Law: Income Tax Act, 1961

Section: 256(2),80

Section 80 of the Income-tax Act, 1961 - Losses - Loss return - Assessment year 1985-86 - Whether when an application is made by assessee for extension of time to file return and no decision is rendered on such application, it must be presumed that Assessing Officer has allowed time to assessee to file return within extended period as asked for by assessee - Held, yes - Whether even if application for extension of time to file return is rejected but order of rejection is not communicated, such order will be treated as non est and assessee will be entitled to presume that application for extension of time has been allowed - Held, yes - Whether, therefore, where assessee had not been communicated of fate of its extension application to file return and it had filed return within time asked for in such application, ITO could not deny assessee benefit of carry forward of loss determined in assessment on ground that return was not filed within time - Held, yes FACTS The assessee filed four applications for extension of time for filing the return for the relevant assessment year. The last one of the application was being made on 31-3-1986, seeking extension of time up to 13-4-1986. The return was ultimately filed on 4-4-1986 showing a loss. The AO made the assessment but did not allow the benefit of carry forward of loss on the ground that the assessee failed to file the return within the time allowed or extended time. The Commissioner (Appeals) upheld the order of the AO. The Tribunal held that no order allowing extension of time was passed by the AO and the return was filed on 4-4-1986, presuming that the applications filed by the assessee had been accepted by the AO, and, therefore, the assessee filed the return within the extended period and he was entitled to carry forward of loss. On reference: HELD If the assessee had filed the return within the time allowed by the ITO, the assessee would be entitled to get the benefit of carry forward of loss as determined in the assessment. In the instant case, four applications were made by the assessee for extension of time. The ITO neither dealt with those applications nor disposed of such applications. The assessee was…

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