1986 (5) TMI 58

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....losses for the current year and set off of past years losses, depreciation and deduction under s. 80J and allowing the same to be carried forward for adjustment in the subsequent assessment years. 3. In order to appreciate the above issues, it would be necessary to state in brief the facts of the case. The assessment year involved is 1979-80. The accounting period of the assessee ended on 31st March, 1979. Return of income under s. 139 (1) of the Act was due to be filed on or before 31st July, 1979. It was not filed nor any notice under s. 132(2) was issued. The ITO, however issued a notice under s. 148 of the Act on 19th April, 1980 which was served upon the assessee on 22nd April, 1980 calling for a return of its total income for the a....

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.... the asst. yr. 1977-78 for which assessment was made on 22nd Aug., 1980 under s. 143(3) r/w s. 144B, business loss assessed to be carried forward was Rs. 8,72,000 and depreciation of Rs. 4,12,000. For the asst. yr. 1978-79, the assessee had filed return on 7th Nov., 1978 showing business loss of Rs. 8,08,000 unabsorbed depreciation of Rs. 3,74,000 and past determined losses and depreciation at Rs. 21,50,000. Assessment had not been framed for this year by the date notice under s. 148 was issued on 11th April, 1980 for the asst. yr. 1979-80. He urged that the past history of the assessee revealed that there were huge losses and the ITO did not possess any material in his possession on the basis of which he could form prima facie belief that ....

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....at taxable income has escaped assessment. Issue notice under s. 148 r/w s. 147(A)." From the above reasons recorded it is apparent that the ITO invoked jurisdiction under s. 147 (a). It has two conditions to be fulfilled before the ITO can assume jurisdiction for issuing notice under s. 148 for assessing or reassessing the escaped income. These are (i) that there should be a failure on the part of the assessee in making a return or if the return was filed the assessee had failed to disclose fully and truly all material facts necessary for his assessment for that year and (ii) the income chargeable to assessment had escaped assessment for that year. So far as the first condition that the assessee had not filed the return of its total inco....