M/S. JAIPUR UDYOG LTD. & ANR. versus COMMISSIONER OF INCOME-TAX, DELHI, RAJASTHAN AND ANOTHER

Citation: [1969] 2 S.C.R. 193 · Decided: 24-09-1968 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

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193 
MIS. JAIPUR UDYOG LID. & ANR. 
v. 
COMMISSIONER OF INCOME-TAX, DELHI, RAJASTHAN 
AND ANOTHER 
September 24, 1968 
[J. C. SHAH, ACTING C.J., V. RAMASWAMI 
AND A. N. GROVER, JJ.] 
lnc<lme-tax Act (43 of 1961), ss. 72, 80, 141 and 210(3)-Provi-
sional assessment under s. 141-/f income-tax officer can determine dis-
puted claims-Whether s. 80 applies to provisional assessments-S. 210 
(3)-Advance lax payable on the basis of 'prmisional assessment'-
Refers to valid provisional assessment. 
The appellant filed its returns for the assessment years 1954-55 to 
1964-65. 
The Income-tax Officer passed orders of assessment for the 
years 1954-55 to 1959-60. While the appeals to the Appellate Assis· 
tant Commissioner for those years, and the assessment proceedings before 
the Income-tax Officer for the years 1960-61 to 1962-63, were.still pend-
ing, for the assessment year 1963-64 (the return for which was filed 
under s. 139 of the Income-tax Act, 1961), the Income-tax Officer made 
a provisional assessment under s. 141. He held that the appellant was 
not entitled to deduct the aggregate amount of losses as claimed by it 
during the previous years and allowed only a much smaller sum as Joss 
which could be carried forward from the earlier years. For the assessment 
year 1964-65, the Income-tax Officer made a provisional assessment with-
out allowing any deduction of loss claimed by the appellant; and for the 
assessment year 1965-66 the Income-tax Officer called upon the appellant 
to pay a certain sum as advanee tax under s. 210(3). The appellant 
filed writ petitions in the High Court for quashing the orders of the 
Income-tax Officer for each of the three years, but the petitions we:ce 
dismissed. The High Court held : ( 1) that under s. 141 the provisional 
assessment of tax must also be made in accordance with and subject to 
the provisions of the Act, and that the combined effect of ss. 72 and 80 
was that a business loss can be carried forward to subsequent assessment 
years only when it has been determined in pursuance of a return filed 
under s. 139; and (2) that under s. 210(3) as inserted by Act 13 of 
1963 and modified by Act 31 of 1964, the Income-tax Officer was entitled 
to make an order for payment of advance tax for 1965-66 on the provi-
sional assessment for the year 1964-65. 
In appeal to this Court, 
HELD: (1) Section 141 bars an enquiry, at the stage of making a 
provisional assessment, into disputed questions of law and fact : it is 
immaterial that the dispute raised is complicated or easy. Therefore the 
Income-tax Officer was not justified in ignoring 
the 
appellant's claim . 
[198 D-FJ 
Under s. 80 loss of a pre,vious year under the head of income from 
profits and gains may be carried forward only if it has been determiN!d 
in pursuance of a return filed under s. 139; that is, if it is not so deter-
mined it cannot be carried forward and set off against the profit of the 
subsequent year or years. 
But the section applies only to a regular 
assessment. 
In the case of a provisional assessment under s. 141, if 
there has been such a determination of the allowances mentioned 
in 
sub-s. 2 in a regular assessment for an earlier year, then under s. 141 (2) 
194 
SUPREME COURT REPORTS 
(1969] 2 S.C.R. 
the income-tax officer must whether the assessee has claimed or not give 
effect to the allowances so determined. But he has no power to adjudi· 
cate upon a .~!aim for deduction made by the assessee when making a 
JJ<OVisional assessment. [196 G; 197 A-198 B; 199 B-C) 
The section has been enacted with the object of expediting collection 
of tax on the basis of the return made by the assessee. The assessment 
so made is summary and is based only on the return and the accounts 
and documents filed by the assessee. If there be discrepancy between 
the return made and the accounts and documents accompanying the 
return the Income-tax Officer may ask the assessee to explain the discre-
pancy but he must 
make a provisional 
assessment on the basis 
of 
the return initially filed or clarified, but cannot hold that certain claims 
made by the assessee are in law unjustified. The provisional assessment 
does not bind the assessee nor the department and the tax paid pursuant 
to such provisional assessment is liable to be adjusted in the light of the 
final order in the regular assessment, and it is open to the Income-tax 
Officer to impose a penalty in appropriat

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