M/S. K L S E H CO-OPERATIVE SOCIETY LTD.,,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRALIZED PROCESSING CENTRE, BENGALURU

These appeals at the instance of the assessee are directed against four Orders of CIT(A) (all orders are dated 15.02.2023), passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Years are 2016-17 to 2019-20.

The solitary issue that is raised is whether the CIT(A) is justified in confirming the action of the CPC in not allowing carry forward of losses.

Brief facts of the case are as follows:

Aggrieved, assessee filed appeals before the First Appellate Authority (FAA). The CIT(A) passed an ex-parte order. The CIT(A) held that assessee has not filed the tax audit report for Assessment Years 2016-17, 2017-18 and 2018-19 and therefore there is no proof that the assessee’s case falls within the extended time limit for filing the return of income under section 139(1) of the Act and hence not entitled to the set off of carry forward of losses.

Aggrieved, assessee has filed the present appeals before the Tribunal. The learned Counsel for the assessee submitted that assessee’s case pertain to filing of statutory audit report. Consequently, there is extended time limit for filing the return of income under section 139(1) of the Act and return of income has been filed within such extended time limit. Therefore, it was submitted that assessee is entitled to carry forward losses for Assessment Year 2016-17 and set off the same for subsequent Assessment Years. It was further stated by the learned AR that the CIT(A) had issued only one notice for filing the written submission and the assessee, by mistake, did not notice the notices issued by the FAA’s office for Assessment Years 2016-17 to 2018-19 but only notice issued for Assessment Year 2019-20, for which an audit report was submitted. The learned AR submitted that in the interest of justice and equity, the matter may be restored to the CIT(A) for furnishing of the tax audit report for the Assessment Years 2016-17 to 2018-19 for which years there were losses available for carry forward and set off.

The learned DR supported the orders of the CIT(A).

We have heard the rival submissions and perused the material on record. The solitary reason for not allowing carry forward of losses is on account of not filing the returns of income for Assessment Years 2016-17 to 2019-20 within the due date prescribed under section 139(1) of the Act. Assessee submitted that its case pertaining to filing of tax audit reports is governed by extended time limit and within such extended time the assessee had filed the return of income. We notice the CIT(A) has passed ex-parte order. Assessee had furnished the tax audit report for Assessment Year 2019-20 by mistakenly noting only the notice for furnishing the written submissions for above mentioned Assessment Year. In the interest of justice and equity, we are of the view that one more opportunity ought to be granted to the assessee to furnish the tax audit report pertaining to Assessment Years 2016-17, 2017-18 and 2018-19 to show that assessee’s case pertain to submission of audit report and assessee has filed the return of income within the time limit specified under section 139(1) of the Act. For above said purposes, the issue raised in these appeals are restored to the file of the CIT(A). The assessee is directed to co-operate with the Revenue and shall furnish the necessary details in support of its claim. It is ordered accordingly.

In the result, the appeals filed by the assessee are allowed for statistical purposes.