Per Riyaz S. Padvekar, Judicial Member: assessee has filed this appeal challenging order of Commissioner of Income-tax (Appeals)-I, Calicut dated 24-8-2004 for assessment year 1998-99. 2. first issue which arises for our consideration is whether CIT (Appeals) is justified in confirming order of Assessing Officer not allowing business loss to be carried forward on reason that return of loss was filed after due date. 3. We have heard parties. learned Chartered Accountant Shri V. Sathyanarayanan for assessee made following submissions: assessee-company filed its return of income for assessment year 1998-99 on 30-11-1998, i.e., within due date prescribed under section 139(1) of Income-tax Act together with statement of income, balance sheet and profit and loss account. It is submitted that since audit under provisions of Companies Act, 1956 was not completed by that time, audit report was not enclosed along with return of income/loss and also audit report as required under section 44AB of Income-tax Act could not be filed when return was filed on 30-11-1998. assessee declared loss in return which was Rs. 44,96,031. It was further submitted that Assessing Officer issued deficiency letter dated under section 139(9) of Act on 29-1-1999 calling assessee to remove defects in return of income, i.e., auditor's statement of account. On receipt of deficiency letter in respect of defect in return of income filed by assessee, application was filed on 25-2-1999 requesting for time to comply and remove defect till 5-3-1999. There was no reply from Assessing Officer and application filed by assessee for extension of time for removing defect was not disposed of. Subsequently, assessee filed revised return on 5-3-1999 declaring total loss of Rs. 92,05,684 and along with said return, assessee also made compliance as was directed by Assessing Officer vide his letter dated 29-1- 1999 by enclosing audit report as per Companies Act and also audit report as per provisions of section 44AB of Income-tax Act. Subsequently, assessment was completed under section 143(3) of Income-tax Act vide order dated 30-3-2001 and Assessing Officer determined net loss of Rs. 79,76,940. It is argued that Assessing Officer did not allow to carry forward net loss of Rs. 79,76,940 determined as per his order dated 30-3-2001 on reason that return of loss was filed after due date of filing of such return. 4. assessee challenged impugned order of Assessing Officer before CIT (Appeals). CIT (Appeals) upheld order of Assessing Officer. But at same time, CIT (Appeals) directed Assessing Officer allow element of depreciation as there is no bar under section 80 of Act. It is argued by ld. CA that due to administrative reasons, assessee could not complete its audit as required under Companies Act and hence when return of loss was filed on 30-11-1998, at that time, assessee enclosed unaudited profit and loss account and balance sheet. It is further argued that when assessee had filed application requesting Assessing Officer for granting additional time for removing defect till 5-3-1999, in fact, it was within discretion of Assessing Officer to grant time or at least to dispose of application filed by assessee. assessee was under bona fide belief that Assessing Officer has extended time as there was no further communication on application filed by assessee. It is further argued that original return of loss was filed as per time specified under section 139(3) of Act. ld. CA also referred to provisions of section 139(9) and submitted that these provisions are identical with earlier provisions when Assessing Officer had discretion to grant time to assessee to file return of income. It is further argued that revised return of loss filed by assessee on 5-3-1999 is also as per provisions of section 139 and hence loss determined is to be carried forward as per provisions of section 80. ld. CA relied on following precedents:-(i) Rajasthan Cylinders & Containers Ltd. v. CIT [2003] 259 ITR 95 (Raj.) (Jaipur Bench); (ii)CIT v. Rohit Organics (P.) Ltd. [2006] 281 ITR 194 (All.); (iii)CIT v. Swastik Sanitary Works Ltd. [2006] 286 ITR 544 (Guj.); (iv)CIT v. Surinder Kumar Parmod Kumar [1992] 193 ITR 71 (Punj. & Har.); (v)CIT v. S. Rangaswamy Nadar & Co. [2003] 260 ITR 197 (Mad.); (vi)CIT v. Pigments India Ltd. [1997] 228 ITR 797 (Ker.); (vii)Kerala State Bamboo Corpn. Ltd. v. CIT [1999] 236 ITR 288 (Ker.). 5. Per contra, Smt. A.S. Bindhu, ld. Departmental Representative submitted that second return filed by assessee was not as per provisions of section 139(3) of Act and as per provisions of section 80, assessee is not entitled to carry forward loss. ld. DR supported order of CIT(A) as well as Assessing Officer. 6. We have heard rival submissions of parties. We have also carefully considered facts as per material placed before us. We have also carefully considered legal principles in precedents relied on by ld. CA. short issue in this case for our consideration is whether assessee is entitled to carry forward loss as determined by Assessing Officer when assessment was completed under section 143(3). assessee filed return of loss for assessment year 1998-99 on 30-11-1998, but at time of filing of return, assessee-company could not attach audited statement o f accounts, profit and loss account, balance sheet, etc., as well as audit report as required under section 44AB of Act. Assessing Officer issued letter to assessee copy of which is placed in paper book No. 1 at pages 11 to 12 dated 29-1-1999. On receipt of letter from Assessing Officer, assessee filed application to Assessing Officer dated 25-2-1999 copy of which is placed at page 13 of paper book No. 1 requesting for extension of time till 5-3-1999 for filing audit report and balance sheet as per deficiency letter. application filed by assessee was not disposed of and assessee could not know whether said application was rejected or allowed as there was no communication from Assessing Officer. 7. Subsequently, assessee filed another return of loss on 5-3-1999 revising loss and also along with other return assessee enclosed audited statement of account like profit and loss account, balance sheet and audit report under section 44AB of Act. assessment of assessee was completed under section 143(3) of Act. Assessing Officer determined net loss at Rs. 79,76,940 but said loss was refused to be carried forward and set off in future as Assessing Officer noted that assessee has filed return of loss after due date. In light of these facts, we have to examine relevant provisions of Act. Section 80 of Act reads as under:- '80. Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of return filed in accordance with provisions of sub-section (3) of section 139, shall be carried forward and set off 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.' As per provisions of section 80 which in nature of overriding provision if return of income is not filed as provided under section 139(3) loss determined shall not be carried forward and allowed to be set off under relevant provisions. There is no controversy whether assessee is otherwise entitled to set off loss, hence we are not dealing with other provisions. short controversy is whether return of loss filed by assessee is as per provisions of section 139(3) of Act. Section 139(3) provides that if any person has sustained loss in previous year under head 'Profits and gains of business or profession' and he claims that loss or any part thereof should be carried forward and to be set off, then he should have filed return of loss within time prescribed under section 139 of Act. Another relevant provision is also section 139(9) wherein it is provided that if in opinion of Assessing Officer return furnished by assessee is defective then he may intimate defect to assessee and give him opportunity to rectify defect within period of 15 days from date of such intimation or within such further period on application made by assessee as Assessing Officer in his discretion allow and if defect is not rectified within period in intimation or further period allowed then return filed by assessee will be treated as invalid return. In this case, assessee filed application for getting further period to rectify defect. This fact is not disputed and that there was no communication from Assessing Officer. assessee has there was no communication from Assessing Officer. assessee has expressed its bona fide difficulty in getting audit as per Companies Act and it requested Assessing Officer for time up to 5-3-1999 to file return. It was duty of Assessing Officer to dispose of application filed by assessee either granting additional time or refusing same. But Assessing Officer did not act on said application. 8. On perusal of section 139(9), it is clear that though defect is to be rectified within period of 15 days from date of intimation, at same time, if application is filed by assessee then that is to be considered judiciously as it is discretion of Assessing Officer to consider reasons and accordingly, grant time. If application filed by assessee is not disposed of or no action is taken and if Assessing Officer remains silent then only conclusion is that time asked by assessee has been granted by Assessing Officer. It is pertinent to note in this case that assessee has asked for time up to 5-3-1999 and on that date, assessee filed revised return along with audited statement of accounts. 9. ld. CA has relied on numerous precedents which are in connection with earlier provision in permitting assessee to file return of income beyond due date. In our opinion, same principles are also applicable as far as section 139(9) is concerned as admittedly, it is discretion of Assessing Officer to grant additional time to remove defect. We are not impressed with argument of ld. DR that assessee has not made compliance of directions of Assessing Officer, In our opinion, assessee has removed defect within meaning of section 139(9) and return filed by assessee on 5-3-1999 is valid revised return. 10. Another aspect to be considered here is that if it was not valid return, then how assessment is framed under section 143(3). On perusal of assessment order, we find that Assessing Officer has determined net loss as per revised return filed by assessee. In our opinion, return filed by assessee on 30-11-1998 as well as 5-3-1999 are valid returns and there is no bar to carry forward determined loss as per section 80 of Act. We are, therefore, of opinion that assessee is entitled to carry forward loss and set off same as per provisions of law. We, therefore, direct Assessing Officer to allow assessee to carry forward determined loss to be set off in future as per provisions of law. We, accordingly, set aside order of CIT (Appeals) on this issue. Thus, ground No. 2 is allowed. 11. next issue is with regard to disallowance of prior period expenses of Rs. 6 lakhs which arises from ground No. 3 taken by assessee. ld. CA submitted that assessee is not pressing ground No. 3. ld. DR has no objection for same. As assessee has not pressed ground No. 3 same is dismissed as not pressed. 12. next issue which arises from ground No. 4 is with regard to disallowance of Rs. 2,49,953 being expenses pertaining to prior period. We have heard rival submissions of parties. argument of ld. CA is that Assessing Officer has picked up said figures from audit report. In fact, audit report cannot be decisive. Assessing Officer should have applied his mind after verifying necessary evidence. ld. CA also referred to order of CIT (Appeals) on this issue and submitted that as Assessing Officer has not applied his mind and merely acted on comments of auditor based on report filed under section 44AB, expenses may be allowed. Per contra, ld. DR supported order of CIT(A) as well as Assessing Officer. 13. In this case, on perusal of order of Assessing Officer, we find that there is no discussion why Assessing Officer has disallowed said expenses. contention of ld. CA is that there is evidence to prove that liability to pay said expenses accrued in previous year relevant to assessment year 1998-99. In our opinion, this issue needs re-consideration by Assessing Officer. We, therefore, restore this issue to file of Assessing Officer with direction that he should determine this issue afresh after giving reasonable opportunity of being heard to assessee as per principles of natural justice. assessee is at liberty to produce necessary evidence before Assessing Officer. We, therefore, set aside order of CIT (Appeals) on this issue and ground No. 4 is allowed for statistical purposes. 14. In result, assessee's appeal is partly allowed for statistical purposes. *** INDUS MOTOR CO. LTD. v. ASSISTANT COMMISSIONER OF INCOME TAX