CIT MADRAS AND ANR. versus DALMIA CEMENT (BHARAT) LTD.

Citation: [1993] SUPP. 2 S.C.R. 369 · Decided: 21-09-1993 · Supreme Court of India · Bench: B.P. JEEVAN REDDY, S.P. BHARUCHA · Disposal: Matter referred to larger bench

Judgment (excerpt)

C.J.T. MADRAS AND ANR. 
A 
v. 
DALMIA CEMENT (BHARAT) LTD. 
SEPTEMBER 21, 1993 
(B.P. JEEVAN REDDY AND S.P. BHARUCHA, JJ.] 
B 
Income Tax Act, 1922: Ss.24.3()-Retwn of Loss-/. TO. Communicat-
ing to assessee of his taking no cognizance of retums on ground of retums 
being time ba1red-Effect of-Fonnal order by I.TO. notifying loss-Whether 
imperative for maintainability of appeal-Matter refe1red to larger Bench. 
C 
The respondent-assessee filed its returns for the assessment years 
1950-51 to 1955-56 showing losses. The Income Tax Officer communicated 
to the assessee that no cognizance of the returns could be taken as the 
same were barred by time. For the assessment years 1960-61and1961-62 D 
the assessee filed returns showing losses after bringing forward and setting 
off losses of the earlier years commencing from the assessment year 
1950-51. The Income Tax Appellate Tribunal directed the I.T.O. to quantify 
the losses for the assessment years 1952-53 to 1954-55 and allow to the 
assessee a set off against its income for the assessment years 1960-61 and 
1961-62. The reference was decided by the High Court in favour of the E 
assessee. The Revenue filed the appeals by special leave. 
The Revenue contended that the communication of the l.T.O. to the 
assessee that the proceedings for assessment years 1950-51 to 1955-56 had 
been closed due to the returns being filed beyond the stipulated period, F 
was an order against which an appeal lay and as the assessee took no steps 
in that regards the Tribunal erred in directing the l.T.O. to quantify the 
losses for those assessment years and allow set off against assessee's 
income for the assessment years 1960-61 and 1961-62. The appellant relied 
on a Division Bench decision of the Calcutta High Court in C.J. T. v. Ga1ia 
Industlies Pvt. Ltd., 1411 ITR wherein it was held that the appeal filed by G 
the assessee against the reply of the I.T.O. informing it that its return 
showing loss for a particular year was invalid, was maintainable as the 
proper effect of the reply of the I.T~O. to assessee was that the loss had 
been computed by him at 'nil'. The appellant also relied on judgments of 
Patna and Madhya Pradesh High Courts to the same effect. 
H 
369 
A 
B 
c 
D 
E 
370 
SUPREME COURT REPORTS (1993) SUPP. 2 S.C.R. 
The respondent-assessee in support of his claim placed reliance 
upon the judgment of a Bench of three Judges of this Court in C.I. T. v. 
Klwshal Chand Daga, 2 ITR 177. The assessee therein had filed an appeal 
against the assessment for the year ending Diwali 1941 made by the l.T.O., 
but had not c1uestioned the loss computed by him. For the subsequent 
assessment years the assessee claimed to reopen the question of the loss 
to be carried forward contending that it was in a much higher figure, and 
when the matter came before this Court, it held that though under s.30, 
an appeal lay in the event of asses see objecting to the amount of the loss 
computed and notified under s.24 but as the I.T.O. had not notified the 
loss, computed by him by an order in writing, no appeal could be taken in 
that regard and the assessee was, therefore, entitled to have the loss 
redetermined in a subsequent year. 
Feeling dilliculty with regard to the judgment in Kliushal Chand 
Daga's case and, referring the matter to a larger Bench, this Court, 
HELD : 1. A formal order notified by the ITO to the assessee under 
section 24(3) of the Income Tax Act 1922 is not imperative before an 
appeal is maintainable. The position taken in this behalf by the Calcutta, 
Patna and Madhya Pradesh High Courts eminently reasonable and deser-
ves consideration. [375-A-B] 
C.J.T. v. Garia Industries Pvt. Ltd., 140 I.T.R. 636; Bihar State 
Electricity Board v. Commissioner of Income-tax, 101 I.T.R 740 and 
Jaikishan Gopikishan & Sons v. C.J. T., 84 I.T.R. 645, referred to. 
2. The judgment of this Court in Khushal Chand Daga's case, which 
F 
requires reconsideration, notes that the loss had been determined in the 
relevant year at a particular figure and that the assessee has appealed 
against the assessment but had not questioned the loss that had been 
determined. The loss has to be determined in the assessment proceedings. 
There was an appeal against the assessment. Necessarily, therefore, the 
G appeal would involve the determination of the loss. In any event, the loss 
having been determined for the relevant year in the assessment proceed-
ings in that behalf, the assessee could 

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