1. This appeal for assessment year 1985-86 by the assessee, being a private limited company, is directed against the order dated 11 -05-1989 of CIT (Appeals)-XI, New Delhi. The issue involved is relating to the allowance of carry forward of loss under the provisions of Section 72 of the Income-tax Act, 1961. For assessment year 1985-86 for which the previous year ended on 23-12-1984 assessee had filed a return on 23-6-1986 declaring loss at Rs. 2,22,174. Assessing Officer vide order dated 22-9-1987 computed the loss at Rs. 1,38,427. In the assessment order, the Assessing Officer observed that since the assessee did not file the return within the time allowed under Section 139 of the Income-tax Act, the benefit of carry forward of business loss, in view of Section 80 of the Income-tax Act, would not be allowed. Assessee appealed to the CIT (Appeals), and claimed that it had filed extension applications from time to time seeking extension up to 30-6-1986 and since, the return had been filed before the expiry of 30-6-1986, the loss may be allowed to be carried forward. The CIT (Appeals) by the impugned order did not accept the claim of the assessee on the ground that the three of the 4 applications filed in Form No. 6 had not been filed after the expiry of the time, whether allowed originally or on extension and, therefore, the assessee was not entitled to the benefit of decision of the Patna High Court in the case of CIT v. S.P. Vij Construction Co. [1987] 165 ITR 732, where their Lordships have held that the filing of extension application, if not rejected, amounts to granting of extension. It may be pertinent to mention that for assessment year 1986-87 also assessee had filed the return after the expiry of the time allowed originally under Section 139(1) and the Assessing Officer had declined to allow carry forward of loss. The CIT (Appeals) having found the applications in Form No. 6 filed before the expiry of the time, held that assessee was entitled to presumption of extension and, therefore, was entitled to the carry forward of loss - time having been deemed to have been extended.
2. Shri N.N. Khanna, Director of the company appearing in person contended that the assessee had instructed the CA for filing extension applications from time to time and unfortunately, the delay in filing of the applications has been due to his negligence for which the assessee may not be penalized. Explaining the circumstances for the delay in filing of the return, Shri Khanna referred to the Directors' Report where the fact of loss of company's books of account with the theft of company's van on 16-8-1964 has been specifically highlighted.
Our attention was also drawn to the decision of the Hon'ble Supreme Court in the case of Rafiq v. Munshilal AIR 1981 SC 1400, where it has been held that the assessee should not suffer for the inaction deliberate omission or misdemeanure of his counsel. Photostat copy of the decision has been placed on record. The decision of the Madhya Pradesh High Court in the case of Mahaveerprasad Jain v. CIT[1988] 172 ITR 331 has also been cited in support of the claim that appellant could not be made to suffer for the negligence of the counsel. It was, accordingly, pleaded that the loss determined by the Assessing Officer may be allowed to be carried forward under the provisions of Section 72 of the Income-tax Act, 1961.
3. The learned departmental representative Smt. Anuja Sarangi contended that under Section 80 of the Act a loss which has not been determined in pursuance of a return filed within the time allowed under Sub-section (1) of Section 139 or within such further time allowed by the ITO, cannot be allowed to be carried forward and set off under Sub-section (1) of Section 72 etc. According to the learned departmental representative since the Assessing Officer did not extend the time in filing of the return of income, the loss could not be allowed to be carried forward. Referring to the extension applications filed by the assessee, learned departmental representative contended that the Assessing Officer was justified in ignoring the same as these had not having been filed before the expiry of time allowed under Section 139(1).
4. We have given our careful consideration to the rival contentions.
Under Section 139(1) assessee was required to file the return of income by 30-6-1985. Assessee, however, did not file the return of income by the said date. On 24-6-1985, assessee has filed an application in Form No. 6 vide receipt No. 743983 seeking extension of time up to 30-9-1985. Since, this application has been filed well before the time allowed under Section 139(1) assessee was entitled to presume extension up to 30-9-1985. This is as per the view expressed by the CIT (Appeals) himself in the impugned order on the basis of the decision of the Patna High Court in the case of S.P. Vtj Construction Co. (supra). Assessee has filed further applications in Form No. 6 as under : 5. As is seen from above all the three applications have been filed after the expiry of the time for filing of the return under Section 139(1). Where applications are filed before the expiry of the time allowed for filing of the return under Section 139(1) either originally or on extension, there is no difficulty to hold that assessee would be justified in presuming grant of extension. This is the view supported by various judicial authorities, some of which are indicated below: 1. Lachman Chaturbhuj Javav. R.G. Nitsure [1981] 132 ITR 631 (Born.) (Under WT Act); However, difficulty arises in a case where applications have been filed after the expiry of the time allowed under Section 139(1) either originally or on extension. Some of the High Courts have taken the view that where the application is belated, assessee cannot presume extension. There, in our view, can be no dispute about this proposition of law. However, in this case, the issue before us is not as to whether the assessee was entitled to presume grant of extension on account of filing the belated applications in Form No. 6. The issue that arises, in this case, is as to whether the Assessing Officer can ignore the belated applications in Form No. 6 and is he duty bound to dispose of the same, before deciding the issue relating to allowance of carry forward of loss under Section 72 of the Act. In a case where the assessee has promptly filed the applications in Form No. 6 within the time allowed under Section 139(1) and the Assessing Officer has not rejected such applications by virtue of the decisions of the various High Courts referred to above, the assessee gets extension not necessarily on merits but by default of the Assessing Officer. However, in a case where applications are filed beyond time allowed for filing of the return under Section 139(1) assessee does not get extension by default of the Assessing Officer. Nevertheless, we are of the considered view that Assessing Officer is duty bound to consider the application filed by the assessee even after the expiry of the time allowed under Section 139(1) either originally or on extension, on merits before deciding the claim of the assessee regarding the carry forward of loss. Under Section 139(1) as applicable for the relevant assessment year the time allowed for filing of the return was up to 30-6-1985. There is a proviso to Section 139(1) which reads as under: Provided that on an application made in the prescribed manner, the Income-tax Officer may in his discretion extend the date for furnishing the return and notwithstanding the fact that the date is so extended, interest shall be chargeable in accordance with the provisions of Sub-section (8).
6. As is evident from above, the proviso does not fix any time limit for filing of the applications on the basis of which the Assessing Officer is empowered to extend the date. The only condition imposed under the proviso is that the application is to be filed in the prescribed manner. Rule 13 of the Income-tax Rules, 1962 which stands omitted w.e.f. 1-4-1989 reads as under: The application to the Income-tax Officer under the proviso to Sub-section (1) or the proviso to Sub-section (2) or Sub-section (3) of Section 139 for seeking an extension of the date for furnishing a return of income shall be in Form No. 6.
Application/or extension of the date for furnishing a return of income under Section 139 of the Income-tax Act, 1961Under Section 139(1)/(2)/(3) of the Income-tax Act, 1961, I/we have to filethe return of my/ our income...the income of......in respect of which I/we am/are assessable for theassessment year commencing on the lst April, 19..., before...19... for the reasons given below, if is not possible/has not been possiblefor me/us to file the return before the said date.2. It is, therefore, requested that time for furnishing the return may beextended up to...Dated...19...
Signature Name (in capital letters) 2. The application should be signed by a person who is entitled to sign a return of income as provided in Section 140 of the Income-tax Act, 1961.
It is evident from proviso to Section 139(1), Rule 13 and Form No. 6 that no time limit is prescribed for furnishing of the application for extension of the date for furnishing the return of income. The language of Form No. 6, however, clearly indicates that the application can be filed either before the time allowed under Section 139(1) or after the expiry of the said time but obviously before the completion of assessment. The words used in Form No. 6 are "for the reasons given below, it is not possible /has not been possible for me to file the return before the said date". The words "is not possible" would be applicable in a case where the application has been filed before the expiry of the time where such an application has been filed. Several High Courts have held that if the Assessing Officer does not pass an order and inform the assessee about the decision, assessee would be entitled to presume grant of extension. However, where the application is filed after the time of expiry allowed under Section 139(1), the assessee will delete the words "is not possible" and the application would read "it has not been possible for me/us to file the return before the said date". When the Act and the Rules provide for filing of application in Form No. 6 for seeking extension of the date for furnishing the return of income even after the expiry of time allowed one cannot hold that the application filed after the expiry of the time allowed under Section 139(1) is invalid and the Assessing Officer would not be bound to dispose of the same even at the time of framing of assessment.
8. In the case of Sunderdas Thackersay & Bros. v. CIT [ 19821 137 ITR 646 Their Lordships of the Calcutta High Court has held "there is no time limit imposed under Section 139 or Rule 13 or in Form No. 6 itself for applying for an extension of time to furnish a return. Where an application is filed in Form No. 6 explaining the reasons for not furnishing the return in time after the expiry of time for furnishing the return of income, the ITO must consider the application giving the reasonable opportunity to all parties concerned and then pass a speaking order as to whether reasonable cause was shown or not".
9. In the case of Karam Singh v. CIT[1977] 110 ITR 726 Their Lordships of the Punjab and Haryana High Court have held as under :- From the application form prescribed for asking for extension of time for filing of the return of Income, it is clear that the application can be made even after the expiry of the prescribed date. Moreover, the proviso to Section 139(2) of the Income-tax Act, 1961 does not contain any limitation to the effect that such an application must be made before the due date.
10. Considering the proviso to Section 139(1), Rule 13 of the Income-tax Rules and Form No. 6 and the aforementioned decisions, we are of the considered view that the assessee being entitled to file an application even after the expiry of the time allowed for furnishing of the return under Section 139(1), the Assessing Officer is duty bound to dispose of the same before deciding the issue relating to carry forward of loss, which is at the stage of assessment. When an application filed by the assessee in accordance with law has not been disposed of by the Assessing Officer, one cannot ascertain as to whether the return of income filed by the assessee is within the further time allowed by the Assessing Officer under proviso to Section 139(1). The Assessing Officer has decided the claim of the assessee without looking at the applications for extension of time. The learned CIT (Appeals) has held that the applications being beyond the time allowed under Section 139(1) the assessee was not entitled to presume grant of extension. We have no quarrel with the view expressed by the CIT (Appeals), in this regard. We concur with his view that in such cases, the benefit of the decisions of the various High Courts referred to in this order would not be available to the assessee and extension cannot be presumed to have been granted. However, the learned CIT (Appeals) has overlooked another aspect of the matter i.e., the duty of the Assessing Officer in considering the belated applications at the stage of assessment for purposes of determination of the issue relating to carry forward of loss under Section 80 of the Income-tax Act, 1961. Since, we are of the considered view that the Assessing Officer is duty bound to dispose of the applications filed even after the expiry of the time at the stage of assessment, we remit the issue to the file of the Assessing Officer with a direction to dispose of the applications filed by the assessee in Form No. 6 judiciously in accordance with law. The issue relating to carry forward of loss is also set aside to be decided afresh after the disposal of applications, details of which are indicated in this order in para 4 as also noted in the order of the CIT (Appeals) at page 5.