COMMISSIONER OF INCOME TAX, MADRAS AND ANR. vs. MIS DALMIA CEMENT

CIVIL APPEAL No. 745/1976Supreme Court1995 INSC 46216 August 1995Bench: 3 JudgesAuthor: B.P. JEEVAN REDDY, S.C. SEN, G.T. NANAVATI A COMMISSIONER OF25 pages
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What were the facts?

The assessee, a public limited company, filed returns for assessment years 1952-53 to 1954-55 beyond the stipulated period. The Income Tax Officer (ITO) refused to take cognizance of these returns. For assessment years 1955-56 to 1959-60, the ITO determined losses. For assessment year 1960-61, the assessee claimed to carry forward and set off losses from earlier years. The ITO rejected this, stating the business in earlier years was different from the one in 1960-61. The Appellate Assistant Commissioner upheld this. The Tribunal allowed the assessee's claim, holding the businesses were the same. The Tribunal also rejected the Revenue's contention that losses for 1952-53 to 1954-55 could not be carried forward as they were not quantified, and that the Tribunal could not direct quantification of these losses during the assessment for 1960-61 or 1961-62. The Revenue appealed to the High Court, which rejected their case. The Revenue then appealed to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that where the Income Tax Officer refuses to make an assessment and determine the loss because returns were filed beyond the prescribed period, the assessee must appeal against such intimation. If this refusal is not appealed against, the question cannot be re-agitated in assessment proceedings for a subsequent year. The assessee, having failed to appeal against the ITO's intimation refusing to take cognizance of loss returns for assessment years 1952-53 to 1954-55, could not claim in subsequent assessment proceedings that the losses from those earlier years be determined, carried forward, and set off against profits of subsequent years. The Court clarified that refusal to make an assessment is wholly different from the failure to intimate the amount of loss determined as required by Section 24(3) of the 1922 Act. The stage of intimation of the quantum of loss under Section 24(3) arises only after an assessment is made under Section 23(3) and the loss is determined. The Court allowed the appeals, set aside the High Court's judgment, and answered Question No. 3 in favour of the Revenue. Questions 2 and 4 were not questioned before the Supreme Court.

What were the issues?

1. Whether, when the Income Tax Officer refuses to make an assessment and determine loss on the ground that returns were filed beyond the prescribed period, the assessee must appeal against such intimation to have the ITO compelled to make an assessment, and if not appealed against, can this question be re-agitated in assessment proceedings relating to a subsequent assessment year? (Question of law, turning on Section 22(1), 22(2A), 23(3), 24(3) of the Income Tax Act, 1922 and Section 30 of the Income Tax Act, 1961). Assessee's contention: The intimation by the ITO that no cognizance could be taken of returns filed beyond the stipulated period was neither an order of assessment nor an order within the meaning of Section 24(3). Therefore, the assessee was entitled to have the losses for those years determined and carried forward. Revenue's contention: The ITO's intimation was an order that could have been appealed against. Failure to appeal meant the assessee could not re-agitate the question of determining losses for those years in subsequent assessment proceedings. 2. Whether the refusal to make an assessment is distinct from the failure to intimate the amount of loss determined as required by Section 24(3) of the Income Tax Act, 1922?

Which sections of the Income-tax Act were involved?

Section 23(3),Section 24(3),Section 22(1),Section 22(2A),Section 30,Section 143(3),Section 157,Section 246(1)

AI-generated summary — verify with the full judgment below

..--- ' A COMMISSIONER OF INCOME TAX, MADRAS AND ANR. v. MIS DALMIA CEMENT AUGUST 16, 1995 B [B.P. JEEVAN REDDY, SUHAS C. SEN AND G.T. NANAVATI, JJ.] Income tax Act, 1922-Sections 23(3) and 24(3}-Detennination and intimation of loss-Sub section (3) of Section 24 must be construed to be c mandat01y--Section 23(3) to be read alongwith Section 24(3)-ln case of loss-Mandatory upon Income Tax Officer to notify to assessee the amount of loss-Income Tax Act, 1961...,-Sections 143(3) and 157. Sections 23(3 ), 24(3) and 30-Retums showing losses-Order of refusal to make assessment as returns filed beyond period stipulated-Appealable u/s D 30-If not appealed against-Question cannot be reagi,tated in assessment proceedings relating to a subsequent assessment yea1'--lncome Tax Act, 1961-Sections 143(3), 157, 246(1).

The respondent assessee, a public limited company filed its returns, E for the first time in the year 1956 for the previous years relating inter-alia to assessment years 1952-53 to 1954-55. The Income Tax Officer informed the assessee that no cognizance could be taken of the said returns as they had been filed beyond the period stipulated u/ss 22(1) and 22(2A

The order continues below.

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