MR GANESH RAMBHAV PAKHE,AURANGABAD vs. INCOME TAX OFFICER, WARD-2(3), AURANGABAD, AURANGABAD
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Income Tax Appellate Tribunal, PUNE BENCH, ‘A’ PUNE
Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI
आदेश / ORDER
PER R.S. SYAL, VP :
This appeal, involving a small but interesting point, is
directed against the order dated 24-08-2023 passed by the CIT(A)
in National Faceless Appeal Centre (NFAC), Delhi in relation to
the assessment year 2015-16.
Succinctly, the facts of the case are that the assessee is an
individual engaged in the business of sale of auto parts. Original
return was filed on 11-09-2015 declaring total income at
Rs.5,01,460/-, which was a belated return u/s 139(4) of the
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Income-tax Act, 1961 (hereinafter called `the Act’). Thereafter,
the assessee filed a revised return on 11-02-2016 declaring total
income at Rs.95,21,060/-. In this return, the assessee declared
long term capital gain and also claimed exemption under section
54F of the Act. The Assessing Officer (AO) completed the
assessment at a total income of Rs.1,51,53,060/- by adopting
income as per the return of income filed at Rs.5,01,460/-. The ld.
CIT(A) did not allow the assessee’s claim of exemption u/s.54F
on sale of the property and also confirmed the disallowance out of
selling expenses. On the last ground raised before him, the ld.
CIT(A) held that the case was selected for limited scrutiny under
CASS on account of “Deduction claimed under the head Capital
gains”. He directed the AO to start the computation of income by
adopting the income offered in the revised return at
Rs.95,21,060/-. The assessee is in appeal before the Tribunal.
We have heard the rival submissions and gone through the
relevant material on record. The ld. AR contended that the AO
completed the assessment on the basis of a revised return, though
starting the computation of total income with the amount declared
in the original return. This was not approved by the ld. CIT(A),
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who directed to compute the total income by taking the revised
income as a starting point. Since the revised return, which was the
basis of assessment, was not a valid one, the ld. AR contended
that the assessment ought not to have been completed on the basis
of such a return.
In order to appreciate the controversy, it would be apposite to
take note of the factual scenario a little more elaborately. The
assessee furnished the original return on 11-09-2015, which was a
belated return u/s.139(4) of the Act. This return was filed
declaring total income of Rs.5,01,460/-. In this return, the
assessee had not disclosed capital gain on the sale of plots situated
at Gut No.138, Village Pisadevi, District Aurangabad. The return
was revised on 11-02-2016 with the returned total income at
Rs.95,21,060/-, also disclosing long term capital gain on the
transfer of the property and claiming exemption u/s.54F of the
Act.
Sub-section (5) of section 139, prior to its substitution by the
Finance Act, 2016 w.e.f. 01-04-2017, provides that: “If any
person, having furnished a return under sub-section (1) or in
pursuance to a notice issued under sub-section (1) of section 142
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discovers any omission or any wrong statement therein, he may
furnish a revised return at any time before the expiry of one year
from the end of the relevant assessment year or before the
completion of the assessment, whichever is earlier”. A bare
perusal of the provision transpires that a return can be revised if it
was originally furnished under sub-section (1) of section 139 or in
pursuance to notice u/s.142(1). Undeniably, the return was not
furnished pursuant to any notice u/s 142(1) of the Act. What is
left out for consideration in the present context is whether that the
original return furnished by the assessee was within the time
permitted under section 139(1), so as to qualify for revision.
Coming to the factual panorama, it is noticed that the
original return in the extant case was furnished on 11-09-2015.
The assessment year under consideration is 2015-16. Ergo, the
return furnished by the assessee on 11-09-2015 was a belated
return filed u/s.139(4) of the Act. Revision of a belated return,
prior to the assessment year 2017-18, was not permissible. Thus,
the revised return filed by the assessee, being of the originally
belated return, was an invalid return which did not require any
action thereon. The AO was also cautious of this fact. He
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recorded in para 1 of his order that: “ However, since, the original
return itself was a belated one, the same would neither be revised
nor processed and hence, the revised return is actually an invalid
return”. If the revised invalid return is removed from
consideration, what remains for assessment is only the originally
filed return u/s.139(4) of the Act with declared income of
Rs.5,01,460/-.
The moot question which now arises is whether the
assessment was done of the original or the revised return? If the
assessment is found to be done of the original return, then no
illegality can be attributed to it. The case was selected for limited
scrutiny under Computer Aided Scrutiny Selection (CASS) for
the reason of “Deduction claimed under the head Capital Gains”.
The assessee had neither offered any income from Capital gain
nor claimed any deduction/exemption under this head in the
original return. It was only in the revised return that the assessee
offered income from long term capital gain after claiming
exemption u/s.54F. This shows that the return taken up for
scrutiny was the revised return and not the original one.
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Section 143(2) is a jurisdictional provision, which gives to
AO the requisite power to frame the assessment. This section
clearly provides that: ‘Where a return has been furnished under
section 139 or in response to notice under sub-section (1) of
section 142, the Assessing Officer. . . . . ,if, considers it necessary
or expedient to ensure that the assessee has not understated the
income or has not computed the excessive loss, . . . . . . shall serve
on the assessee a notice requiring him . . . . . . to produce or cause
to be produced before the Assessing Officer any evidence on
which the assessee may rely in support of the return:” It is only
by virtue of notice issued under section 143(2) that the AO
acquires jurisdiction for framing assessment in respect of return
filed under any sub-section of section 139, may be original, loss,
belated or revised. Only when the notice is issued under this
provision with reference to the relevant return that the assessment
proceedings commence practically culminating into the passing of
the order u/s.143(3) of the Act eventually.
Adverting to the notice u/s.143(2) of the Act, a copy placed at
page 15 of the paper book, it is seen that the same was with
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reference to “Limited Scrutiny”. Para 1 of the notice reads as
under :
“This is for your kind information that the return of income for Assessment Year 2015-16 filed vide ack. No.950640970110216 on 11-02-2016 has been selected for Scrutiny. Following issues have been identified for examination.
i. Deduction claimed under the head Capital Gains.”
It is crystal clear from notice u/s.143(2) that the AO took up
the assessment for `Limited scrutiny’ on the reason of “Deduction
claimed under the head Capital Gains” with reference to the
return filed by the assessee vide Acknowledgement
No.950640970110216 on 11-02-2016. We have noticed above
that the assessee did not offer any income under the head `Capital
gains’ in the original belated return. It was only in the revised
return that the assessee offered long term capital gain and also
claimed exemption under the head `Capital gains’. From para 1
of the notice u/s.143(2), it is clear that it refers to the deduction
claimed under the head `Capital gains’, which was claimed in the
revised return filed u/s.139(5) on 11-02-2016 with the
Acknowledgement No. 950640970110216. The Ackn. no. is also
that of the revised return.
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It thus become palpable that the revised return was
considered for selection of the case under CASS and the notice
u/s.143(2) was also issued with reference to the revised return
only. It has been noticed above that the revised return did not
conform to the prescription of section 139(5), before its
substitution w.e.f. A.Y. 2017-18, which provided for revision of a
return filed u/s.139(1) and not u/s.139(4) of the Act. The
substituted section 139(5) now liberalizes the revision of return
originally filed under sub-section (1) or under sub-section (4).
The amendment has come into vogue from the A.Y. 2017-18.
The assessment year under consideration is 2015-16. It is the pre-
substituted provision which will prevail for the year under
consideration, debarring the revision of any return filed
u/s.139(4). Since the revised belated return filed on 11-02-2016
was an invalid one, the same could not have been acted upon for
the assessment. Once the invalid return is excluded from
consideration, what survives is the valid return filed by the
assessee u/s.139(4) on 11-09-2015. The assessment could have
been taken place only with reference to such return filed
u/s.139(4) and not the invalid return filed by the assessee. The
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selection of the case under Limited Scrutiny under CASS on the
basis of the invalid return and thereafter the issuance of
jurisdictional notice u/s.143(2) also qua such invalid return can
have no consequence except the passing of an illegal assessment
order. We, therefore, vacate the assessment order and the
consequential proceedings flowing therefrom.
In the result, the appeal is allowed.
Order pronounced in the Open Court on 14th November,
2023.
Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 14th November, 2023 सतीश
आदेश की �ितिलिप अ�ेिषत/Copy of the Order is forwarded to: अपीलाथ� / The Appellant; 1. ��थ� / The Respondent 2. 3. The Pr.CIT concerned, Pune 4. DR, ITAT, ‘A’ Bench, Pune गाड� फाईल / Guard file. 5.
आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
ITA No.1097/PUN/2023 Ganesh Rambhau Pakhe
Date 1. Draft dictated on 13-11-2023 Sr.PS 2. Draft placed before author 14-11-2023 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *
