Income-tax Officer v. Sadhu Ram & Co
[Citation -2005-LL-0413-7]

Citation 2005-LL-0413-7
Appellant Name Income-tax Officer
Respondent Name Sadhu Ram & Co.
Court ITAT-Amritsar
Relevant Act Income-tax
Date of Order 13/04/2005
Assessment Year 1994-95
Judgment View Judgment
Keyword Tags set off of brought forward loss • computation of income • revenue authorities • interest of revenue • original return
Bot Summary: The only effective issue raised in this appeal is that the learned CIT(A) was not justified in directing the Assessing Officer to accept revised return under section 139(5) and also directing to allow benefit of claims made in the revised return as the return had not been under section 139(4). Subsequently, the CIT, Patiala passed order under section 263 on 9-11-1998 on the ground that the assessment order passed under section 143(3) on 13-3-1996 was erroneous and prejudicial to the interest of revenue because the revised return under section 139(5) could have not been filed, as the original return was filed under sub-section of section 139 and not under section 139(1) of the Income-tax Act. In pursuance of such order of the CIT, the Assessing Officer completed the assessment under section 143(3) on 28-12-1999, where the benefit of set off of brought forward speculative loss against the speculative profit of the current assessment year was not allowed for the reason that the revised return filed by the assessee could have not been treated and acted upon, in view of the fact that original return had been filed under sub-section of section 139. The learned CIT(A) held that the return filed on 12-2-1997 could not be considered as revised return as original return was filed under section 139(4). The learned DR heavily relied on the order of the Assessing Officer and submitted that since original return was not filed within time allowed under section 139(1), the revised return filed by the assessee was invalid and should have not been acted upon by the Assessing Officer. There is no quarrel with the proposition that assessee could file revised return under sub-section of section 139 only if the first return was furnished under sub-section of section 139 or within the time allowed under a notice issued under sub-section of section 142. The revised return filed by the assessee was not a valid return in the eye of law.


By this order, we shall dispose of this appeal of revenue filed against order of CIT(A), Bhatinda, for assessment year 1994-95. 2. only effective issue raised in this appeal is that learned CIT(A) was not justified in directing Assessing Officer to accept revised return under section 139(5) and also directing to allow benefit of claims made in revised return as return had not been under section 139(4). facts of case are that assessee filed first return on 24-11-1994 declaring income of Rs. 5,08,450. This return was not filed within time allowed under sub-section (1) of section 139. But same was filed under sub-section (4) of section 139. Subsequently, assessee filed revised return on 12-2-1997 declaring income of Rs. 29,026. In revised return, assessee had claimed that amount of Rs. 4,81,445 was speculative profit which required to be set off against speculative loss brought forward from earlier assessment year. Assessing Officer completed assessment under section 143(3) on 13-3-1997 on income of Rs. 1,26,620 and allowed benefit of brought forward speculative loss of earlier assessment year against speculative profit. Subsequently, CIT, Patiala passed order under section 263 on 9-11-1998 on ground that assessment order passed under section 143(3) on 13-3-1996 was erroneous and prejudicial to interest of revenue because revised return under section 139(5) could have not been filed, as original return was filed under sub-section (4) of section 139 and not under section 139(1) of Income-tax Act. Thus, CIT set aside assessment order and directed Assessing Officer to reframe assessment as per law after allowing proper opportunity. In pursuance of such order of CIT, Assessing Officer completed assessment under section 143(3) on 28-12-1999, where benefit of set off of brought forward speculative loss against speculative profit of current assessment year was not allowed for reason that revised return filed by assessee could have not been treated and acted upon, in view of fact that original return had been filed under sub-section (4) of section 139. Assessing Officer also relied on judgment of Honble Supreme Court in case of Kumar Jagdish Chandra Sinha v. CIT [1996] . Accordingly, assessment was completed on total income of Rs. 5,67,260. 3. Being aggrieved, assessee impugned action of Assessing Officer in appeal before CIT(A). It was submitted before CIT(A) that even if second return filed by assessee on 12-2-1997 was invalid return, computation of income filed alongwith said return could not be just ignored without verifying genuineness. Reliance was also placed on judgment of Honble Supreme Court in case of Bihar State Co-op. Bank Ltd. v. CIT [1960] and circular of C.B.D.T. No. 14(XI/3) of 1955, dated 11-4-1955 where Field Officers were directed not to take advantage of ignorance of assessee as to his rights. They were also directed to assist taxpayers in every reasonable way, particularly in matter of claiming and securing reliefs and allowing claim, if those were admissible under law. learned CIT(A) held that return filed on 12-2-1997 could not be considered as revised return as original return was filed under section 139(4). However, statement submitted alongwith revised return should have been accepted by Assessing Officer and brought forward speculative loss should have been adjusted against brought forward profit. Thus, accepting claim of assessee, learned CIT(A) allowed appeal by recording following findings in para 4 of impugned order: "4. I have given careful consideration to views expressed by both sides and I hold that there is weightage in arguments advanced by learned counsel of appellant. I fully endorse views of learned CIT and learned Jt. CIT that return filed on 12-2-1997 cannot be treated as revised return as original return filed on 24-11-1994 is return filed under section 139(4) of Income-tax Act, 1961 but at same time fact that appellant has filed revised computation of income declaring his net income at Rs. 29,026 alongwith revised return cannot be just ignored as income is to be assessed under proper head and appropriate classification is to be given to particular income. This is duty of Assessing Officer to assist taxpayer in every reasonable way, particularly in matter of claiming and securing reliefs. Under these circumstances, I hold that income claimed by appellant amounting to Rs. 4,81,445 as speculative profit in revised computation of income is income from speculative profit and should be treated as such and brought forward losses if any should be set off as per law. My this finding is also prompted by fact that Assessing Officer in fact has admitted that income of Rs. 4,81,450 is income from speculative profit and he was rightly held so in para 2 of his assessment order dated 13-3-1997." revenue is aggrieved by order of CIT(A). Hence, these appeals before us. 4. learned DR heavily relied on order of Assessing Officer and submitted that since original return was not filed within time allowed under section 139(1), revised return filed by assessee was invalid and should have not been acted upon by Assessing Officer. He relied on judgment of Honble Supreme Court in case of Kumar Jagdish Chandra Sinha (supra). 5. ld. Counsel for assessee, on other hand, heavily relied on order of CIT(A) and reiterated submissions which were made before authorities below. He also relied on two decisions of ITAT, Amritsar Bench (SMC) in cases of Asstt. CIT v. Standard Radios [IT Appeal No. 87 (ASR) of 2000] for assessment year 1995-96 and ITO v.Hotel Bahia Fort [IT Appeal No. 568 (ASR) of 2000] for assessment year 1996-97. Copies of these orders were also placed on our files. 6. We have heard both parties and given our thoughtful consideration to rival submissions, examine facts, evidence and material on record. We have also gone through orders of authorities below. There is no quarrel with proposition that assessee could file revised return under sub-section (5) of section 139 only if first return was furnished under sub-section (1) of section 139 or within time allowed under notice issued under sub-section (1) of section 142. Admittedly, in present case, original return was not filed under sub-section (1) of section 139 and same was filed under sub- section (4) of section 139. No notice under section 142(1) was also issued to assessee. Therefore, revised return filed by assessee was not valid return in eye of law. But question still remains whether statement filed alongwith revised return claiming benefit of set off of brought forward speculative loss against speculative profit of current assessment year could have been ignored by Assessing Officer. purpose of assessment is to determine correct income of assessee in accordance with provisions of Act. In case, assessee inadvertently failed to claim set off of brought forward speculative loss against speculative profit, such claim could be made during course of assessment proceedings. It was not even necessary for assessee to file revised return. assessee could make such claim for allowing set off of brought forward loss during course of assessment proceedings because claim is open to scrutiny and in any case w s determined in earlier years. In this case, first assessment was completed under section 143(3). Therefore, mere filing of claim would not have enabled assessee to claim such benefit until assessee was entitled to same and Assessing Officer was satisfied with same. It is none of claim of revenue authorities that profit of Rs. 4,81,445 was not speculative profit. It is also not claim of revenue that there was no brought forward speculative loss which could be given set off against current years speculative profit. Thus, on merits assessee was indeed entitled to such set off as per provisions of Act. Moreover, claim alongwith revised return was submitted during course of assessment proceedings on 12-2-1997 and assessment under section 143(3) was made much thereafter, i.e., on 28-12- 1999. Thus, we are of considered opinion that ld. CIT(A) was justified in holding that assessee was entitled to set off of brought forward loss against speculative profit of current year on basis of statement submitted alongwith revised return. action of CIT(A) is in conformity with letter and spirit of Act and Circular No. 14(XI-35), dated 11-4-1995. We confirm his order and reject grounds of appeal of revenue. 7. In result, appeal filed by revenue is dismissed. *** Income-tax Officer v. Sadhu Ram & Co
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