BLUE STAR BUILDING MATERIAL PVT. LTD.,URAN PANVEL vs. ACIT CIRCLE PANVEL, PANVEL

6. In the facts and circumstances of the case and in law, the learned AO ought to have held that the assessee is entitled to set off of business loss of earlier year though the return of income filed for the year under appeal is belated.

7. In the facts and circumstances of the case and in law, the AO erred in not allowing assessee's claim to carry forward unabsorbed business loss of A. Y. 2010-2011 of Rs.9,65,91,286/-, A. Y. 2011-12 of Rs.1,71,34,682/- and A. Y. 2012-13 of Rs. 1,86,65,117/- on the ground that return of income for the current year disclosing profit was not filed within the time allowed u/s 139(1) r.w.s. 139(3) of the Act.

8. In the facts and circumstances of the case and in law, the learned AO erred in holding that for carry forward of unabsorbed depreciation as per the claim in the return filed, it is necessary that the return should be filed within the time allowed u/s. 139(1) r.w.s. 139(3) of the Act.

9. In the facts and circumstances of the case and in law, the learned A. O. erred in holding that the provisions of section 80 of Income Tax At do apply to unabsorbed depreciation covered under section 32(2) of I T. Act.

as occasion may arise of demand.” Submission of ld.AR :

2. The ld.AR for the assessee submitted a paper book. Ld.AR submitted that ld.CIT(A) has not adjudicated the grounds of appeal raised by the assessee which is the requirement of the section 250 of the Act. Ld.AR submitted that in this case the only issue involved is the Assessing Officer in the assessment order for the A.Y.2016-17 has not allowed the brought forward losses and also not allowed to carry forward brought forward losses and depreciation. Ld.AR read out the relevant paragraphs of the assessment order. Ld.AR also read out section 80 and section 72 of the Act. The relevant part of the written submission filed by ld.AR is as under :

“Submission of merit being Grounds Nos., 5 to 8:

On merit it is submitted that for the year under appeal the assessee has filed belated return showing profit at Rs. 1,39,24,384/-. There is a carry forward of business loss and un-absorbed depreciation as under: - LOSSES TABLE Brought Losses Carried A.Y. HEAD Forward Set-Off Forward Unabsorbed 2009-10 Depreciation 6,29,139 6,29,139 Ordinary 2010-11 9,65,91,286 1,39,24,384 8,26,66,902 Business Unabsorbed 2010-11 Depreciation 2,39,21,263 2,39,21,263 Ordinary 2011-12 Business 1,71,34,682 1,71,34,682 Unabsorbed 2011-12 2,06,05,222 2,06,05,222 Depreciation Ordinary 2012-13 1,86,65,117 1,86,65,117 Business Unabsorbed 2012-13 1,76,65,013 1,76,65,013 Depreciation Unabsorbed 2013-14 Depreciation 1,76,65,012 1,76,65,012 Unabsorbed 2014-15 Depreciation 1,50,99,342 1,50,99,342 Unabsorbed 2015-16 1,28,75,689 1,28,75,689 Depreciation 10. It is submitted as loss returns filed in the earlier years were within the stipulated time slot, the assessee has a statutory right given u/s. 72 to carry forward the said loss from one year to the following year and the assessing officer has a corresssponding duty to set off such carry forwards losses against the income of the subsequent assessment year irrespective of the fact that the return is filed belated. It is further submitted that the AO misinterpreted section 80 of I T Act. The scope of section 80 has elaborately explained in Circular No 397 dated 16/10/1984. The said circular clarifies that loss shall not be carry forward and set off unless such loss is determined in pursuance of the return filed within the time allowed u/s. 139(1)/139(3) for furnishing voluntary return of income.” Submission of ld.DR : 3. The ld.DR for the Revenue relied on the order of the Assessing Officer(AO).

Findings & Analysis : 4. We have heard both the parties and perused the records. It is observed that ld.CIT(A) dismissed the appeal of the assessee without discussing grounds of appeal. The relevant paragraph 3.10 of the ld.CIT(A)’s order is as under : “3.10 From the aforementioned discussion, it is clear that no written submissions have been made. Therefore, it is stated that no useful purpose would be served by keeping the appeal pending and therefore the appeal is decided on the basis of documents available on record. There may be various reasons with the appellant to remain absent at the time of hearing. One of the reasons may also be a desire or absence of need to prosecute the appeal or inability to assist in the appellate proceeding in a proper manner or to take benefit of vagaries of law. However, the exact reasons for non-attendance/non- submission are only known to the appellant. The CIT (Appeal) can under such circumstances, invoke the inherent powers vested therein. These powers are embedded with certain inherent obligations also. One of such obligations is that the appellant must not be deprived of being heard. Therefore, the easiest way for appellant in this case was to furnish the written submission in support of grounds of appeal arid attend the hearing. But instead, the appellant in this case not only chose to ignore the date of hearing but even did not furnish any submissions.” 4.1 Thus, ld.CIT(A) has not discussed anything regarding the merits of the grounds raised by the assessee, whereas in earlier paragraphs, ld.CIT(A) had reproduced assessee’s written submission. Thus, there were specific details available with ld.CIT(A) to decide the grounds of appeal raised by the assessee. However, ld.CIT(A) failed to discharge his duty.

4.2 The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF)(Bombay)/[2017] 297 CTR 614 (Bombay) as under : Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” Unquote.