5) TMI 93
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....as not been controverted by the ITO and has been accepted by the first appellate authority. This factual finding is not disputed before us. It, however, appears that the returns were not traceable at the office and that, therefore, no action was taken thereon. It was the assessee's claim that he was entitled to a set off of loss of Rs. 1,22,781 as relating to the assessment year 1978-79 against his share income from Hyderabad Trading Co. 3. The ITO disallowed the claim on the ground that the loss was not determined. The first appellate authority, however, found that the assessee had produced proof regarding filing of the return as well as the revised return within the time allowed under section 139(4) of the Income-tax Act, 1961 ('the 19....
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....e appeal to resist the set off altogether more or less on the ground that the return had been belated with reference to the time limit prescribed for loss return under section 139(3). He argued that the time limit prescribed under section 139(3) becomes meaningless if the assessee's argument is accepted. He alternatively stressed the original grounds that the ITO should have an opportunity of vetting the claim with reference to the two decisions cited in the grounds of appeal. The leaned representative for the assessee claimed that the loss was correct and that it needs no further vetting. He stated that the assessee is entitled to claim the set off is now a matter established by the decision of the Supreme Court in Kulu Valley Transport Co....
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....] 108 ITR 838 the Andhra Pradesh High Court in the case of C.P. Sarathy Mudaliar v. CIT [1978] 114 ITR 687, the Bombay High Court in Shri Panchaganga Sahakari Sakhar Karkhana Ltd. v. CIT [1979] 119 ITR 590, Telster Advertising (P.) Ltd. v. CIT [1979] 116 ITR 610 and the Madhya Pradesh High Court in the case of Co-operative Marketing Society Ltd. v. CIT [1983] 143 ITR 99 have all given effect to the rationale of the decision of the Supreme Court in the case of Kulu Valley Transport Co. (P.) Ltd. for different sets of circumstances. The decision of the Andhra Pradesh High Court was sought to be distinguished by the learned departmental representative on the ground that the High Court considered the ITO's action in accepting the return as one ....
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....ce, we do not find any merit in the argument which seeks to enlarge the scope of the appeal before us by way of additional grounds. We cannot also imagine that the circular dated 20-9-1983 which seeks to give a different interpretation, has considered various High Court decisions. We hold that the ITOs have been directed and are taking action to withdraw the set off on the basis of the earlier circulars referred to in Kulu Valley Transport Co. (P.) Ltd.'s case by initiating action under section 263/147(b)/154, in pursuance of this circular as the Department also does not accept the view of the Kerala High Court as to the ruling nature of the circulars before they are withdrawn. In other words, a plethora of appeals is expected as a result o....
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....to have the question reopened in the year of set off. No doubt, this was a case where the ITO did not fail in his duty to have the loss determined while there has been such a failure in this case. Even so, we do not find any justification for not applying the rationale of this decision in the facts of the assessee's case. The law that is good enough for the taxpayer should also be good enough for the revenue unless there is some prohibition against the ITO considering the loss in the year of set off, if he had failed to pass any order in the proper year in proper time. We do not find any such prohibition. The Supreme Court had again, though under the provisions of the 1922 Act, decided in the case of Manmohan Das that the decision recorded ....