ORDER
D.K. Seth, J.
1. The points raised :
This appeal was admitted on the following two grounds :
'I. Whether, when a second revised return was filed under Section 139(5) of the Act within the specified period of one year from the end of the relevant assessment order (year), the AO is obliged to adjust the demand made under Section 143(1)(a) raised on the basis of the earlier returns and whether the Tribunal is justified in law in deciding the case without considering the legal position ?
II. Whether, in view of the fact that the petitioner had filed a revised return on 7th Jan., 1991 claiming a loss of Rs. 2,49,05,044 and carry forward the loss of unabsorbed depreciation of Rs. 6,26,26,557 the Tribunal without deciding the question as to whether there was any reduction of loss consequent upon the filing of the second revised return on 7th Jan., 1991 could send the matter back when there was no dispute regarding the carry forward unabsorbed depreciation of a sum of Rs. 6,26,26,557 ?'
Facts :
2. In order to answer these two questions, it would be relevant to narrate the facts in brief.
2.1. Return under Section 139(1) of the IT Act, 1961 covering a period of 21 months from 1st July, 1987 to 31st March, 1989 was submitted by the assessee on 29th Dec., 1989, i.e., within the time stipulated under Section 139(1). A revised return (first revised return) was filed on 30th March, 1990. On 19th Sept., 1990 the AO issued an intimation under Section 139(1)(a) accepting the revised return and reducing the amount of loss as claimed while levying additional tax under Section 143(1)(a). The petitioner applied for rectification of the said order dt. 19th Sept., 1990 under Section 154 on 20th Oct., 1990 claiming carry forward of earlier years' loss and unabsorbed depreciation. By an order dt. 31st Dec., 1990, this application for rectification was rejected on the ground that neither in the original return nor in the revised return any claim for carry forward of earlier years' loss or depreciation was made. Admittedly, it was so. On 7th Jan., 1991, a revised return (second revised return), claiming carry forward of earlier years' loss and unabsorbed depreciation, was filed. This was not considered and assessment was made. The matter travelled in between the appeals and upto this Court and ultimately the present order under appeal was passed rejecting the claim of the assessee for carrying forward the earlier years' loss and unabsorbed depreciation.
2.2. The learned Tribunal in its order dt. 22nd April, 1999 had remanded the case only on the' question whether the claim in the revised return at the enhanced figure was a wrong claim by deprecating the process of finding out depreciation for 21 months on pro rata basis or not. On the other hand, it had held that the issue of loss after adjustment stands covered against the assessee by reason of the discussion made in the order pointing out to the retrospective amendment of Section 143(3).
The preliminary objection by the respondent/Department :
3. The order of the learned Tribunal was sought to be supported by Mr. Moitra on two-fold grounds--first, according to him, the return comprising of 21 months cannot be treated to be a valid return and as such there was no return in the eye of law. In order to substantiate this question, he referred to the definition of 'previous year' defined in Section 2(34) to mean the previous year as defined in Section 3. Referring to Section 3, he points out that the previous year means the financial year immediately preceding the assessment year, which comprises of the period from 1st April, 1988 till 31st March, 1989. Since the return comprised of the period anterior to 1st April, 1988, this return is not a return at all. The second ground he has taken is that no revised return could be filed under Section 139(5) in view of the decision in Kumai Jagadish Chandra Sinha (Dead) through LRs etc. v. CIT : [1996]220ITR67(SC) wherein the apex Court had held that in such a case no revised return could be filed.
3.1. Before we proceed to discuss the contention raised by Dr. Pal, we may deal with the preliminary objections raised by Mr. Moitra. So far as the first question is concerned, it appears that section defining 'previous year' was substituted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1988 prior to its substitution by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989. In the present case, as contended by Dr, Pal, the assessee was following a different accounting year other than 1st April and 31st March following. Therefore, in view of the provisions contained in Section 3 as amended by the 1987 Amendment effective from 1st April, 1988, the fraction of the period from 1st July 1987 till 31st March, 1988 was included in the return for the period ending 31st March, 1989. By reason of the substitution of the definition of 'previous year' through the 1987 Amendment effective from 1st April, 1988, the period following is to be dealt with as the transitional period as contemplated under Section 3, Sub-section (2) read with the Tenth Schedule Therefore, the first contention of Mr. Moitra cannot be sustained.
3.2. That apart, it is also to be noted that this return was never treated to be a void return by either the AO or the appellate authority or the Tribunal. Neither this point was ever raised. In any event, having regard to the facts and circumstances of the case, we do not think that this preliminary objection can be sustained and is accordingly overruled.
3.3. So far as the second question that has been raised by Mr. Moitra is concerned, the decision in Kumai Jagadish Chandra Sinha (supra) is distinguishable on facts as rightly pointed out by, Dr. Pal. In fact, in that case the return was filed after the period had expired under Sub-section (4) of Section 139. In such a situation a revised return was sought to be filed under Sub-section (5), which was held by the apex Court that could not be done. Whereas in the present case, the original return was filed within the time limited under Section 139(1) and the revised returns were filed within the period prescribed under Sub-section (5) of Section 139. Therefore, this contention raised by Mr. Moitra does not seem to be of any consequence and this objection is also overruled.
Section 32(2) : Whether unabsoibed depreciation can be carried forward :
4. Having regard to the facts and circumstances of the case, it appears that the Tribunal in effect did not consider the implications either of Section 32(2) or of Section 139(5) r/w Section 139(1)(a), (b) and (3). Having regard to the proposition of law, we may find that Section 32(2) as it stood at the relevant point of time permitted carry forward of the unabsorbed depreciation to the succeeding previous year. Therefore, according to Section 32(2), the unabsorbed depreciation could very well be carried forward to the succeeding previous year and if it is so permitted and in that event that can be adjusted against the profit and loss at the time of assessment or adjustment either under Section 139 or Section 143, as the case may be.
Whether second revised return is valid :
5. Section 139(5) permits furnishing of revised return within the relevant assessment year or before the completion of the assessment, whichever is earlier provided he has furnished a return either under Section 139(1) or in pursuance of the notice issued under Section 142(1). In the present case, the assessee had filed return under Section 139(1), Therefore, he is eligible to file a revised return under Sub-section (5) within or before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.
5.1. In this case, the intimation under Section 143(1)(a) was issued on 19th Sept., 1990, namely, long before the end of the assessment year supposed to expire on 31st March, 1991. This intimation cannot be treated to be an assessment contemplated under Sub-section (5) for the purpose of limitation for filing revised return. This is clear from the provisions contained in Section 143(1B) which permits furnishing of revised return under Sub-section (5) of Section 139 after the issue of an intimation under Section 143(1) or under Section (1) and (1A). Therefore, the provision of Sub-section (1B) of Section 143 clearly indicates that an intimation is not an assessment within the meaning; of Sub-section (5) of Section 139. Therefore, the second revised return filed after the intimation is a valid return.
Whether the second revised return envisages assessment under Section 143(3) :
6. Sep. 143 postulates under Sub-section (1) to accept the return as submitted either under Sub-section (1) or Sub-section (1A) or Sub-section (1B) or to issue a notice under Sub-section (2) in such situation contemplated in that sub-section and then to assess under Sub-section (3) of Section 143. It was open to the AO to issue a notice under Sub-section (2) of Section 143. But such notice could be issued within the period provided in the proviso to Sub-section (2) namely that such notice is to be served on the assessee before the expiry of the financial year in which the return is furnished which was on 31st March, 1991 or the expiry of six months from the end of the month in which the revised return is furnished, whichever is later. The second revised return was filed on 7th Jan., 1991. Therefore, notice could have been issued till 6th July, 1991. Admittedly, no such notice has been issued. Therefore, it is no more open to the Department to assess the return under Sub-section (3) of Section 143 in the absence of any notice under Sub-section (2) thereof.
6.1. In such a circumstances, the learned Tribunal was wrong in holding that the issue stands covered against the assessee by reason of the discussion made in the order on account of amendment of Section 143(3) w.e.f. 1st April, 1989 or that the only question to be decided with regard to the enhancement of the figure by reason of the first revised return with regard to the loss claimed.
6.2. In fact, having regard to the facts and circumstances of the ease, by reason of the situation in law, it was incumbent upon the AO and the appellate authority as well as the Tribunal to take into consideration the second revised return filed on 7th Jan., 1991 and proceed in accordance with Section 143(1) or Sub-section (1A) or Sub-section (1B), as the case may be. In this case, since the revised return has been filed after the intimation within the-time and validly, therefore, now the assessment is to be made under Sub-section (1B) of Section 143.
Conclusion :
7. Having regard to the facts of the case and the situation in law as discussed above (a) the second revised return is required to be considered; (b) on account of the expiry of the period contemplated in Section 143(2), in the absence of any notice, the assessment cannot be made under Section 143(3); (c) it is required to be considered under Section 143(1B) of the IT Act, 1961.
Order :
8. In the circumstances, we set aside the order of the Tribunal and all consequential orders and remand the case for being assessed by the AO afresh on the basis of the second revised return in the light of the observation made above in accordance with law in terms of Section 143(1B). It is expected that the assessment shall be concluded within a period of three months from the date of communication of this order.
8.1. Both the questions on which the appeal was admitted, are answered in the negative in favour of the assessee.
8.2. The appeal is, thus, allowed. There will, however, be no order as to costs.