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Facts
The assessee, a foreign company, faced technical difficulties with the Income-tax portal, causing a delay of 28 minutes in filing its return of income for AY 2021-22. This resulted in the return being considered belated, and the claim for carry forward of business loss and full credit for prepaid taxes was initially restricted.
Held
The Tribunal acknowledged the bonafide hardship faced by the assessee due to technical glitches and the short delay in filing. It held that the grounds raised by the assessee should be allowed for statistical purposes.
Key Issues
Whether the assessee's claim for carry forward of business loss and full credit of prepaid taxes can be allowed despite the return being filed belatedly due to technical issues on the Income-tax portal.
Sections Cited
154, 139(4), 139(1)
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Income Tax Appellate Tribunal, “C” BENCH MUMBAI
Before: SMT. BEENA PILLAI & SHRI GIRISH AGRAWAL
O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by assessee is against the order of Ld. CIT(A)-56, Mumbai, vide order no. ITBA/APL/S/250/2024-25/1065225426(1), dated 29.05.2024, passed against the rectification order by DDIT(CPC), Bengaluru, u/s.154 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 05.06.2023 for Assessment Year 2021-22.
2. Grounds taken by the assessee are reproduced as under:
“1. Under facts and circumstances of the case the Learned Commissioner of Income Tax (Appeal) has erred in not allowing carry forward of entire current year China Kunlun Contrac�ng and Engineering Corpora�on., AY 2021-22 business loss amounting to INR 1,04,57,56,800 which was claimed by the Appellant in its ROI and as reflected in ITR-V 2. Under facts and circumstances of the case the Learned Commissioner of Income Tax (Appeal) erred in facts and in law by granting only partial credit of prepaid taxes to the extent of INR 2,41,28,920 as against INR 7,02,91,070 duly reflected in Form no. 26AS for the captioned year and as claimed by the Appellant in its ROI filed on March 16, 2022 3. Under facts and circumstances of the case the Learned Commissioner of Income Tax (Appeal) had passed the order without considering the facts and submissions put before him as also without allowing the appellant sufficient opportunity of being heard.
4. Each of the above ground be considered as separate from the other grounds.”
Brief facts of the case are that assessee is a foreign company and a non-resident incorporated under the laws of People's Republic of China. It is engaged into the business of providing general contracting and project management consulting, research, and development, designing, and other engineering services. It is also engaged in the business of petrochemicals, textile and chemical fiber and environmental engineering. Assessee filed its return of income on 16.03.2022 (the extended due date for filing return of income for AY 2021- 22 being 15.03.2022). In this regard, assessee had filed e- grievances on the Income-tax portal on 15.03.2022 and 16.03.2022 to seek resolution as it was not able to register the Digital Signature Certificate (DSC) of the Authorised Signatory of the assessee for the purpose of verification of return of income and further faced issues in validation of JSON file purely due to certain technical difficulties on the Income-tax portal, as a result of which assessee was only able to file the return of income 28 minutes past midnight and accordingly, the return was reckoned as belated return u/s. 139(4) of the Act. Further, vide such return of income, assessee declared a net business loss of Rs.1,04,57,56,800/- resulting into Nil taxable income and claimed credit of prepaid taxes amounting to Rs.7,02,91,067/- that was duly China Kunlun Contrac�ng and Engineering Corpora�on., AY 2021-22 reflected in Form No. 26AS for the captioned Assessment Year, resulting into refund due of Rs. 7,02,90,070/- to the assessee. Subsequently, the return of income was processed and an intimation was issued u/s. 143(1) of the Act dated 26.07.2022, wherein the credit of prepaid taxes allowable to the assessee was restricted to Rs.2,27,32,121/-. Further, the refund determined in this regard amounting to Rs. 2,37,93,118/- was adjusted against the outstanding demand for Assessment Year 2020-21 on 08.09.2022. Against the said intimation, assessee made online application for rectification for tax credit mismatch correction on 28.02.2023. In response to such application, ld. Assessing Officer passed the rectification order u/s. 54 of the Act dated 05.06.2023, wherein after making a few adjustments, the refund determined was Rs.2,41,48,312/-. Aggrieved, assessee went in appeal before the ld. CIT(A).
Before the ld. CIT(A), the difficulties faced by the assessee in filing its return within the due date were reiterated. It also made submissions in respect of difference in the credit given for TDS reflected in Form 26AS. Ld. CIT(A), after taking into account submissions made by the assessee did not accept the claim of carry forward of current year’s business loss to subsequent year, as assessee had failed to file return of income within the due date of filing the return u/s.139(1). In respect of credit for TDS, a direction was given to the ld. Assessing Officer to verify the same and give credit corresponding to income assessable during the year. Aggrieved, assessee is in appeal before the Tribunal.
Before us, the ld. Counsel for the assessee reiterated the factual position as narrated above. It is also demonstrated by way of correspondences made by it at the time of filing of return along with screen shots to justify the claim so made. The email sent by the assessee China Kunlun Contrac�ng and Engineering Corpora�on., AY 2021-22 on 31.03.2023 at 23.49 narrates the entire technical problem faced by the assessee for registering the Digital Signature Certificate (DSC) of the authorised signatory which resulted in a delay of 28 minutes in filing the return within the due date u/s.139(1) of the Act. The email is reproduced below:
4.1. In support of the above email, assessee has also furnished screen shots for the technical glitches faced by it.
We have considered the submission made before us along with documentary evidences placed on record. Assessee has elaborately explained the technical difficulty faced by it and all the possible steps taken by it to resolve the same for filing the return within the prescribed due date u/s.139(1) but failed, resulting into a delay of 28 minutes in filing the return. Considering the facts on record and the bonafide hardship faced by the assessee, as well as considering the claim made by the assessee to allow carry forward of the current year’s business loss to subsequent year, we are of considered view to accept the same in view of decision of Hon'ble Supreme Court in the case of Goetze China Kunlun Contrac�ng and Engineering Corpora�on., AY 2021-22 (India) Ltd. vs. CIT [2006] 284 ITR 323 (SC), whereby it was held that “nothing impinges on the power of the appellate authorities to entertain such a claim of the assessee”.
Thus, we remit the matter back to the file of ld. Jurisdictional Assessing Officer (JAO) to verify the claim of the assessee for its correctness and consider the same in accordance with the provisions of law for carry forward of current year’s business loss to the subsequent year. Ld. Assessing Officer is also directed to verify the claim of assessee towards tax deducted at source vis-à-vis Form 26AS and corresponding income reported in the return and allow the appropriate credit after the due verification. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 23rd May, 2025