TaxTMI 
TaxTMI 
2014 (8) TMI 687
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....sp; "Whether, under the facts and in the circumstances of the case and under the established legal principles of law, the Income-tax Appellate Tribunal was justified in confirming the action of the authorities below in allowing the rectification of subsequent orders without rectifying the initial order from where the dispute in question arose ?" 3. A few facts relevant for the decision of the controversy involved, as narrated in I. T. A. No. 305 of 2007 may be noticed. The assessee is the director of M/s. Monga Brox. Ltd. and resident of Ludhiana. He filed income-tax return for the assessment year 1996-97 on December 24, 1996, declaring a total income of Rs. 1,98,630. He claimed certain deductions and set off of loss. On March 25, 1997, the Assessing Officer issued notice under section 143(2) of the Act to the assessee. During the course of the assessment proceedings, the Assessing Officer observed that certain expenses were being paid to the assessee as perquisites by the company which were to be taken as part of the income. The assessee admitted liability and these perquisites were added to the income of the assessee. Thereafter, the Assessing Officer conside....
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....f the Gujarat High Court in Saurashtra Cement and Chemical Industries Ltd. v. CIT [1980] 123 ITR 669 (Guj). 5. On the other hand, learned counsel for the Revenue supported the order passed by the Tribunal. 6. After hearing learned counsel for the parties, we do not find any merit in the appeals. 7. It would be expedient to refer to sections 72, 80 and 139(3) of the Act, which read thus : "72. (1) Where for any assessment year, the net result of the computation under the head 'Profits and gains of business or profession' is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not been so set off or, where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and- (i) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that asses....
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....nbsp; 139. (3) If any person who has not been served with a notice under sub-section (2) has sustained a loss in any previous year under the head 'Profits and gains of business or profession' or under the head 'Capital gains' and claims that the loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, or sub-section (1) or sub-section (3) of section 74, or sub-section (3) of section 74A, he may furnish, within the time allowed under sub-section (1) or by the thirty-first day of July of the assessment year relevant to the previous year during which the loss was sustained, a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1)." 8. Section 72 of the Act deals with carry forward and set off of business loss. It provides that where the net result of the computation under the head "Profits and gains" of business or profession is a loss and such loss cannot be or is not wholly set off a....
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....s of the assessment year 1996-97 during the assessment year 1997-98. It was not disputed that the return for the assessment year 1997-98 was filed on February 3, 1998, and thus, it could not be held to be return filed under section 139(3) of the Act which was required to be filed within the time allowed under sub section (1) of section 139 of the Act. Once that was so, in terms of sections 80 and 139(3) of the Act, the assessee was not entitled to set off and carry forward of losses of the assessment year 1996-97 in the assessment year 199798 and thereafter. For the sake of argument, it may be noticed that the said plea as has been raised by the assessee would have been available to him, had the assessee filed the return for the assessment year 1997-98 within the time allowed under section 139(1) of the Act. Once it is held that the assessee was not allowed to set off the capital loss of the assessment year 1996-97 in the assessment year 1997-98, equally the same could not have been allowed to be carried forward and set off in the assessment year 19992000. Further, the Tribunal, while declining the aforesaid plea, vide order dated March 20, 2007, annexure A.1 noticed as under : ....
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....term capital loss disclosed in the return of income filed for the assessment year 1996-97 (which was filed after the specified period indicated in section 139(1)) was not permissible to be carried forward and set off in accordance with the relevant provisions of Act. 13. The only question that remains for our consideration is as to whether the Assessing Officer had the power to deny the set off of capital loss suffered in the assessment year 1996-97 in the subsequent assessment years notwithstanding the fact that in the assessment order for the assessment year 1996-97 the Assessing Officer had specifically mentioned that the long-term capital loss of Rs. 2,41,759 is allowed to be carried forward. It is not disputed before us that the said assessment order for the assessment year 1996-97 has not been modified either by the Assessing Officer or by any appellate or superior authorities. As pointed out earlier, the learned counsel for the assessee has relied upon two decisions of the Chandigarh Bench of the Tribunal to support his contentions that the Assessing Officer is not entitled to modify the orders for the subsequen....
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....of the said loss against the long-term capital gain. Subsequently, notices under section 154 were issued to the assessee on the ground that there was a mistake in allowing the set off long-term capital loss pertaining to the assessment year 1996-97 as the said loss had not been determined in pursuance of a return filed within the time allowed under section 139(1). As indicated earlier, section 139(3) read with section 80 prohibits the set off of such losses in subsequent years. The action of the Assessing Officer in allowing the set off of the long-term capital loss of the assessment year 1996-97 not determined in pursuance of the return filed in accordance with the provisions of section 139(3), was a mistake apparent from record. In this case, the mistake apparent from record was a mistake of law. It is also pertinent to mention that the Assessing Officer, while deciding the cases for the assessment years 1997-98 and 1999-2000, was entitled to look into the record of the assessee for the assessment year 1996-97 also to consider the claim of the assessee. As held by the Supreme Court in the case of Maharana Mills (Pvt.) Ltd. v. ITO [1959] 36 ITR 350 (SC) the record for the purpose ....