R.P. GARG, A.M. This is appeal by assessee against order of AAC for asst. Yr. 1980-81. assessee is partner in M/s. Laxmikant & Co. registered firm. As no return was filed, ITO issued notice under s. 148 which was served upon assessee on 15th Oct., 1981. return thereupon was filed on 15th Dec., 1982 declaring loss of Rs.30,220. assessment was completed at net loss of Rs.66,100 arrived at by reducing dividend income of Rs.585 from assessee's share of loss as assessed in assessment of firm. Before ITO, assessee had contended that return was originally filed by him under s. 139(1) i.e. at time when return of firm was filed No evidence thereto was produced by assessee before ITO. He therefore, informed assessee that return filed on 15th Dec., 1982 was being treated as having been filed in response to notice under s. 148 and, therefore, loss assessed at Rs. 66,100 was denied to be carried forward to subsequent years by observing that assessee had failed to file return within statutory limit. appeal of assessee also failed before AAC. Observing that there being no evidence on record with assessee to show that return was originally filed under s. 139(1), AAC held that no return was filed under s. 139 and that return filed was only in response to notice under s. 148. In rejecting claim of assessee be observed that proceedings by issue of notice under s. 148 are undertaken only in case where income has escaped assessment and it is not case where assessee should derive advantage of getting itself benefit of carry forward loss assessed which it did not claim by filing return under s. 139. assessee is in appeal before us. ld. Counsel of assessee Shri Pandit stated before us that he is not able to substantiate contention of assessee that return was originally filed under s. 139(1) along with return of firm. He has however, pressed following contentions for our consideration; (i) return filed on 15th Dec., 1982 must be treated return under s. 139(4). (ii) Even if it is treated as return filed in pursuance of notice under s. 148 it has to be treated as return under s. 139(2). He, therefore, contended that in neither of situations assessee could be denied benefit of carried forward of loss. ld. Departmental Representative, on other hand, supported order of AAC and submitted that it was return under s. 148 and under proceedings this section assessee could not get advantage of carry forward of loss. He relied upon decisions of Bombay High Court in case of Kevaldas Ranchhodas vs. CIT (1968) 68 ITR 842 (Bom), Mysore High Court in case of S. Natrajan vs. CIT (1964) 52 ITR 882 (Mys) and Calcutta High Court in case of Sun Engineering works Pvt. Ltd. vs. CIT (1978) 111 ITR 166 (Cal). He further submitted that in any case it was return not filed within prescribed limit of s. 139(3) assessee was not entitled to benefit of carry forward of loss by virtue of s. 139(3). We have heard parties and perused records very carefully. In our opinion, assessee must succeed for reasons given in subsequent paragraphs. Sec. 139 prescribes various eventualities under which assessee files return. Sub-s. (1) provides filing of voluntary return within period of 4 months from end of previous year or 30th June of assessment year whichever is later. return filed in present case was not under this provision as same was filed much beyond aforesaid two periods. Sub-s. (2) authorises ITO to call for return from assessee who is assessable to income-tax. notice calling return has to be given before end of relevant assessment year. This return is to be filed within 30 days of issue of notice by ITO. No notice under this section as such was issued. Therefore, return was not under this provision either. Therefore, return was not under this provision either. Sub-s. (3) provides that if no notice under sub-s. (2) was served upon assessee who has sustained loss under head 'business', he is required to file loss return within time allowed under sub-s. (1) or till such further extended time as allowed by ITO, if he claim s loss to be carried forward. Sub-s. (4) gives another right to assessee who has not filed return under sub-s. (1) or (2), to file return before assessment is made at any time within 2 years from end of assessment year to which return relates. In present case, return was filed on 15th Dec., 1982. It was before assessment was made and also within two years from end of asset. yr.1980-81. Therefore, it could be held that it was return filed under s. 139 of Act and loss determined in pursuance of such return had to be carried forward and set off as per provisions of Act. non-obstante provision of s. 80 does not come in way of assessee. provisions of s. 139(3) would also not affect right of assessee by virtue of Bombay High Court decision in case of Telester Advertising Pvt. Ltd. vs. CIT (1979) 116 ITR 610 (Bom). It was held in that decision that return filed under s. 139(3) has to be treated return under sub-s. (1) and, therefore, assessee would be entitled to carry forward loss. We do not, therefore, see any substance in argument of Shri Pasi, ld. departmental representative that in case of late return benefit of carry forward loss would not be available to assessee. Question now remains what is effect of notice under s. 148. Does return filed after issued of notice under s. 148 cease to be return under s. 139 or any loss determine in pursuance of such return could be denied to be carried forward and setoff. departments contention is that recourse to s. 148 is remedy available to Department to assess or re-assess income which had escaped assessment and in such recourse assessee cannot be granted benefit to prejudice of Revenue. It may be true that assessee cannot be benefited in proceeding under s. 148 as this provision is meant to safeguard interests of Revenue. It is enabling provision to assess or re-assess income which escaped assessment. But at same time we cannot overrule right of assessee to file return within two years from end of assessment year under s. 139(4). This right of assessee, in our opinion, cannot be taken away or whittle down by Revenue by issuing notice under s. 148. We would have agreed with contention of Department if return in this case was filed beyond prescribed limit under s. 139(4). notice under s. 148 as aforesaid to assess or re-assess escaped income and notice should be deemed invalid if ultimately alleged income is found to have not escaped. If in case of income having escaped it is found ultimately that there was loss, whole bases of notice under s. 148 falls down and notice, therefore, becomes for all practical purposes invalid. It should be deemed as if it were never issued. As natural consequence, therefore, it is to be assumed that there was no notice under s. 148 in this case and return filed on 15th Dec., 1982 was not return in pursuance of notice under s. 148. We therefore, hold that it was return under s. 139(4) and in view of Bombay High Court decision (supra), assessee would be entitled to carry forward loss. We may examine this point from different angle also. Section 148 provides that ITO shall serve notice under this section containing all or any of requirements which may be included in notice under s. 139(2) and that provisions of IT Act shall, so far as may be, apply accordingly as if notice under s. 148 were notice issue under s. 139(2). This clearly shows what follows in pursuance of notice under s. 139(2) should also follow in pursuance of notice under s. 148. Even of if return is treated in pursuance of notice pursuance of notice under s. 148, it is to be deemed return in pursuance of notice unders s. 139(2) and consequently loss competent under these proceedings shall be deemed to loss determined in pursuance of return filed under s. 139(2). We are supported only this view of matter by Special Bench decision of Tribunal in case of Bela Singh Pabla vs. ITO (1982) 1 ITD 370 (Del) Paras 18 and 19 of order which are material for purpose of this are extracted below; "But even provisions of s. 148 are not self-contained. That section postulates that notice containing all or any of requirements, which may be included in notice under sub-s. (2) of s. 139. shall be served on assessee before making assessment, reassessment of reoccupation under s. 147 and provisions of this Act shall, so far as may be, apply accordingly as if the provisions of this Act shall, so far as may be, apply accordingly as if notice were notice issued under that sub-section. It will be seen that s. 148 introduces fiction, whereby notice issued under that section is to be treated as notice issued under s. 139(2). However, latter part of section, wherein it lays down that provisions of Act shall, so far as may be, apply accordingly, does not contain any fiction. It does not say that provisions of this Act shall, so far as may be, deemed to apply accordingly, states categorically, that those provisions shall apply accordingly. consequences flowing from fiction contained in s. 148 have to be carefully examined. Where notice issued under s. 148 is to be deemed as notice issued under s. 139(2), consequences are that assessee is required to file return of his income, in response to that notice, within time limited therein. Secondly, on being required by ITO, under provisions of s. 142(1), to produce or cause to be produced such accounts or documents as ITO may require or to furnish in writing and verified in prescribed manner information on such points or matters as he may require, assessee is bound to comply with those requirements. ITO may either accept return filed by assessee without requiring his presence, as laid down in s. 143(1), or may require assessee to produce evidence in support of his return under s. 143(2). In case of failure on part of assessee to comply with requirements relating to filing of return or requirements under s. 142(1) or s. 143(2), ITO can complete assessment to best of his judgment under s. 144. If assessee complies with all requirements, ITO will complete assessment under s. 143(3). These are not assessments deemed to be made under s. 144 or under s. 143(3) but are in, fact and in law, assessments made under those section. Thus, though assessment or reassessments may have been initiated under s. 143 or 144. It is now well settled that in construing scope of legal fiction, it is not only proper but also necessary to assume all those facts on which alone fiction can operate. In this connection, reference may be made to decision of Supreme Court in CIT vs. Teja Singh (1959) 35 ITR 408 (SC) and in particular to following of quoted observations of Lord Asquith in East India Dwellings Co. Ltd. vs. Finbury Boroough Coundil (1952) AC 109 quoted therein; 'If you are bidden to treat imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real consequences and incidents which if putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it statute says that you must imagine certain state of affairs it does not say that having done so, you must cause or permit your imagination to boggle when it comes to inevitable corollaries of that state of affairs". Thus, where s. 148 introduces fiction that notice issued under that section is to be deemed to be notice under s. 139 (2), logical consequence, when section does not say that other provisions of Act shall be deemed to apply, is that other provisions apply in same manner as in normal or regular assessment and resultant assessment is one, which is made either under s. 143 (3) or s. 144." Further more words "insofar as may be" appearing in s. 148, in our opinion, put limit on operation of s. 148 to effect that it does not go beyond scope of s. 139. Therefore if return is filed beyond period of two years from end of assessment years, loss may not be said to have been determined in pursuance of return under s. 139 which could have been filed only within two years from assessment years and if return is filed within limit prescribed under s. 139 provisions of Act would apply to proceedings under s. 148 as if ITO has proceeded under s. 139(2). moment return filed on 15th Dec., 1982 is deemed in pursuance of notice under s. 139(2) for applicability of all other provisions of Act then because of opening wards in sub-s. (3) that "if any person who has not been served with notice under sub-s. (2)", provisions of sub-s. (3) requiring assessee to file return within time prescribed under s. 13 (1) would not be applicable to claim loss to be carried forward in pursuance of said return, Furthere more loss in present case share of assessee's loss in partnership firm and taken in assessment of assessee as determined in firm's assessment. This loss, assessee is entitled to carry forward for set off under ss. 72,73,74 and 74A by virtue of provisions in s. 75(1). loss in hands of firm had been determined in pursuance of return filed by firm which was admittedly in time under s. 139. Sec. 80, therefore, cannot in any way dis-entitle assessee even if individual return of assessee was in pursuance of notice under s. 148 and such return could not be treated return under s. 139. Coming now to cases relied upon by Department, first case is of Bombay High Court in case of Kevaldas Rachhod Das vs. CIT (1969) 68 ITR 842 (Bom). It was case where there was already assessment made in pursuance of return filed earlier. Proceedings were reopened because larger loss of Rs. 31,149 was allowed. In reassessment assessee claimed that difference of Rs. 85,510 which was not allowed to him in original assessment should be allowed in reassessment. In view of these facts, High Court has held that provisions of s. 34(1)(A) of IT Act, 1922 were not intended for benefit of assessee but for benefit of Revenue. In this view of matter, reduction of loss by Rs. 31,149 was held justified and High Court refused to allow set of Rs. 85,510 claimed by assessee as it amounted to determine entire assessment afresh. contention in this case was raised by assessee to effect that such like case it should have been held that proceedings under s. 34 could not be taken and should have been dropped. Since this question was not referred by Tribunal, High Court refused to answer same. Thus this was case where already return had been filed and return filed in pursuance of s. 34 was return after first assessment was made and further question of validity of proceedings was left upon and not gone into. next case relied upon of Mysore High Court is (1964) 52 ITR 802 (Mys). In this case, facts were almost similar to present case and High Court held that proceedings under s. 34 is only made to assessees or to reassess income which has escaped assessment and not total income of assessee. No question about validity of proceedings under s. 34 was raised in this case ever though there was no escaped income and rather it was case of loss assessed. This case, therefore, does not help Department on question that loss determined proceedings under s. 34 cannot be allowed to be carried forward. It does not deal with further contention of assessee, that proceedings under s. 34 could not have been taken and that assessee, that proceedings under s. 34 could not have been taken and that proceedings should have been dropped. This case is basically confined to interpretation of s. 34 and not with respect to right available to assessee besides that. last case relied upon by Department is of Calcutta High Court reported in (1978) 111 ITR 166 (Cal) (supra). This is also case where return was originally filed and accepted even though there was no computation of loss for purpose of being carried forward same subsequent years. proceeding under s. 34 were to reassess income which escaped assessment. Court held that in order to determine that income has escaped assessment ITO cannot wholly ignore losses suffered in relevant year. remaining loss, if any, was not allowed to be carried forward in this case because in original assessment it was not computed. Court observed that "in absence of such computation there may not be any carry forward but for assessment of escaped income this loss has to be computed" This case also does not help Department because it was case of return having been already filed and secondly because loss was denied to be carried forward because it was not determined in original assessment. Naturally it was for assessee to have known right at time of original assessment. If he failed to claim such loss at that time, he cannot be given better right in proceedings under s. 34. We may point out here that provisions of s.34 referred to in aforesaid three cases are para mateia to provisions of s. 148 of IT Act, 1961. Considering firm any angle aforesaid, we are of opinion that loss cannot be denied to be carried forward for set off. We, therefore, allow claim of assessee. In result, appeal is allowed. *** BAKIMCHANDRA LAXMIKANT v. INCOME TAX OFFICER