D. A. MEHTA, J. ( 1 ) THE Income Tax Appellate Tribunal, Ahmedabad Bench b has referred the following question under Section 256 (1) of the Income-Tax Act, 1961 (the Act) at the instance of the assessee :"whether on the facts and in the circumstances of the case the Tribunal has been right in law in holding that the assessee is not entitled to carry forward of the business loss determined on a belated return of income ?" ( 2 ) THE Assessment Year is 1985-1986 and the relevant accounting period is the year ended on 31st March, 1985. Return of income was due on 31st July, 1985 but was filed on 23rd December, 1985. The Assessing Officer while finalizing the assessment on 15th March, 1988, computed business loss at Rs. 2,35,461/- but did not permit carry forward of the same by observing ". . . As the return is not filed within the statutory period, the loss of Rs. 2,35,461/- is not allowed to be carried forward. . . . " ( 3 ) THE assessee carried the matter in appeal before the CIT (Appeals) who reversed the order of the Assessing Officer and held that the assessee was entitled to carry forward the business loss computed by the Assessing Officer. According to the CIT (Appeals) the assessee had filed Form No. 6 on 28th June, 1985 vide acknowledgment slip No. 560733 seeking extension of time upto 31st December, 1985 to submit the return of income. The said application was neither rejected nor granted by the Assessing Officer and, therefore, the assessee was entitled to presume that extension had been granted. For this purpose, the CIT (Appeals) placed reliance on decision of this Court in the case of Commissioner of Income-Tax, Gujarat-IV Vs. Gordhanbhai Jethabhai, [1983] 142 ITR 84 (Guj.) ( 4 ) THE Revenue carried the matter in appeal before the Tribunal and the Tribunal reversed the order of Commissioner (Appeals ). While passing the impugned order on 19th October, 1992, the Tribunal observed as under :"the return was due on 31. 7. 1985, but the same was filed on 23. 12. 1985. According to the assessee, vide form No. 6, dated 28. 6. 1985 (slip No. 560733), it applied for extension upto 31. 12. 1985. Form No. 6 was neither rejected nor intimated by the assessing officer. 7. 1985, but the same was filed on 23. 12. 1985. According to the assessee, vide form No. 6, dated 28. 6. 1985 (slip No. 560733), it applied for extension upto 31. 12. 1985. Form No. 6 was neither rejected nor intimated by the assessing officer. Hence the rejection of carry forward was objected before the CIT (A) and CIT (A) taking into consideration the above facts applied the principles laid down by the jurisdictional High Court in the case of Gordhanbhai Jethabhai 142 ITR 84 and directed the ITO to allow carry forward of the business loss for the assessee. The above facts are also not controverted even before us. The departments stand is that the principles laid down in the above case by the jurisdictional High Court is not applicable in the instant case of the assessee. The Honble High Court in that case was concerned with penalty and not with carry forward of losses. The learned counsel for the assessee produced before us the order of the Tribunal in ITA No. 285/ahd/89 dtd. 4. 6. 1992. In that case the claim of the assessee for extension of time was allowed due to the general extension granted by the Board of considering the tense situation prevailing in the city. Therefore, the benefit of the order relied upon by the assessee cannot be extended to the Assessees case. Therefore, we allow the appeal by the department on this ground. " (emphasis supplied) ( 5 ) LEARNED advocate for the applicant - assessee Ms. Sameera Shah submitted that the Tribunal was not justified in reversing the order of the Commissioner (Appeals ). Inviting attention to provisions of Section 139 (1) and proviso thereunder read with Section 139 (3) of the Act, it was submitted that a return of loss which was required to be submitted under provisions of sub-section (3) had to be filed within the time prescribed under sub-section (1) or as may be extended by the assessing authority by exercising powers under the proviso to sub-section (1) of Section 139 of the Act. That as recorded by CIT (Appeals) the applicant - assessee had applied for extension of time for submitting the return of income and the said application was neither rejected nor granted. Thus, the assessee was entitled to presume that the time prayed for was granted. That as recorded by CIT (Appeals) the applicant - assessee had applied for extension of time for submitting the return of income and the said application was neither rejected nor granted. Thus, the assessee was entitled to presume that the time prayed for was granted. That if the extension application was considered to have been granted, the assessee having sought extension upto 31st December, 1985, the return of income tendered on 23rd December, 1985 was within time and the assessee could not be denied the benefit of carrying forward business loss. In support of the submission made, she placed reliance on decision of this Court in case of CIT Vs. Gordhanbhai Jethabhai (supra) as well as following decisions of High Courts of Madras, Calcutta, Rajasthan and Kerala : (i) Commissioner of Income-tax Vs. Dolerite Pvt. Ltd. [1996] 217 ITR 318 (Mad.); (ii) Commissioner of Income-tax Vs. Janata Film Exchange (P.) Limited, [1993] 202 ITR 532 (Cal.); (iii) Rajasthan Cylinders and Containers Ltd. Vs. Commissioner of Income-tax, [2003] 259 ITR 95 (Raj.); and (iv) Commissioner of Income-tax Vs. Panavision Electronics (Kerala) (P.) Ltd. , [2003] 264 ITR 710. ( 6 ) MR. M. R. BHATT, learned Senior Standing Counsel appearing on behalf of the respondent, submitted that the Tribunal had not committed any error which would call for any intervention by this Court. That as recorded by the Tribunal as part of the submissions made on behalf of the department, the decision of this Court could not be applied to the facts of this case as the same was rendered in context of penalty leviable for late submission of return under Section 271 (1) (a) of the Act. He, therefore, submitted that the reference be rejected, as there was no dispute that the return of income was not filed on the due date. ( 7 ) UNDER Section 139 (3) of the Act a return of loss has to be furnished within time allowed under sub-section (1) or within such further time which, on an application made in the prescribed manner, the Assessing Officer may, in his discretion, allow. The assessee being a Limited Company, under normal circumstances the time to furnish a return under Section 139 (1) of the Act would be before the expiry of four months from the end of previous year i. e. 31st July, 1985. The assessee being a Limited Company, under normal circumstances the time to furnish a return under Section 139 (1) of the Act would be before the expiry of four months from the end of previous year i. e. 31st July, 1985. However, under proviso to Section 139 (1) of the Act an Assessing Officer is granted discretion to extend the date for furnishing the return on an application made in the prescribed manner. Therefore, the scheme of the Act envisages that the due date is either the one stated under clause (a) or clause (b) of sub-section (1) of Section 139 of the Act, or the extended date which may be fixed on exercise of discretion by the Assessing Officer on an application moved by an assessee under the proviso. However, as to what is the effect in a case where an application is made in time before the Assessing Officer under the proviso to sub-section (1) of Section 139 of the Act, and where such application is not dealt with by the Assessing Officer i. e. it is neither rejected nor granted, is no longer res integra. This Court in case of CIT Vs. Gordhanbhai Jethabhai (supra) has enunciated the law in the following words : The question of delay in filing the return which arises in the context of the assessees obligation to file a return under s. 139 (1) of the Act. Proviso to s. 139 (1) lays down that on an application made in the prescribed manner, the ITO may, in his discretion, extend the date for furnishing the return, and, notwithstanding that the date is so extended, interest shall be chargeable in accordance with the provisions of sub-s. (8 ). Rule 13 of the I. T. Rules, 1962, deals with application for extension of time for filing return of income and it lays down that the application to the ITO under the proviso to sub-s. (1), or the proviso to sub-s. (2), or sub-s. (3) of s. 139, for seeking an extension of the date for furnishing the return of income shall be in Form No. 6. As already pointed out above, applications in Form No. 6 were made on behalf of the assessee for extension of time. As already pointed out above, applications in Form No. 6 were made on behalf of the assessee for extension of time. It is, however, contended on behalf of the Revenue that the applications which were made on behalf of the assessee were not made in the prescribed manner inasmuch as they were not signed by the person authorised to sign on behalf of the assessee. The ITO, therefore, could have ignored these applications. In other words, according to the Revenue, it was not incumbent upon the ITO to render his decision on the applications made on behalf of the assessee. As pointed out above, proviso to sub-s. (1) of s. 139 empowers the ITO to extend the date for furnishing the return. It is obvious that there is a corresponding duty on the ITO to render his decision on the application made to him and communicate it to the assessee concerned. He has no doubt discretion whether or not to extend the date, but such discretion has to be exercised judicially and not arbitrarily. In other words, he has to exercise the discretion fairly and reasonably. He, however, cannot refuse to use discretion one way or the other and ignore the application for extension made to him in the prescribed form. If the application is not made properly or it suffers from some defect, it may be open to the ITO to reject the application on that ground, but he cannot simply ignore the application as not maintainable. A statutory duty is enjoined on the ITO to entertain and decide the application for extension of time. He cannot refuse to discharge his duty under the pretext that since the application was not properly made or signed, he can ignore it. If a statute invests a public officer with authority to do an act in a specified set of circumstances, it is imperative upon him to exercise his authority in a manner appropriate to the case when a party interested and having a right to apply moves in that behalf and circumstances for exercise of authority are shown to exist. We are, therefore, unable to see any force in the Revenues argument that the ITO could have ignored the applications made on behalf of the assessee. It was incumbent upon the ITO either to grant or reject the applications for valid reasons. We are, therefore, unable to see any force in the Revenues argument that the ITO could have ignored the applications made on behalf of the assessee. It was incumbent upon the ITO either to grant or reject the applications for valid reasons. On plain reading of the provisions as well as the settled legal position enunciated by this Court, it is apparent that the law pronounced by this Court is not in relation to interpretation of provisions of Section 271 (1) (a) of the Act but deals with the scheme envisaged by the statute under Section 139 (1), 139 (2) and 139 (3) as well as the relevant Rules and the prescribed form. This statutory scheme would apply in every case where a return of income which is not filed by due date, but where it is filed within the period as stated in the prescribed application seeking extension of time. ( 8 ) IN the present case, there is no doubt that the return of loss was filed within the period for which extension was sought, and in light of the ratio of the decision rendered by this Court, the assessee was justified in presuming that the application seeking extension of time was granted in absence of any order of grant or rejection being communicated. As recorded by the Tribunal facts are undisputed. It is not the case of revenue, as was in the matter of CIT Vs. Gordhanbhai Jethabhai (supra), that the application was defective or invalid in any manner. Though that cannot be a ground for not exercising the discretion vested in the Assessing Officer. There is a mandate on the authority to exercise its power when called upon to do so. The authority cannot refuse to exercise the same by ignoring an application. This is a jurisdictional error. The Tribunal has committed an error of law by not dealing with this issue indicating total non-application of mind. In the circumstances, the Tribunal was not justified in reversing the order of CIT (Appeals) and denying the benefit of carry forward of business loss by treating the return of loss as having been filed beyond the stipulated date or the extended period. ( 9 ) BEFORE parting, it is necessary to take note of the fact that the tribunal has, to say the least, approached the matter very cursorily and in a casual manner. ( 9 ) BEFORE parting, it is necessary to take note of the fact that the tribunal has, to say the least, approached the matter very cursorily and in a casual manner. The extract from the Tribunals order reproduced hereinbefore shows that the earlier portion of the paragraph narrates the facts; thereafter the submissions of the departmental representative are summarized, followed by summary of the submissions made on behalf of the assessee. The only reasoning, if one can say it to be a reason, which appears in the Tribunals order is "therefore, the benefit of the order relied upon by the assessee cannot be extended to the Assessees case. Therefore, we allow the appeal by the department on this ground. " It is most unfortunate that despite a decision of this Court having been brought to the notice of the Tribunal, and the CIT (Appeals) having applied and followed the same, the Tribunal has not even chosen to point out as to why the ratio of the said decision is not applicable to the facts of the case. At the cost of repetition it requires to be stated that this Court has time and again laid down that the law declared by the Highest Court in the State is binding on authorities or Tribunals under its superintendence and they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding. [air Conditioning Specialists Pvt. Ltd. Vs. Union of India, [1996] 221 ITR 739] ( 10 ) THE impugned order of the Tribunal is a classic case whereby the Tribunal has disposed off the appeal before it contrary to the settled legal position. In the case of omar Salay Mohamed Sait Vs. Commissioner of Income-tax, Madras, [1959] 37 ITR 151 (S. C) the Apex Court has laid down the duty of the Tribunal in the following terms :"the Income-tax Appellate Tribunal is a fact finding tribunal and if it arrived at its own conclusions of fact after due consideration of the evidence before it the court will not interfere. Commissioner of Income-tax, Madras, [1959] 37 ITR 151 (S. C) the Apex Court has laid down the duty of the Tribunal in the following terms :"the Income-tax Appellate Tribunal is a fact finding tribunal and if it arrived at its own conclusions of fact after due consideration of the evidence before it the court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence on record before it. " ( 11 ) THE impugned order of the Tribunal is, therefore, bad in law when one applies the settled legal position. The order does not reflect any application of mind by the Tribunal. The order does not even indicate as to whether the Tribunal is alive as to what is the ratio laid down by this Court and hence, there is no finding as to whether the said decision is applicable or not, despite the fact that the Tribunal is bound to apply and follow the ratio laid down by a decision of the Highest Court of the State. ( 12 ) IN the circumstances, the Tribunal was not justified in law in holding that the assessee was not entitled to carry forward the business loss determined on a belated return of income, as the return of income, in fact, was not belated but had been tendered within the extended time which was prayed for. The question referred to the Court is, therefore, answered in the negative i. e. in favour of the assessee and against the Revenue. The reference stands disposed of accordingly. There shall be no order as to costs. .