CREDENCE PROPERTY DEVELOPERS PRIVATE LIMITED ,MUMBAI vs. DCIT -CC-2(4), MUMBAI , MUMBAI

The assessee in appeal has assailed disallowance of carry forward of loss Rs.1,85,40,668/- on account of delay in filing return of income by 35 minutes.

Shri Naresh Kumar appearing on behalf of the assessee narrating facts of the case submitted that the assessee had filed its return of income for the impugned assessment year on 01/10/2011 declaring current year losses at Rs.1,85,40,668/-. The assessee was mandatorily required to file return of income through electronic mode on the official website of Income Tax Department. The Chartered Accountant of the assessee tried to upload the return of income on 30/09/2011 late evening. However, the official website of the Income Tax Department was not accessible for uploading of the income tax return on 30/09/2011 between 11.05 pm to 12.05 am of 01/10/2011. The website of the Department started working on 01/10/2011 at 12.05 am and immediately thereafter, the income tax return of the assessee was uploaded at 12.35a.m.on 01/10/2011. On account of technical reasons beyond the control of assessee, there was delay of 35 minutes in filing of the income tax return. After uploading of return of income, the assessee vide letter dated 10/10/2011 informed the Assessing Officer about the delay and reasons for delay of 35 minutes in uploading the return of income. A copy of the said letter is at page-1 of the Paper Book. The ld. Authorized Representative for the assessee pointed that stamp acknowledging receipt of said letter in the office of Assessing Officer is evident from the copy of letter placed in the Paper Book. The return of the assessee was selected for scrutiny and assessment order dated 07/03/2014 u/s. 143(3) of the Income Tax Act, 1961 [in short ‘the Act’] was passed accepting assessee’s claim of carry forward of current year’s business losses to subsequent Assessment Years. After more than three years, from the date of assessment, the assessee received notice dated 07/07/2017 u/s. 154 of the Act from the Assessing Officer to disallow carry forward of current year’s losses to subsequent Assessment Years. The assessee vide letter

The ld. Authorized Representative of the assessee submits that filing of return of income on ‘e-portal’ of the Department is a time consuming process. The Chartered Accountant who was assigned the task of filing income tax return of the assessee had started preparing return of income on 30/09/2011. However, by the time the return was fully prepared and uploaded on the portal of Income Tax Department, there was delay of 35 minutes. The delay in filing of the return occurred because of technical glitch. The official website of the Department was not functional between 11.05 pm on 30/09/2011 to 12.05 am on 01/10/2011. Thus, the delay of 35 minutes in uploading return was on account of bonafide reasons beyond the control of assessee and not intentional. The ld. Authorized Representative for the assessee further submitted that the Assessing Officer in scrutiny assessment proceedings

Per contra, Shri Prasoon Kabra representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld. Departmental Representative submits that the benefit of carry forward of losses for set off in subsequent years is allowed only if the return of income is filed within the time prescribed u/s. 139(1) of the Act. The Assessing Officer while passing assessment order initially allowed assessee to carry forward current year’s losses to be set off in the subsequent Assessment Years, the said finding of the Assessing Officer was a mistake apparent on record which was rectified by the Assessing Officer in the proceedings u/s. 154 of the Act. Hence, there is no infirmity in the action of Assessing Officer in withdrawing the benefit of carry forward of losses in the facts of the case.

We have heard the submissions made by rival sides and have examined the orders of authorities below. In so far as the facts and the time line of the events necessary for adjudication of the issue is concerned, there is no dispute.

The income tax return of the assessee was delayed by 35 minutes on account of alleged glitch in the official website of the Income Tax Department on 30/09/2011 from 11.05 pm to 12.05 am of 01/10/2011. Therefore, the income tax return of the assessee could be uploaded on the portal of the Department at 12.35am on 01/10/2011. The assessee thereafter promptly informed the Assessing Officer vide letter dated 10/10/2011about hardship in uploading the return which ultimately resulted in delay of 35 minutes. This shows that there was no intention on the part of assessee to file the return of income beyond time. The Assessing Officer while framing the assessment took note of the fact of delay in filing return of income and accepted the claim of assessee.

The delay occurred due to bonafide reasons beyond control of the assessee. No useful purpose or benefit could have been drawn by the assessee by delaying the return of income. In fact delay in filing return of income was detrimental to the interest of assessee, as the assessee had suffered business losses during the relevant financial year, and current year losses could only be allowed to be carry forward for set off in subsequent years if, the assessee files return within the time specified. It is a trite law that rules or procedures are made to facilitate and streamline compliances with an intent that no one takes undue advantage under the Acts. Procedural rules deserves to be read down where sufficient cause exists or events are beyond the control of a party to the lis. It is an accepted fact that filing of income tax return is an intense process

Before we part, we wish to record that this decision is rendered purely on peculiar facts of the case and hence, does not lay down any precedent.