Srikant Mohta, Kolkata V. CIT, Central Circle - II, Kolkata, Kolkata

ITA 1988/KOL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83137 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 01-11-2010
• Court: TRIBUNAL
• Department Lawyers: SWETABH SUMAN
• Assessee Lawyers: J P KHAITAN; S MODI
• Keywords: Search and seizure; Revised return
• Section: 72(1); 142(1); 153A; 263; 154; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE S RI SHAMIM YAHYA, AM ] ITA NO.1988/KOL/2010 ASSESSMENT YEAR : 2004-05 ( APPELLANT ) (RESPONDENT) SRIKANT MOHTA -VS- C.I.T., CENTRAL CIRCLE-II, KOLKATA KOLKATA (PAN:AFAPM 1673 C) FOR THE APPELLANT SHRI J.P.KHAITAN, SR.ADVOCATE AND SHRI S.MODI, CA FOR THE RESPONDENT SHRI SWETABH SUMAN, CIT, SR.DR DATE OF HEARING : 14.08.2014 DATE OF PRONOUNCEMENT : 12. 09.2014. ORDER PER SHRI SHAMIM YAHYA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF LD. C.I.T.-CENTRAL- II, KOLKATA DATED 08.09.2010 AND PERTAINS TO ASSES SMENT YEAR 2004-05. 2. THE GROUNDS OF APPEAL RAISED IN THIS APPEAL REA D AS UNDER :- 1. THAT THE ORDER U/S 263 OF THE LEARNED COMMISSIO NER OF INCOME TAX IS CONTRARY TO LAW AND THE FACTS THE APPLICANTS CASE. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE INITIATION OF PROCEEDINGS U/S 263 OF THE ACT IS BAD IN LAW. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT ERRED IN HOLDING THAT THE CARRY FORWARD OF LOSS AMOUNTING TO RS.96,84,726/- WAS INCORRECT AND CONTRARY TO THE PROVISIONS OF THE ACT. 5. THE APPELLANT CRAVES LEAVE TO ADD TO OR AMEND TH E AFORESAID GROUNDS BEFORE DISPOSAL OF THE APPEAL. 3. IN THIS CASE ASSESSMENT WAS PASSED U/S 153A/143( 3) OF THE IT ACT. THE ASSESSMENT ORDER READS AS UNDER :- IN THIS CASE AND IN THE CASE OF THE ASSOCIATES OF T HE ASSESSEE, A SEARCH & SEIZURE OPERATION WAS CONDUCTED ON 02.09.2004 AND ON SUBSEQ UENT DATES AND CASH, JEWELLERY, OTHER ASSETS AND A NUMBER OF INCRIMINATING DOCUMENT S WERE SEIZED AND/OR IMPOUNDED. CONSEQUENTLY, NOTICES U/S 153A OF THE I.T.ACT 1961 (HEREINAFTER REFERRED TO AS THE THE ITA NO.1988/K/2010 SRIKANT MOHTA A.YR.2004-05 2 ACT) WERE ISSUED CALLING FOR RETURNS FOR THE ASSES SMENT YEARS 1999-2000 TO 2004-05 WHICH WAS DULY COMPLIED WITH. RETURN FOR THIS YEAR WAS SUBMITTED ON 26.04.2006 DECLARING A TOTAL INCOME OF RS.NIL. NOTICES U/S 143 (2) AND 142(1) OF THE ACT WERE ISSUED AND IN THE RESPONSE TO THE SAID NOTICES SHRI SANJAY MODI, A/R APPEARED FROM TIME TO TIME ALONG WITH SHRI B.YADAV, ACCOUNTANT OF THE ASS ESSEE GROUP AND EXPLAINED THE RETURN OF INCOME WITH THE HELP OF VARIOUS SUBMISSIONS AND EXPLANATIONS IN RELATION TO THE ACCOUNTS. THE CASE WAS HEARD AND DISCUSSED WITH THE A/RS. WITH REFERENCE TO THE SEIZED AND IMPOUNDED BOOKS OF ACCOUNTS AND DOCUMENTS AND T HEY WERE ALLOWED A THOROUGH EXAMINATION OF THE SAME AS AND WHEN REQUIRED. THE ASSESSEE IS A WELL-KNOWN PRODUCER AND DISTRIBUT OR OF FILMS UNDER THE BANNER OF HIS PROPRIETORSHIP BUSINESS OF M/S.SHREE VENKATESH FILM S AND TWO OTHER BUSINESS ENTITIES. THE BUSINESS IS CONDUCTED FROM THE OFFICE AT 6, WAT ERLOO STREET, KOLKATA-700069. SUBJECT TO THE ABOVE DISCUSSION, THE RETURNED INCOM E OF RS.NIL IS ACCEPTED. ASSESSED U/S 143(3)/153A AS ABOVE AT A TOTAL INCOME OF RS.NIL. CALCULATION OF TAX AS PER ITNS 150. ISSUE D.N. AND THE COPY OF ORDER. 3.1. THEREAFTER AO PASSED ORDER U/S 154 OF THE IT A CT IN THIS CASE. IN THE ORDER PASSED U/S 154 OF THE ACT THE AO HELD THAT LOSS WAS ALLOWED TO BE CARRIED FORWARD IN THE NEXT YEAR AMOUNTING TO RS.96,84,726/-. ORDER DA TED 09.06.2010 IN THIS REGARD READS AS UNDER :- ASSESSMENT IN THE CASE WAS COMPLETED U/S 153A/143( 3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON 21.12.2006 BY ACCEPTING THE RETURNED INCOME OF RS.NIL SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOM E FILED ON 26.04.2006. IN HIS COMPUTATION OF TOTAL INCOME FILED ALONG WITH HIS RETURN OF INCOME, THE ASSESSEE HAD CLAIMED CARRY FORWARD OF LOSS TO NEXT YEARS A MOUNTING TO RS.96,84,726/- UNDER THE HEAD INCOME FORM BUSINESS/PROFESSION. HOWEVER , WHILE PASSING THE ASSESSMENT ORDER U/S 153A/143(3) ON 31.12.2009, THE SAME WAS N OT MENTIONED INADVERTENTLY. THIS BEING A MISTAKE APPARENT FROM RECORDS IS HEREBY REC TIFIED AS UNDER :- CALCULATION OF TAX AND INTEREST PAYABLE TOTAL INCOME ASSESSED RS. NIL LOSS ALLOWED TO BE CARRIED FORWARD TO NEXT YEARS RS .96,84,726/- TAX ON TOTAL INCOME ASSESSED RS.NIL ORDER PASSED U/S 153A/143(3)/154 AS ABOVE. ISSUE DEMAND NOTICE ALONG WITH A COPY OF THE ORDER TO THE ASSESSEE. 3.2. THE ABOVE ORDER PASSED U/S 154 WAS THE SUBJECT MATTER OF THE ACTION U/S 263 OF THE ACT PASSED BY THE LD. COMMISSIONER OF INCOME TA X. 4. IN THE ORDER U/S 263 OF THE ACT, AT THE OUTSET, THE LD. CIT OBSERVED AS UNDER :- IN THE CASE OF SRI SRIKANT MOHTA THE ORIGINAL RETU RN OF INCOME FOR A.Y.2004-05 WAS FILED ON 31.03.2005 DECLARING LOSS OF RS.96,80,319/ -. A SEARCH & SEIZURE OPERATION WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 02.09.2004 AND SUBSEQUENTLY IN RESPONSE TO NOTICE U/S 153A OF THE I.T.ACT HE FILED REVISED RET URN ON 26.04.2006 DECLARING NIL INCOME AFTER CARRY FORWARD OF BUSINESS LOSS TO THE NEXT YEARS TO THE EXTENT OF ITA NO.1988/K/2010 SRIKANT MOHTA A.YR.2004-05 3 RS.96,84,726/-. THE ASSESSMENT WAS COMPLETED U/S 15 3A/143(3) ON 21.12.2006 AT A TOTAL INCOME OF RS.NIL AS PER RETURN. THE ASSESSEE WAS NO T NOTIFIED, BY ANY ORDER IN WRITING, THE AMOUNT OF ANY LOSS TO BE CARRIED FORWARD TO THE FOLLOWING YEARS AS PER THE PROVISIONS OF SECTION 157 OF THE ACT. THE SAID ASSESSMENT ORDE R WAS RECTIFIED SUO-MOTO BY THE A.O. ON 09.06.2010 BY PASSING AN ORDER U/S 153A/143(3)/1 54 WHEREBY THE LOSS TO THE EXTENT OF RS.96,84,726/- WAS ALLOWED TO BE CARRIED FORWARD TO THE NEXT YEARS. 2. IT WAS FOUND THAT THE ORDER OF THE A.O. TO ALLOW CARRY FORWARD OF LOSS RS.96,84,726/- TO THE NEXT YEARS WAS NOT CORRECT AND NOT IN ACCORD ANCE WITH THE PROVISIONS OF LAW. IN THE ORDER U/S 153A/143(3) DATED 21.12.2006 THE CLAIM OF THE ASSESSEE TO CARRY FORWARD OF LOSS WAS NOT CONSIDERED AND NO ORDER WAS PASSED FOR THE CARRY FORWARD. THUS NO LOSS PERTAINING TO THE A.Y. 2004-05 WAS ALLOWED BY THE A SSESSING OFFICER TO BE CARRIED FORWARD EITHER BY ANY ORDER IN WRITING (AS PER THE PROVISIONS OF SECTION 157 OF THE ACT) OR BY RECORDING ANYTHING TO THAT EFFECT IN THE ORDE R-SHEET FOR THE A.Y. 2004-05. IT IS ALSO FOUND THAT THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE U/S 139 OF THE ACT BELATEDLY ON 31.03.2005 SHOWING TOTAL LOSS OF RS.96 ,80,319/-. SINCE THE ASSESSEE DID NOT FILE HIS ORIGINAL RETURN OF INCOME WITHIN THE TIME ALLOWED UNDER SUB-SECTION (1) OF SECTION 139, THE CARRY-FORWARD OF THE SAID LOSS TO THE FOLLOWING YEARS U/S 72(1) SHOULD NOT HAVE BEEN ALLOWED AS PER THE PROVISIONS OF SECT ION 80 READ WITH THE PROVISIONS SUB- SECTION (3) OF SECTION 139 WHILE PASSING THE ORDER U/S 153A/143(3) ON 09.06.2010. THUS, ALLOWING CARRY-FORWARD OF LOSS AMOUNTING TO RS.96,8 4,726/- WHILE PASSING THE ORDER U/S 153A/143(3) ON 09.06.2010 WAS INCORRECT AND CONTRAR Y TO THE PROVISIONS OF THE ACT. 4.1. IN VIEW OF THE ABOVE THE ASSESSEE WAS ISSUED S HOW CAUSE NOTICE. ASSESSEE FILED WRITTEN SUBMISSIONS WHICH WERE CONSIDERED BY THE LD . CIT. THE LD. CIT NOTED THAT ASSESSEE HAD SUBMITTED THAT WHILE PASSING ORDER U/S 153A/143(3) DATED 21.12.2006 AND AO HAD ACCEPTED THE RETURN OF INCOME BUT INADVE RTENTLY HE DID NOT MENTION THE LOSS TO BE CARRY FORWARDED. IT WAS SUBMITTED THAT T HIS INADVERTENT MISTAKE OF THE AO WAS SUO MOTO RECTIFIED U/S 154 OF THE ACT DATED 09. 06.2010. THE ASSESSEE ALSO RELIED UPON THE ASSESSMENT ORDER FOR A.Y.2006-07 WHEREIN T HE BROUGHT FORWARD LOSS FOR A.YR.2004-05 WAS SET OFF TO THE INCOME OF THAT YEAR . IT WAS CONTENDED THAT THE ACTION OF THE AO IN SETTING OFF THE BROUGHT FORWARD LOSS O F A.YR.2004-05 IN A.YR.2006-07 CLEARLY DEMONSTRATED THAT THE AO HAD INTENDED TO CA RRY FORWARD THE LOSS FOR A.YR.2004-05, WHICH HE HAD INADVERTENTLY MISSED TO MENTION IN THE ORDER PASSED U/S 153A/143(3) OF THE ACT DATED 21.12.2006. IN THIS RE GARD THE LD. CIT OBSERVED THAT THE PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE UNDER THE INCOME TAX PROCEEDINGS. NO INFERENCE CAN BE DRAWN IN THE ACTION OF THE AO IN T HE SUBSEQUENT ASSESSMENT YEAR. THE LD. CIT OBSERVED THAT IN FACT THE ACTION OF THE AO IN ALLOWING THE SETTING OFF OF BROUGHT FORWARD LOSS IN A.YR.2004-05 IN A.YR.2006-07 WAS AL SO CONTRARY TO THE PROVISION OF LAW AND A SEPARATE PROCEEDINGS U/S 263 OF THE ACT H AS BEEN INITIATED IN THE A.YR.2006- ITA NO.1988/K/2010 SRIKANT MOHTA A.YR.2004-05 4 07 AS WELL. HENCE THE LD. CIT HELD THAT THE ARGUMEN TS OF THE ASSESSEE THAT THE AO INTENDED TO CARRY FORWARD THE LOSS FOR A.YR.2004-05 AS APPARENT FROM THE ACTION IN THE A.YR.2006-07 CANNOT BE ACCEPTED. THE LD. CIT FURTHE R OBSERVED THAT THE PERUSAL OF MATERIALS AVAILABLE ON RECORD SUGGESTS THAT THE A.O . DID NOT INTEND TO CARRY FORWARD THE LOSS FOR THE A.Y.2004-05. THE LD.CIT NOTED THAT IT IS FOUND FROM THE RECORD THAT THE ORDERS U/S 143(3)/153A FOR THE A.Y.2004-05 AND FOR THE A.Y.2005-06 WERE PASSED ON THE SAME DATE I.E. 21.12.006. THE RETURN FOR A.Y.20 05-06 WAS FILED ON 31.10.2006 SHOWING NIL INCOME AND CLAIMING CARRY FORWARD OF BUSINESS LOSS OF RS.21,76,194/-. THAT THE NIL INCOME FOR A.Y. 2005-06 WAS ACCEPTED BY THE A.O. THAT IN THE ORDER SHEET FOR THE A.Y.2005-06 THE A.O. HAS GIVEN A CATE GORICAL FINDING THAT BUSINESS LOSS OF RS.21,76,194/- IS ALLOWED TO BE CARRIED FORWARD. THAT THE NOTING DATED 21.12.2006 IN THE ORDER SHEET FOR THE A.Y.2005-06 IS FOUND TO BE AS UNDER :- 21.12.06 ASSESSED U/S 153A/143(3) AT A T.I. OF RS. NIL AS PER SEPARATE ORDER. THE BUSINESS LOSS OF RS.21.76,194/- IS ALLOWED TO BE C/ F. TAX AS PER ITNS-150. ISSUE D.N. AND COPY OF THE ORDER. IN THE ORDER SHEET FOR THE A.Y.2004-05, HOWEVER, TH E A.O. HAD NOT RECORDED ANY FINDING FOR CARRY FORWARD OF BUSINESS LOSS AS CLAIM ED. THE NOTING IN THE ORDER SHEET FOR A.Y.2004-05 IS AS UNDER : 21.12.06 - ASSESSED U/S 153A/143(3) AT A T.I. OF R S.NIL AS PER SEPARATE ORDER. TAX AS PER ITNS-150. ISSUE D.N. ETC. TO THE ASSESSEE. 4.2. THE LD. CIT FURTHER OBSERVED THAT THE AO HAD P ASSED ORDERS FOR BOTH THE ASSESSMENT YEARS 2004-05 & 2005-06 ON THE SAME DATE . HE HAD ALLOWED CARRY FORWARD OF LOSS FOR THE A.Y.2005-06 FOR THE REASON THAT THE RETURN FOR THIS YEAR HAS FILED ON 31.10.2005 I.E. WITHIN THE DUE DATE U/S 139(1). HOW EVER, IN THE ORDER SHEET FOR 2004- 05 NO FINDING FOR CARRY FORWARD OF LOSS WAS RECORDE D PRESUMABLY FOR THE REASON THAT THE RETURN FOR THIS YEAR WAS NOT FILED WITHIN THE D UE DATE U/S 139(1). IN VIEW OF THESE FACTS, THE CONTENTION OF THE ASSESSEE THAT THE AO H AD INTENDED TO CARRY FORWARD THE LOSS FOR A.Y.2004-05 WHILE PASSING THE ORDER U/S 153A/14 3(3) DATED 21.12.2006 BUT HAD INADVERTENTLY NOT RECORDED THIS FACT IN THE ORDER C ANNOT BE ACCEPTED. RATHER THE ITA NO.1988/K/2010 SRIKANT MOHTA A.YR.2004-05 5 RECORDINGS OF THE AO AS PER ORDER SHEET SUBSTANTIAT ES THAT THE AO DID NOT INTEND TO CARRY FORWARD THE LOSS FOR THE A.Y.2004-05. 4.3. THE LD. CIT FURTHER OBSERVED THAT ASSESSEES C ONTENTION IS THAT ORDER WAS PASSED U/S 154/153A/143(3) OF THE ACT DATED 09.06.2010 WAS AN ORDER PASSED SUO MOTTO BY THE AO AND WAS MADE CLARIFICATORY IN NATURE. THE LD . CIT DID NOT AGREE WITH HIS CONTENTION. HE OBSERVED THAT THE AO DID NOT INTEND TO CARRY FORWARD THE LOSS FOR THE A.Y.2004-05 AS IS APPARENT FORM HIS RECORDING IN TH E ORDER SHEET VIS--VIS THE RECORDING IN THE ORDER SHEET FOR A.Y.2005-06. FURTH ER THE LOSS WAS ALSO NOT ELIGIBLE FOR CARRY FORWARD IN ACCORDANCE WITH THE PROVISION OF L AW AS THE RETURN WAS NOT FILED WITHIN THE DUE DATE U/S 139(1). UNDER THE CIRCUMSTA NCES THERE WAS NO MISTAKE APPARENT FROM RECORD WHICH COULD HAVE BEEN RECTIFIED VIDE OR DER DT.09.06.2010. THAT WHETHER THE LOSS WILL BE ALLOWED TO BE CARRIED FORWARD OR N OT IS A CONTENTIOUS MATTER AND INVOLVES APPLICATION OF MIND AND SUCH MATTER CANNOT BE REVISITED UNDER THE PROVISIONS OF SEC.154 OF THE ACT. A LOSS CAN BE ALLOWED TO BE CARRIED FORWARD ONLY ON FULFILLMENT OF CONDITIONS REGARDING FILING OF RETURN AND THIS I SSUE INVOLVES APPLICATION OF MIND, VERIFICATION OF RECORDS, AND A CATEGORICALLY FINDIN G AS TO THE FULFILLMENT OF REQUIRED CONDITIONS. SUCH A MATTER CANNOT BE SUBJECT MATTER OF PROCEEDING U/S 154 OF THE ACT. IT HAS BEEN HELD BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF TSAI TEA ENTERPRISES (P) LTD VS CIT REPORTED IN 73 ITR 119 THAT SINCE TH E QUESTION OF GIVING EFFECT TO LOSS DETERMINED IN RELEVANT ASSESSMENT YEAR WAS DEPENDEN T UPON FULFILLMENT OF CERTAIN CONDITIONS PRESCRIBED IN SECTION 72, IT WAS A DEBAT ABLE QUESTION AND NOT A MISTAKE APPARENT FORM RECORD. TO QUOTE FROM THE SAID ORDER : WITH RESPECT TO THE ASSESSMENT YEAR 1982-83, AS NOT ICED BEFORE, THE RETURN WAS FILED SHOWING A LOSS AND THE ORDER OF ASSESSMENT AL SO SHOWS THAT LOSS WAS COMPUTED. THE QUESTION OF GIVING EFFECT TO THE LOSS DETERMINED IN THE ASSESSMENT FOR THE ASSESSMENT YEAR 1982-83 IN THE SUBSEQUENT A SSESSMENT YEARS WAS DEPENDENT UPON THE FULFILLMENT OF THE CONDITIONS PR ESCRIBED IN SECTION 72. IT WAS, THEREFORE, A DEBATABLE QUESTION. 4.4. THAT THERE IS NOTHING ON RECORD TO SUGGEST THA T THE A.O. WHILE PASSING THE ORDER U/S 153A/143(3) DATED 21.12.2006 HAD APPLIED HIS MI ND AND RECORDED HIS FINDING THAT THE LOSS HAS TO BE CARRIED FORWARD BUT HAD INADVERT ENTLY FAILED TO MENTION THE SAME IN ITA NO.1988/K/2010 SRIKANT MOHTA A.YR.2004-05 6 THE ORDER. UNDER THE CIRCUMSTANCES, THERE WAS NO MI STAKE APPARENT ON RECORD WHICH CALLED FOR PASSING AN ORDER U/S 154 OF THE ACT. RAT HER THE AO WHILE PASSING THE ORDER U/S 153A/143(3) DATED 21.12.006 HAD EXAMINED THE FA CTS AND DELIBERATELY NOT RECORDED CARRY FORWARD OF LOSS FOR A.Y.2004-05 WHEREAS HE HA D RECORDED THE FACT REGARDING CARRY FORWARD OF LOSS FOR THE A.Y.2005-06 IN THE OR DER SHEET. LD.CIT FURTHER OBSERVED THAT BE THAT AS IT MAY, THIS ISSUE CANNOT BE SUBJEC T MATTER OF PROCEEDING U/S 154 OF THE ACT AS HELD BY THE JURISDICTIONAL HIGH COURT (SUPRA ). THE AO WHILE PASSING THE ORDER U/S 154 OF THE ACT HAS ALSO NOT CONSIDERED THE FULF ILLMENT OF CONDITION U/S 80 OF THE ACT. THAT THE OVERRIDING PROVISION OF SECTION 80 ST IPULATES THAT NO LOSS WHICH HAS NOT BEEN DETERMINED IN PURSUANCE TO THE RETURN FILED US 139(3) OF THE ACT SHALL BE CARRIED FORWARD AND SET OFF UNDER THE PROVISION OF SECTION 72 OF THE ACT. THE PROVISIONS OF SECTION 139(3) STIPULATES THAT IN CASE OF LOSS RETU RN IT WILL BE MANDATORY FOR THE ASSESSEE TO FILE HIS RETURN OF INCOME WITHIN THE TI ME LIMIT PRESCRIBED U/S 139(1) OF THE ACT. IT IS AN UNDISPUTED FACT THAT THE RETURN OF FO R THE CURRENT YEAR WAS NOT FILED BY THE ASSESSEE WITHIN THE TIME LIMIT AS PER PROVISIONS OF SECTION 139(1) OF THE ACT. HENCE, THE LOSS CLAIMED BY THE ASSESSEE WAS NOT ELIGIBLE F OR CARRY FORWARD. THE AO WHILE PASSING THE ORDER U/S 154 OF THE ACT DATED 09.06.20 10 DID NOT CONSIDER THESE PROVISIONS OF THE ACT AND THE ORDER AS PASSED BY HI M IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4.5. LD CIT FURTHER OBSERVED THAT IT HAS FURTHER BE EN HELD BY THE CALCUTTA HIGH COURT IN THIS CASE OF TSAI TEA ENTERPRISES (P)LTD VS- CIT (SUPRA) THAT WHETHER THE LOSS IS ELIGIBLE FOR CARRY FORWARD AND SET OFF IS T O BE DECIDED IN THE SUBSEQUENT YEAR WHILE ALLOWING THE ACTUAL SET OFF AND NOT IN THE YE AR OF GENERATION OF LOSS. TO QUOTE FROM THE SAID ORDER THE QUESTION, THEREFORE, WHETH ER THE LOSS IN ANY YEAR MAY BE CARRIED FORWARD TO THE SUBSEQUENT YEAR AND SET OFF AGAINST THE PROFITS AND GAINS OF THE FOLLOWING AND/OR SUBSEQUENT YEARS HAS TO BE DETERMI NED BY THE ASSESSING OFFICER WHO DEALS WITH THE ASSESSMENT OF THE FOLLOWING AND/OR S UBSEQUENT YEAR. UNDER THE CIRCUMSTANCES THERE WAS NO REASON FOR THE AO TO PAS S THE ORDER U/S 154/153A/143(3) DATED 09.06.2010. 4.6. LD CIT FURTHER OBSERVED THAT IN VIEW OF THE AB OVE FACTS AND DISCUSSIONS, IT IS AMPLY CLEAR THAT THE ORDER U/S 154/153A/143(3) DATE D 09.06.2010 WAS PASSED WITHOUT ITA NO.1988/K/2010 SRIKANT MOHTA A.YR.2004-05 7 PROPER APPRECIATION OF FACTS OF THE CASE AND WITHOU T DUE APPLICATION OF MIND RELATING TO THE ISSUE AS MENTIONED ABOVE. NETHER ANY MISTAKE WA S APPARENT FORM RECORD WHICH COULD HAVE BEEN RECTIFIED NOR THERE WAS ANY NECESSI TY TO PASS ANY ORDER REGARDING CARRY FORWARD OF LOSS, AS THIS MATTER HAS TO BE DEC IDED IN THE SUBSEQUENT YEAR THEREFORE THE LD. CIT HELD THAT THE ORDER U/S 154/153A/143(3) DATED 09.06.2010 IS ILLEGAL AND CONTRARY TO THE PROVISIONS OF LAW AND THEREFORE IT IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY , AS THE CONDITIONS FOR EXERCISE OF REVISIONARY POWERS U/S 263 OF THE ACT, ARE SATISFIE D IN THE INSTANT CASE, THE ORDER U/S 154/153A/143(3) DATED 09.06.2010 IS CANCELLED FOLLO WING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THIS CASE OF TSAI TEA ENTERPRISES (P) LTD. VS CIT (SUPRA). AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL B EFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND CAREFULLY PER USED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ORDER PASSED U/S 154 DATED 09.06.2010 WAS PROPER AND A JUSTIFIED ORDER. HE SUBMITTED THAT THE RE WAS A MISTAKE APPARENT FORM RECORD IN THE ORDER PASSED U/S 153A/143(3) DATED 21 .12.2006 WHEREIN THE AO HAS OMITTED TO MENTION THE AMOUNT OF LOSS TO BE CARRIED FORWARD TO THE FOLLOWING YEAR. IN THIS REGARD HE SUBMITTED THAT IN THE ASSESSMENT ORD ER FOR A.YR.2006-07 AO HAS SET OFF THE BROUGHT FORWARD OF LOSS FOR A.YR.2004-05 WITH T HE INCOME OF THAT YEAR. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT IT I S THE SAME AO WHO HAS PASSED THE ORDER FOR A.YR.2004-05 U/S 153A/143(3) OF THE ACT H ENCE THE LD. COUNSEL AVERRED THAT THERE WAS A CLEAR MISTAKE APPARENT FROM RECORD IN T HE ASSESSMENT ORDER FOR A.YR.2004- 05. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ORIG INAL RETURN WAS FILED U/S 139 OF THE ACT BELATEDLY ON 31.03.2005 SHOWING TOTAL LOSS OF R S.96,80,319/-. IN THIS REGARD THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS RET URN WAS NOT AT ALL REQUIRED TO BE FILED. THE SAID RETURN HAS NO VALUE AS THE SEARCH IN THIS CASE WAS CONDUCTED ON 02.09.2004 AND SUBSEQUENTLY ACTION U/S 153A WAS INITIATED. THE LD. COUNSEL REFERRED TO THE PROVISION OF SECTION 153A OF THE ACT. REFERRING TO THE SAID SECTION THE LD.COUNSEL FURTHER SUBMITTED THAT WHEN THE ASSESSMENT IS DONE U/S 153A OF THE ACT, THE SAME HAS TO BE DONE IN ACCORDANCE WITH THIS SECTION NOTWITHS TANDING ANYTHING CONTAINED IN ITA NO.1988/K/2010 SRIKANT MOHTA A.YR.2004-05 8 SECTION 139, SECTION 147, SECTION 147, SECTION 149, SECTION 151 AND SECTION 153 OF THE ACT. HENCE THE LD. COUNSEL OF THE ASSESSEE SUBMITTE D THAT SINCE ASSESSMENT HAS BEEN FRAMED U/S 153A AND THE DATE OF SEARCH WAS 02.09.20 04 THERE WAS NO REQUIREMENT ON THE PART OF THE ASSESSEE TO FILE A BELATED RETURN U /S 139 ON 31.03.2005. HENCE HE SUBMITTED THAT NO COGNIZANCE CAN BE GIVEN TO THIS B ELATED RETURN AND ACCORDINGLY IT CANNOT BE HELD THAT SINCE THE RETURN WAS BELATED, L OSS CANNOT BE CARRIED FORWARD. THUS THE LD. COUNSEL SUBMITTED THAT THERE WAS NOTHING ON RECORD ON WHICH THE AO CAN HOLD THAT THE LOSS CANNOT BE CARRIED FORWARD. HENCE HE S UBMITTED THAT THE OMISSION BY THE AO TO MENTION THE LOSS TO BE CARRIED FORWARD IN THE ASSESSMENT ORDER WAS A MISTAKE APPARENT FROM RECORD. THE LD. COUNSEL CONTENDED THA T THE RECTIFICATION OF THE MISTAKE BY THE AO WAS FULLY JUSTIFIED AND THE LD. CIT WAS N OT JUSTIFIED IN TAKING ACTION U/S 263 OF THE ACT. THE LD. DR, ON THE OTHER HAND, RELIED O N THE ORDERS OF THE LD.CIT. 6. WE HAVE HEARD BOTH THE COUNSEL AND CAREFULLY PER USED THE RECORDS. AT THE OUTSET, WE NOTE THAT THE PROVISION RELATING TO THE CARRY FORWARD OF LOSS U/S 72 OF THE IT ACT READS AS UNDER :- CARRY FORWARD AND SET OFF OF BUSINESS LOSSES. 72 (1) WHERE FOR ANY ASSESSMENT YEAR, THE NET RESULT OF THE COMPUTATION UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION IS A LOSS TO THE ASSESEE, NOT BEING A LOSS SUSTAINED IN A SPECULATION BUSINESS, AND SUCH LOSS CANNOT BE OR IS NOT WHOLLY SET OFF AGAINST INCOME UNDER ANY HEAD OF INCOME IN ACCORDAN CE WITH THE PROVISIONS OF SECTION 71, SO MUCH OF THE LOSS AS HAS NOT BEEN SO SET OFF OR, WHERE HE HAS NO INCOME UNDER ANY OTHER HEAD, THE WHOLE LOSS SHALL, SUBJECT TO THE OT HER PROVISIONS OF THIS CHAPTER, BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR, A ND (I) IT SHALL BE SET OFF AGAINST THE PROFITS AND GAI NS, IF ANY, OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM AND ASSESSABLE FOR THAT ASSESSMEN T YEAR; (II) IF THE LOSS CANNOT BE WHOLLY SO SET OFF, THE A MOUNT OF LOSS NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR AN D SO ON; 6.1. FROM THE ABOVE WE NOTE THAT THERE ARE SPECIFIC PROVISIONS U/S 72 OF THE ACT WHICH ARE TO BE CONSIDERED AND ONLY THEN LOSS CAN B E ALLOWED TO BE CARRIED FORWARD. THE CARRY FORWARD OF LOSS INVOLVES FULFILLMENT OF C ONDITIONS AS MENTIONED IN THE ABOVE SECTION. THE HONBLE JURISDICTIONAL HIGH COURT HAD AN OCCASION TO CONSIDER THIS ASPECT IN THE CASE OF TSAI TEA ENTERPRISES VS CIT 273 ITR 119. THE HONBLE HIGH COURT HAS HELD THAT SINCE THE QUESTION OF GIVING EFFECT TO LO SS DETERMINED IN RELEVANT ASSESSMENT YEAR WAS DEPENDENT UPON FULFILLMENT OF CERTAIN COND ITIONS PRESCRIBED IN SECTION 72 OF ITA NO.1988/K/2010 SRIKANT MOHTA A.YR.2004-05 9 THE ACT, IT WAS A DEBATABLE QUESTION AND NOT A MIST AKE APPARENT FORM RECORD. HENCE IN VIEW OF THE AFORESAID PRECEDENT WE HOLD THAT ALLOWA NCE OF THE LOSS TO BE CARRY FORWARD IN THIS CASE WAS A DEBATABLE QUESTION AND IT CANNOT BE PRESUMED THAT NON ALLOWANCE OF THE LOSS TO BE CARRY FORWARD IN THE ASSESSMENT ORDE R WAS A MISTAKE OF THE AO APPARENT FROM RECORD. 6.2. WE CAN ALSO CONSIDER THE ISSUE IN THE FOLLOWIN G MANNER ON THE FACTS OF THE CASE. IN THIS CASE A SEARCH AND SEIZURE WAS CONDUCTED ON 02.09.2004. NOTICE WAS ISSUED U/S 153A OF THE ACT TO FILE RETURN. THE ASSESEE DID NOT FILE THE RETURN OF INCOME FOR A.YR. 2004-05 ON TIME. THE ORIGINAL RETURN FOR A.YR.2004- 05 WAS FILED BELATEDLY ON 31.3.2005 SHOWING A LOSS OF RS.96,80,319/-. THEREAF TER A REVISED RETURN WAS FILED ON 26.4.2006. ASSESSMENT U/S 153A/143(3) OF THE ACT WA S COMPLETED ON 21.12.2006 AT A TOTAL INCOME OF NIL WITH REFERENCE TO THE RETURN FILED ON 26.04.2006. THERE WAS NO MENTION WHATSOEVER IN THIS ASSESSMENT ORDER REGARDI NG CARRY FORWARD OF LOSS. HENCE APPARENTLY NO LOSS WAS ALLOWED TO BE CARRY FORWARD. THIS IS BECAUSE SECTION 80 OF THE ACT POSTULATES AS UNDER :- SUBMISSION OF RETURN FOR LOSSES 80. NOTWITHSTANDING ANYTHING CONTAINED IN THIS CHAPTER , NO LOSS WHICH HAS NOT BEEN DETERMINED IN PURSUANCE OF A RETURN FILED [IN ACCOR DANCE WITH THE PROVISIONS OF SUB- SECTION (3) OF SECTION 139], SHALL BE CARRIED FORW ARD 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]. SECTION 139(3) OF THE ACT PROVIDES AS UNDER :- 139(3) : IF ANY PERSON WHO HAS SUSTAINED A LOSS IN ANY PR EVIOUS YEAR UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION OR UN DER THE HEAD CAPITAL GAINS AND CLAIMS THAT THE LOSS OR ANY PART THEREOF SHOULD BE CARRIED FORWARD 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], HE MAY FURNISH, WITHIN THE TIME ALLOWED UNDER SUB-SECTION (1), A RETURN OF LOSS IN THE PRES CRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND CONTAINING SUCH OTHER PARTICU LARS AS MAY BE PRESCRIBED, AND ALL THE PROVISIONS OF THIS ACT SHALL APPLY AS IF IT WER E A RETURN UNDER SUB-SECTION(1). HENCE AS PER THE SPECIFIC PROVISION OF THE ACT IF A LOSS RETURN IS NOT FILED IN TIME, THE LOSS CANNOT BE CARRIED FORWARD. NOW THE LOSS IN THI S CASE CAN BE ALLOWED TO BE CARRIED FORWARD ONLY IF IT IS HELD THAT FILING OF RETURN FO R A.YR. 2004-05 BELATEDLY DECLARING THE LOSS OF RS.96,80,319/- WAS OF NO CONSEQUENCE. NOW T HE CONTENTION OF THE LD. COUNSEL ITA NO.1988/K/2010 SRIKANT MOHTA A.YR.2004-05 10 OF THE ASSESSEE IS THAT UNDER THE PROVISION OF SECT ION 153 A WHEN ACTION HAS BEEN INITIATED UNDER THE SAID PROVISIONS, OTHER PROVISIO N OF SECTION 139 HAVE NO SIGNIFICANCE. IN THESE CIRCUMSTANCES AS PER THE LD. COUNSEL OF THE ASSESSEE BELATED RETURN FILED ON 31.03.2005 SHOULD HAVE NO CONSEQUENCE AND THE BELATED RETURN CANNOT BE TAKEN AS A REASON FOR NOT ALLOWING THE CARRY FORWA RD LOSS. THUS WE NOTE THAT LOSS IN THIS CASE COULD HAVE BEEN ALLOWED BY THE AO TO BE C ARRIED FORWARD ONLY IF HE HAS CONSIDERED THE ASPECT THAT ONCE ACTION U/S 153A OF THE ACT HAVE COMMENCED SECTION 139 LOOSES ITS SIGNIFICANCE. FURTHERMORE HE SHOULD HAVE FOUND THAT THE RETURN FILED ON 31.03.2005 DECLARING LOSS OF RS.96,80,319/- HAD NO SIGNIFICANCE. THE ASSESSEES RETURN U/S 153A OF THE ACT WAS FILED ON 26.04.2006 AS REVI SED RETURN. THERE IS NO FINDING THAT THIS RETURN U/S 153A WAS FILED WITHIN THE PRESCRIBE D TIME. 6.3. NOW WE NOTE THAT NOTHING TO THE ABOVE EFFECT H AS BEEN MENTIONED IN THE ASSESSMENT ORDER NOR IT IS THE CLAIM THAT THIS ASPE CT WAS BROUGHT TO AOS NOTICE. HENCE IT CANNOT BE SAID THAT AFTER DUE APPLICATION OF MIND AO HAS FOUND THAT LOSS WAS TO BE CARRIED FORWARD AND HE ONLY INADVERTENTLY FAI LED TO MENTION THAT ASPECT. RATHER BECAUSE OF THERE BEING A BELATED RETURN IT CAN BE E ASILY INFERRED THAT IN VIEW OF SECTION 80 R.W.S. 139(3) OF THE ACT ON THE FACTS OF THE CAS E AO HAD OPINED THAT LOSS WAS NOT TO BE CARRIED FORWARD AND HENCE THERE IS NO MENTION TH AT LOSS WAS TO BE CARRIED FORWARDED. 6.4. FURTHERMORE THIS IS FURTHER SUPPORTED BY FOLLO WING THE FACT. THE ASSESSMENT ORDER U/S 143(3)/153A OF THE ACT FOR A.YR.2004-05 A ND FOR A.YR.2005-06 WERE PASSED ON THE SAME DATE I.E. 21.12.2006. THE RETURN FOR A. YR.2005-06 WAS FILED ON 31.10.2006 SHOWING NIL INCOME AND CLAIMED FORWARD OF BUSINESS LOSS AT RS.21,76,194/-. THE NIL INCOME FOR A.YR.2005-06 W AS ACCEPTED BY THE AO. IN THE ORDER SHEET FOR A.YR.2005-06 AO HAS GIVEN A CATEGOR ICALLY FINDING THAT BUSINESS LOSS OF RS.21,76,194/-HAS ALLOWED TO BE CARRIED FORWARD. THE NOTING DATED 21.12.2006 IN THE ORDER SHEET FOR A.YR.2005-06 MENTIONED AS UNDER :- 21.12.06 ASSESSED U/S 153A/143(3) AT A T.I. OF RS. NIL AS PER SEPARATE ORDER. THE BUSINESS LOSS OF RS.21.76,194/- IS ALLOWED TO BE C/ F. TAX AS PER ITNS-150. ISSUE D.N. AND COPY OF THE ORDER. ITA NO.1988/K/2010 SRIKANT MOHTA A.YR.2004-05 11 IN THE ORDER SHEET FOR THE A.Y.2004-05, HOWEVER, TH E A.O. HAD NOT RECORDED ANY FINDING FOR CARRY FORWARD OF BUSINESS LOSS AS CLAIM ED. THE NOTING IN THE ORDER SHEET FOR A.Y.2004-05 IS AS UNDER : 21.12.06 - ASSESSED U/S 153A/143(3) AT A T.I. OF R S.NIL AS PER SEPARATE ORDER. TAX AS PER ITNS-150. ISSUE D.N. ETC. TO THE ASSESSEE. 6.5. THUS FROM THE ABOVE IT IS CLEAR THAT ON DUE AP PLICATION OF MIND THE AO WAS OF THE OPINION THAT LOSS IS NOT BE CARRIED FORWARD FOR A.YR.004-05. FURTHERMORE, WE MAY ALSO REFER TO THE PROVISION OF SECTION 157 OF THE A CT REGARDING INTIMATION OF LOSS WHICH IS AS UNDER :- INTIMATION OF LOSS 157 . WHEN, IN THE COURSE OF THE ASSESSMENT OF THE TOTA L INCOME OF ANY ASSESSEE, IT IS ESTABLISHED THAT A LOSS HAS TAKEN PLACE WHICH THE A SSESSEE IS ENTITLED TO HAVE CARRIED FORWARD AND SET OFF UNDER THE PROVISIONS OF SUB-SEC TION (1) OF SECTION 72, SUN-SECTION (2) OF SECTION 73, [SUB-SECTION(1) [OR SUB-SECTION (3)] OF SECTION 74 OR SUB-SECTION (3) OF SECTION 74A], THE ASSESSING OFFICER SHALL NOTIFY TO THE ASSESSEE BY AN ORDER IN WRITING THE AMOUNT OF THE LOSS AS COMPUTED BY HIM FOR THE PURPO SES OF SUB-SECTION (1) OF SECTION 72, SUB-SECTION (2) OF SECTION 73, [SUB-SECTION (1) [OR SUB-SECTION (3)] OF SECTION 74 OR SUB- SECTION (3) OF SECTION 74A]. 6.6. FROM THE ABOVE IT IS EVIDENT THAT WHILE ALLOWI NG THE ASSESSEE CARRY FORWARD OF LOSS AO HAS TO SPECIFICALLY INTIMATE TO THE ASSSESS EE BY ORDER IN WRITING AMOUNT OF LOSS AS COMPUTED BY HIM FOR THE PURPOSE OF CARRY FORWARD . IN THIS CASE THE AO HAS NOT MENTIONED ANYTHING ABOUT THE LOSS TO BE CARRIED FOR WARD. HENCE IT IS CLEAR THAT FOLLOWING THE MANDATE OF SECTION 157 AO WAS OF THE OPINION THAT NO LOSS IS TO BE CARRIED FORWARDED IN THIS CASE. 6.7. WE FURTHER NOTE THE LD. COUNSEL OF THE ASSESSE ES SUBMISSION THAT THE SAME ASSESSING OFFICER IN A.YR.2006-07 HAS ALLOWED ADJUS TMENT OF THE CARRY FORWARD LOSS FOR A.YR.2004-05. WE NOTE THAT ASSESSMENT ORDER FOR A.YR.2006-07 WAS PASSED ON 25.6.2008. IN THIS ORDER THE AO HAS ADJUSTED THE BR OUGHT FORWARD LOSS IN A.YR.2004-05 WITH THE INCOME OF A.YR.2006-07. NOW WE NOTE THAT T HIS ACTION OF THE AO WAS CLEARLY UNTENABLE IN THE LIGHT OF ASSESSMENT ORDER FOR A.YR .2004-05. IN THE SAID A.YR.2004-05 THERE WAS NO MENTION OF CARRY FORWARD OF LOSS. THIS WAS MORE SO AS PER THE MANDATE OF SECTION 157 OF THE ACT, WHEN A LOSS IS TO BE CARRIE D FORWARD THE AO HAS TO INTIMATE THE ASSESSEE IN WRITING. HENCE WE NOTE THAT THE PRESENT AO HAS PASSED THE ASSESSMENT ORDER FOR A.YR.2006-07 ADJUSTING THE CARRY FORWARD LOSS OF A.YR.2004-05. HE HAD ITA NO.1988/K/2010 SRIKANT MOHTA A.YR.2004-05 12 CLEARLY COMMITTED AN ERROR. THIS MISTAKE AO HAS ATT EMPTED TO COVER UP BY PASSING AN ORDER U/S 154 OF THE ACT FOR A.YR.2004-05 ON 9.6.20 10 WHEREIN HE HAS ALLOWED THE LOSS TO BE CARRIED FORWARD. THE LD. CIT HAS NOTED T HAT SEPARATE ACTION U/S 263 HAS BEEN INITIATED WITH RESPECT TO ASSESSMENT ORDER FOR A.Y. 2006-07 IN THIS REGARD. 6.8. IN SUCH CIRCUMSTANCES, IN OUR CONSIDERED OPINI ON, IT CANNOT BE SAID THAT THERE WAS A MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE AO. AS A MATTER OF FACT, THE FACTS OF THE CASE PRIMA FACIE INDICATE THAT ASSESSE E WAS NOT ENTITLED TO CARRY FORWARD OF THE LOSS IN VIEW OF THE BELATED FILING OF THE RETUR N.. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT WE ARE OF THE CONSIDERED O PINION THAT THERE WAS NO MISTAKE APPARENT FROM RECORD IN THE ASSESSMENT ORDER DATED 21.12.2006. HENCE RECTIFICATION THEREON BY THE AO U/S 154 OF THE ACT VIDE ORDER DAT ED 09.06.2010 IS CLEARLY ERRONEOUS AND HENCE WE FIND THAT THE LD. CIT WAS PERFECTLY JU STIFIED IN TAKING ACTION U/S 263 OF THE ACT. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE S TANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 12.09.2014. SD/- SD/- [ MAHAVIR SINGH ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 12.09.2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. SRIKANT MOHTA, P-31A, KALAKAR STREET, KOLKATA-70000 7. 2 C.I.T., CENTRAL CIRCLE-II, KOLKATA. 3 . CIT(A)- . 4. CIT-DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA NO.1988/K/2010 SRIKANT MOHTA A.YR.2004-05 13