NARNE ESTATES PRIVATE LIMITED ,HYDERABAD vs. INCOME TAX OFFICER, WARD-16(2), HYDERABAD

O R D E R PER A. MOHAN ALANKAMONY, A.M.: This is assessee’s appeal for the AY.2005-06, directed against the order of the Commissioner of Income Tax (Appeals)–4, Hyderabad, in appeal No. 10910/16-17/ITO, Wd./CIT(A)-4/Hyd./2019-20, dated 31-05-2019.

“1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous both on facts and in law.

2. The learned Commissioner of Income-Tax (Appeals) erred in confirming the order of the Assessing officer wherein the Assessing officer allowed relief of only Rs.3,93,800/- and not the amount as claimed by the appellant.

3. The learned Commissioner of Income-Tax (Appeals) erred in confirming the addition made of Rs.22,78,530/- by not allowing the deduction of the amount written off.

4. The learned Commissioner of Income-Tax (Appeals) erred in confirming levy of interest u/s.234A, u/s.234B and u/s.234C of the I.T.Act.

5. Any other ground that may be urged at the time of hearing”.

5.1. At the outset, we find that the Ld. Revenue Authorities have computed the capital gains in accordance with the belated return filed by the assessee. Now, the assessee claims that there is omission/wrong statement in the return filed by the assessee, which is required to be rectified and accordingly, the assessment order needs to be modified. We do not find any merit in the claim of the assessee. It is an admitted fact that the assessee has filed the return belatedly U/s.139(4) of the Act. Further Section 139(5) of the Act for the relevant assessment year stipulates as under: - “if any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, 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.”

From the above it is clear that, any omission or wrong statement furnished by the assessee cannot be entertained as the return is filed beyond the due date of filing of the return U/s.139(1) of the Act and the assessee is bared from filing revised return U/s 139(5) of the Act. Moreover, the assessee has not brought out before us the proposed corrections to be carried out in the assessment Order other than simply stating that certain corrections are to be given effect. Further it appears from the arguments advanced by the Ld.AR that there are no drastic adjustments required to be made in the Order of the Ld.AO which otherwise will lead to substantial miscarriage of injustice to the assessee. The Ld.AR also has conceded that the Ld.AO had assessed the income of the assessee in accordance with the belated return of income filed by the assessee. It is also pertinent to mention that this is the second round of litigation before us and this ground was never raised on the earlier occasions. In this situation We do not find any merits in the arguments advanced by the Ld.AR on the issue. Therefore, this ground raised by the assessee is devoid of merits and accordingly disposed-off.

i. Rs.10,87,250/- paid to M/s.Narne Publications Pvt. Ltd., towards interest free advances. ii. Rs.3,21,279/- paid to M/s.Danteswari Mineral Ltd., towards interest free advances. iii. Rs.8,22,000/- paid as loans to various parties/members. iv. Rs.48,000/- invested in M/s.Riverdale Foods Ltd.

6.1. The assessee has claimed that, the above irrecoverable advances were related to the business of the assessee and therefore it should be allowed to be treated as ‘bad debts”. The Ld.AO had denied the deduction as “bad debts” because the assessee has not established that the aforesaid advances are related to the business of assessee with cogent evidence. Ld.CIT(A) also confirmed the order of the Ld.AO because even before him the assessee has not produced proper evidence to establish its claim.

6.2. Before us, the Ld.AR vehemently argued that all these advances are with respect to business of the assessee and therefore it must be allowed as deduction under the head ‘bad debts’ because the aforesaid receivables are not recoverable. Nevertheless, even before us at this stage the Ld.AR did not produce any coherent evidence to substantiate that the aforestated advances made by the assessee is related to the business of the assessee. However keeping in view of the facts and circumstances of the case, and the prayer of the Ld.AR, in the interest of justice, We are of the considered view that one more opportunity is required to be provided to the assessee to establish its claim before the Ld. Revenue Authorities. Therefore, We hereby remit this issue back to the file of Ld.AO for Denovo consideration.

7.1. At the outset, we find that the interest leviable u/s. 234A, 234B and 234C of the Act are consequential in nature and therefore, the orders of the Ld. Revenue Authorities do not call for any interference.

Order pronounced in the open court on 9th December, 2020