Set off and carry forward of losses

As per Sec. 80 of the I.T. Act, to carry forward loss under a particular head of income(except income from the house property), the assessee is required to submit his return of income within the time limit given u/s 139(1). now, the assessee has incurred non-speculative business loss as under:

suppose, the assessee is not able to file the return of 2006-07 within the time limit u/s 139(1). All other returns are filed within time. does it mean, he will not be allowed to carry forward the entire loss upto that AY (i.e.,7 lacs) next year, though the return for AY 2005-06 was filed by him within time? plz. reply.