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

ITA 1989/KOL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83140 (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: 2006-2007
• Appeal Filed On: 01-11-2010
• Court: TRIBUNAL
• Department Lawyers: SWETABH SUMAN
• Assessee Lawyers: J P KHAITAN; S MODI
• Keywords: Depreciation; Search and seizure; Assessment record; Revised return; Unabsorbed depreciation
• Section: 143(3); 72(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.1989/KOL/2010 ASSESSMENT YEAR : 2006-07 ( 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 PASSED U/S 263 OF THE I.T.ACT DATED 10. 09.2010 AND PERTAINS TO ASSESSMENT YEAR 2006-07. 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. 2. 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. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT ERRED IN SETTING ASIDE THE ALLOWANCE OF INTEREST ON LOAN AMOUNTING T O RS.1,57,833/- U/S 40(A)(IA). 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT ERRED IN SETTING ASIDE THE ALLOWANCE OF PUBLICITY EXPENSES AMOUNTIN G TO RS.3,00,041/- U/S 40(A)(IA). 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT ERRED IN SETTING ASIDE THE ALLOWANCE OF PICTURE COST AMOUNTING TO R S.8,76,696/- U/S 40(A)(IA). 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT ERRED IN SETTING ASIDE THE ALLOWANCE OF COMMISSION AMOUNTING TO RS.1 3,973/- U/S 40(A)(IA). 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT HAS ERRED IN DIRECTING THE AO TO MODIFY THE ASSESSMENT BY WITHDR AWING THE SET OFF OF BROUGHT FORWARD BUSINESS LOSS OF RS.94,70,226/- FOR THE A.Y.2004-05 . ITA NO.1989/K/2010 SRIKANT MOHTA A.YR.2006-07 2 8. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT HAS ERRED IN SETTING ASIDE THE CLAIM OF SET OFF OF UNABSORBED DE PRECIATION AMOUNTING TO RS.2,10,093/- FROM THE A.Y.2004-05. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD TO OR AME ND THE AFORESAID GROUNDS BEFORE DISPOSAL OF THE APPEAL. 3. FROM THE GROUNDS OF APPEAL IT EMANATES THAT THE LD. CIT HAS EXERCISED HIS JURISDICTION QUA APPLICATION OF SECTION 40(A)(IA) O F THE I.T.ACT. AND WITHDRAWAL OF SET OFF OF BROUGHT FORWARD BUSINESS LOSS OF RS.94,70,22 6/- FOR A.YR.2004-05. 4. AT THE OUTSET THE LD. COUNSEL OF THE ASSESSEE SU BMITTED THAT IN THE CONSEQUENTIAL ORDER THE ASSESSEE HAS BEEN GRANTED RELIEF WITH RES PECT TO DISALLOWANCE PERTAINING TO SECTION 40(A)(IA) OF THE ACT. HENCE HE SUBMITTED TH AT THIS ASPECT OF THE ASSESSEES AGITATION U/S 263 OF THE ACT HAS BECOME INFRUCTUOUS . ACCORDINGLY HE SUBMITTED THAT THE ASSESSEE SHALL NOT BE PRESSING FOR THIS ASPECT. 5. UPON CAREFUL CONSIDERATION WE AGREE WITH THE CON TENTION OF THE LD. COUNSEL OF THE ASSESEE AND ADJUDICATE THE ISSUE WITH RESPECT T O EXERCISE OF POWER U/S 263 OF THE ACT BY THE LD. CIT PERTAINING TO WITHDRAWAL OF SET OFF OF BROUGHT FORWARD BUSINESS LOSS. IN THIS REGARD IN THE ORDER PASSED U/S 263 OF THE ACT THE LD. CIT HAS NOTED AS UNDER :- IT WAS FURTHER NOTICED THAT THE A.O. HAD ALLOWED S ET OFF OF BUSINESS LOSS OF RS.96,80,319/- FOR THE A.Y.2004-05 WHICH WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW. IN HIS COMPUTATION OF TOTAL INCOME FILED ALONG WITH HIS RETURN OF INCOME U/S 153A ON 26.04.2006, THE ASSESSEE HAD SHOWN HIS TOTAL INC OME AT RS.NIL FOR THE A.Y.2004-05 AFTER CLAIMING CARRY-FORWARD OF BUSINESS LOSS TO TH E NEXT YEARS TO THE EXTENT OF RS.96,84,726/-. THE ASSESSMENT WAS COMPLETED U/S 15 3A/143(3) AT RETURNED INCOME OF RS.NIL. HOWEVER, THE ASSESSEE WAS NOT NOTIFIED, BY ANY ORDER IN WRITING, THE AMOUNT OF ANY LOSS TO BE CARRIED FORWARD TO THE FOLLOWING YEA RS AS PER THE PROVISIONS OF SECTION 157 OF THE ACT. IT WAS ALSO FOUND THAT THE ORIGINAL RET URN OF INCOME FOR THE A.Y.2004-05 WAS FILED BY THE ASSESSEE ON 31.03.2005 SHOWING TOTAL LOSS OF RS.96,80,319/- AND THIS RETU RN WAS PROCESSED U/S 143(1) ON 14.02.2006. SINCE, THE ASSESSEE DID NOT FILE HIS 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) W AS NOT ADMISSIBLE AS PER THE PROVISIONS OF SECTION 80 READ WITH THE PROVISIONS OF SUB-SECTI ON (3) OF SECTION 139 OF THE ACT. THE A.O. HAD, THEREFORE, WRONGLY ALLOWED CARRY-FORWARD AND SET-OFF OF BROUGHT FORWARD LOSS OF A.Y.2004-05 AMOUNTING TO RS.96,80,319 IN THIS YE AR, I.E. A.Y.2006-07. ITA NO.1989/K/2010 SRIKANT MOHTA A.YR.2006-07 3 6. THE ASSESSEE IN RESPONSE TO THE NOTICE U/S 263 S UBMITTED THAT THE ASSESSEE HAS FILED A DETAILED SUBMISSION IN THE PROCEEDINGS U/S 263 OF THE ACT FOR A.YR.2004-05 WHICH MAY PLEASE BE CONSIDERED. IT WAS CONTENDED TH AT NO MISTAKE WAS COMMITTED BY THE AO WITH RESPECT TO SET OFF OF BROUGHT FORWARD L OSS FOR A.YR.2004-05. CONSIDERING THE ABOVE THE LD. CIT RECAPITULATED THE FACTS IN TH E CASE FOR A.YR.2004-05. THE LD.CIT ALSO REFERRED TO HIS FINDING IN THE ORDER U/S 263 O F THE ACT FOR A.YR.2004-05 AND CONCLUDED AS UNDER :- IN VIEW OF THE ABOVE FACTS AND DISCUSSIONS, IT IS AMPLY CLEAR THAT THE ORDER U/S 143(3) DATED 25.06.2008 WAS PASSED WITHOUT PROPER APPRECIA TION OF FACTS OF THE CASE AND WITHOUT DUE APPLICATION OF PROVISIONS OF LAW SO FAR AS CARRY FORWARD AND SET OFF OF LOSS FOR A.Y.2004-0 WAS CONCERNED. THEREFORE, I HOLD THA T THE ORDER U/S 143(3) DATED 26.06.2008 IS ILLEGAL AND CONTRARY TO THE PROVISION S OF LAW AND, THEREFORE, IT IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF R EVENUE. ACCORDINGLY, AS THE CONDITIONS FOR EXERCISE OF REVISIONARY POWERS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 ARE SATISFIED IN THE INSTANT CASE, THE ORDER U/S 143(3) DATED 25.06.2008 IS MODIFIED. IT IS FOUND THAT THE AO HAS ALLOWED SET OFF OF BUSINESS L OSS OF RS.94,70,226/- FOR THE A.Y. WHICH WAS NOT IN ACCORDANCE WITH PROVISION OF LAW. THE BALANCE AMOUNT OF RS.2,10,093/- REPRESENTED UNABSORBED DEPRECIATION F OR THE A.Y.200-05. THE A.O. IS DIRECTED TO MODIFY THE ASSESSMENT BY WITHDRAWING TH E SET OFF OF BROUGHT FORWARD BUSINESS LOSS OF RS.94,70,226/- FOR THE A.Y.2004-05 . AS REGARDING UNABSORBED DEPRECIATION OF RS.2,10,093/- IS CONCERNED NO SUCH CLAIM IS FOUND APPARENT FROM THE ASSESSMENT RECORD OF A.Y.2004-05 IN THE COMPUTATION OF INCOME. THE SAME SHOULD BE VERIFIED BY THE A.O. AND IF THE CLAIM IS FOUND TO B E CORRECT IT SHOULD BE ALLOWED SET OFF IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL B EFORE US. 7. WE HAVE HEARD BOTH THE COUNSEL AND CAREFULLY PER USED THE RECORDS. THE LD COUNSEL OF THE ASSESSEE REITERATED THE SUBMISSIONS WHICH HE MADE FOR THE APPEAL AGAINST ORDER U/S 263 OF THE ACT FOR A.YR.2004-05. THE LD. DR RELIED UPON THE ORDER OF LD. CIT. 7.1. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS. WE FIND THAT WE HAVE CONSIDERED THE ISSUE OF THE LD.CITS JURISDICTION I N ASSESSEES CASE FOR A.YR.200-05. SINCE AJDUDICATION IN THE PRESENT CASE IS DEPENDENT UPON THE FINDINGS IN OUR ORDER FOR A.YR.2004-05. WE CONSIDER IT WORTHWHILE TO BRING HE REIN OUR ADJUDICATION IN THAT CASE ITA NO.1989/K/2010 SRIKANT MOHTA A.YR.2006-07 4 VIDE OUR ORDER DATED 12.09.2014 IN ITA NO.1988/KOL/ 2010. THE SAME READS AS UNDER :- 6. WE HAVE HEARD BOTH THE COUNSEL AND CAREFULLY PE RUSED 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 C AN BE ALLOWED TO BE CARRIED FORWARD. THE CARRY FORWARD OF LOSS INVOLVES FULFILL MENT OF CONDITIONS AS MENTIONED IN THE ABOVE SECTION. THE HONBLE JURISDI CTIONAL HIGH COURT HAD AN OCCASION TO CONSIDER THIS ASPECT IN THE CASE OF TSA I TEA ENTERPRISES VS CIT 273 ITR 119. THE HONBLE HIGH COURT HAS HELD THAT SINCE THE QUESTION OF GIVING EFFECT TO LOSS DETERMINED IN RELEVANT ASSESSMENT YEAR WAS DEPENDENT UPON FULFILLMENT OF CERTAIN CONDITIONS PRESCRIBED IN SECTION 72 OF THE ACT, IT WAS A DEBATABLE QUESTION AND NOT A MISTAKE APPARENT FORM RECORD. HENCE IN VI EW OF THE AFORESAID PRECEDENT WE HOLD THAT ALLOWANCE 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 ORDER WAS A MIST AKE 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 ASSE SEE DID NOT FILE THE RETURN OF INCOME FOR A.YR. 2004-05 ON TIME. THE ORIGINAL RETU RN FOR A.YR.2004-05 WAS FILED BELATEDLY ON 31.3.2005 SHOWING A LOSS OF RS.96,80,3 19/-. THEREAFTER A REVISED RETURN WAS FILED ON 26.4.2006. ASSESSMENT U/S 153A/ 143(3) OF THE ACT WAS 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 WHATSOEVE R IN THIS ASSESSMENT ORDER REGARDING CARRY FORWARD OF LOSS. HENCE APPARENTLY N O LOSS WAS ALLOWED TO BE CARRY FORWARD. THIS IS BECAUSE SECTION 80 OF THE AC T POSTULATES AS UNDER :- SUBMISSION OF RETURN FOR LOSSES ITA NO.1989/K/2010 SRIKANT MOHTA A.YR.2006-07 5 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 THIS CASE CAN BE ALLOWED TO BE CARRIED FORWARD ONLY IF IT IS HELD THAT FILING OF R ETURN FOR A.YR. 2004-05 BELATEDLY DECLARING THE LOSS OF RS.96,80,319/- WAS OF NO CONS EQUENCE. NOW THE CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE IS THAT UNDER TH E PROVISION OF SECTION 153 A WHEN ACTION HAS BEEN INITIATED UNDER THE SAID PROVI SIONS, OTHER PROVISION OF SECTION 139 HAVE NO SIGNIFICANCE. IN THESE CIRCUMST ANCES AS PER THE LD.COUNSEL OF THE ASSESSEE BELATED RETURN FILED ON 31.03.2005 SHO ULD HAVE NO CONSEQUENCE AND THE BELATED RETURN CANNOT BE TAKEN AS A REASON FO R NOT ALLOWING THE CARRY FORWARD LOSS. THUS WE NOTE THAT LOSS IN THIS CASE C OULD HAVE BEEN ALLOWED BY THE AO TO BE CARRIED FORWARD ONLY IF HE HAS CONSIDERED THE ASPECT THAT ONCE ACTION U/S 153A OF THE ACT HAVE COMMENCED SECTION 139 LOOS ES ITS SIGNIFICANCE. FURTHERMORE HE SHOULD HAVE FOUND THAT THE RETURN F ILED ON 31.03.2005 DECLARING LOSS OF RS.96,80,319/- HAD NO SIGNIFICANCE. THE ASS ESSEES RETURN U/S 153A OF THE ACT WAS FILED ON 26.04.2006 AS REVISED RETURN. THER E IS NO FINDING THAT THIS RETURN U/S 153A WAS FILED WITHIN THE PRESCRIBED 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 FAILED TO MENTION THAT ASPECT. RATHER BECAUSE OF THERE BEING A BELATED RET URN IT CAN BE EASILY INFERRED THAT IN VIEW OF SECTION 80 R.W.S. 139(3) OF THE ACT ON THE FACTS OF THE CASE AO HAD OPINED THAT LOSS WAS NOT TO BE CARRIED FORWARD AND HENCE THERE IS NO MENTION THAT 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.Y R.2004-05 AND FOR A.YR.2005- 06 WERE PASSED ON THE SAME DATE I.E. 21.12.2006. TH E RETURN FOR A.YR.2005-06 WAS FILED ON 31.10.2006 SHOWING NIL INCOME AND CL AIMED FORWARD OF BUSINESS LOSS AT RS.21,76,194/-. THE NIL INCOME FOR A.YR.2 005-06 WAS ACCEPTED BY THE ITA NO.1989/K/2010 SRIKANT MOHTA A.YR.2006-07 6 AO. IN THE ORDER SHEET FOR A.YR.2005-06 AO HAS GIVE N A CATEGORICALLY 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.2005-0 6 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. 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 ASSESSE E. 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 FORW ARD FOR A.YR.2004-05. FURTHERMORE, WE MAY ALSO REFER TO THE PROVISION OF SECTION 157 OF THE ACT 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, SUB-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 ASSSESSEE BY ORDER IN WRITING AMOUNT OF LOSS AS COMPUTED BY HIM FOR THE P URPOSE OF CARRY FORWARD. IN THIS CASE THE AO HAS NOT MENTIONED ANYTHING ABOUT T HE LOSS TO BE CARRIED FORWARD. HENCE IT IS CLEAR THAT FOLLOWING THE MANDA TE 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 ADJUSTMENT OF THE CARRY FORWARD LOSS FOR A.YR.2004-05. WE NOTE THAT ASSESSM ENT ORDER FOR A.YR.2006-07 WAS PASSED ON 25.6.2008. IN THIS ORDER THE AO HAS A DJUSTED THE BROUGHT FORWARD LOSS IN A.YR.2004-05 WITH THE INCOME OF A.YR.2006-0 7. NOW WE NOTE THAT THIS 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 N O MENTION OF CARRY FORWARD OF LOSS. THIS WAS MORE SO AS PER THE MANDATE OF SEC TION 157 OF THE ACT, WHEN A LOSS IS TO BE CARRIED FORWARD THE AO HAS TO INTIMAT E THE ASSESSEE IN WRITING. HENCE WE NOTE THAT THE PRESENT AO HAS PASSED THE AS SESSMENT ORDER FOR A.YR.2006-07 ADJUSTING THE CARRY FORWARD LOSS OF A. YR.2004-05. HE HAD CLEARLY COMMITTED AN ERROR. THIS MISTAKE AO HAS ATTEMPTED T O 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 ITA NO.1989/K/2010 SRIKANT MOHTA A.YR.2006-07 7 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 ORD ER OF THE AO. AS A MATTER OF FACT, THE FACTS OF THE CASE PRIMA FACIE INDICATE T HAT ASSESSEE WAS NOT ENTITLED TO CARRY FORWARD OF THE LOSS IN VIEW OF THE BELATED FI LING OF THE RETURN.. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDEN T WE ARE OF THE CONSIDERED OPINION THAT THERE WAS NO MISTAKE APPARENT FROM REC ORD IN THE ASSESSMENT ORDER DATED 21.12.2006. HENCE RECTIFICATION THEREON BY TH E AO U/S 154 OF THE ACT VIDE ORDER DATED 09.06.2010 IS CLEARLY ERRONEOUS AND HE NCE WE FIND THAT THE LD. CIT WAS PERFECTLY JUSTIFIED IN TAKING ACTION U/S 263 OF THE ACT. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STAN DS DISMISSED. 7.2. FROM THE ABOVE WE NOTE THAT WE HAVE FOUND THAT THE FACTS OF THE CASE IN A.YR.2004-05 PRIMA FACIE INDICATE THAT LOSS WAS NOT TO BE CARRIED FORWARD. IN THE ORDER FOR A.YR.2004-05 THE AO ON DUE APPLICATION OF MIND WAS OF THE OPINION THAT LOSS WAS NOT TO BE CARRIED FORWARD FOR A.YR.2004-05. WE FURT HER NOTE THAT THERE IS SPECIFIC PROVISION U/S .157 OF THE ACT REGARDING INTIMATION OF LOSS WHICH HAS ALREADY BEEN REPRODUCED IN OUR ADJUDICATION AS MENTIONED ABOVE. SECTION 157 OF THE ACT CLEARLY PROVIDES THAT WHILE ALLOWING THE ASSESSEE CARRY FOR WARD OF LOSS AO HAS TO SPECIFICALLY INTIMATE THE ASSESSEE BY ORDER IN WRITING THE AMOUN T OF LOSS AS COMPUTED BY HIM FOR THE PURPOSE OF CARRY FORWARD. IN THIS CASE THE AO H AS NOT MENTIONED ANYTHING ABOUT THE LOSS TO BE CARRY FORWARD. IN SUCH CIRCUMSTANCES IN OUR CONSIDERED OPINION THE AO WHILE PASSING THE ORDER FOR A.Y.2006-07 HAS NO REAS ON WHATSOEVER TO SET OFF BROUGHT FORWARD LOSS FOR A.YR.2004-05 WITH THE INCOME FOR A .Y.2006-07. THE ASSESSMENT ORDER FOR A.YR.2006-07 WAS PASSED ON 25.02.2008. AT THIS TIME THE AO WAS IN POSSESSION OF NO MATERIAL WHICH SUGGESTED THAT ASSE SSEE WAS ENTITLED TO SET OFF OF CARRY FORWARD LOSS FOR A.YR.2004-05. HENCE IT IS CLEAR TH AT AO IN THE A.YR.2006-07 HAS ERRED IN ADJUSTING THE BROUGHT FORWARD LOSS OF A.YR .2004-05 WITH THE INCOME FOR A.YR.2006-07. ORDER PASSED U/S 154 OF THE ACT OF TH E AO FOR A.YR.2004-05 DATED 09.06.2010 WHICH PURPORTS TO ALLOW CARRY FORWARD OF LOSS IS SUBSEQUENT TO THE AOS ORDER FOR A.YR.2006-07. HENCE THIS ALSO CANNOT BE S AID TO BE THE REASON FOR MANDATING THE AO TO PASS AN ORDER FOR A.YR.2006-07 WHEREIN CA RRY FORWARD LOSS FOR A.YR.2004- ITA NO.1989/K/2010 SRIKANT MOHTA A.YR.2006-07 8 05 WAS TO BE ADJUSTED. IN THESE CIRCUMSTANCES WE FU LLY AGREE WITH THE LD.CIT THAT AO HAS WRONGLY CARRIED FORWARD AND SET OFF LOSS BROUGH T FORWARD FOR A.YR.2004-05. HENCE LD. CIT WAS PERFECTLY JUSTIFIED IN EXERCISING JURISDICTION U/S 263 OF THE ACT IN PASSING AN ORDER THEREIN HOLDING THAT LOSS FOR A.YR .2004-05 WAS WRONGLY ADJUSTED IN A.Y.2006-07. ACCORDINGLY WE UPHOLD THE ORDER OF LD. CIT. 8. 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