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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI O.P. KANT & SHRI K.N. CHARY
ORDER PER O.P. KANT, AM:
This appeal by the Revenue is directed against order dated 03/06/2016 passed by the learned Commissioner of Income-tax (Appeals)-I, New Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2006-07 in relation to rectification of order under section 153A passed by the Assessing Officer. The grounds raised by the Revenue are reproduced as under:
1. Whether in fact and circumstances of the case and in law, the Ld. CIT(A) is legally justified in holding that the return filed in response t notice u/s I53A of the Income Tax Act 1961 (the Act) is actually ‘revised return’ u/s 139 (5) of the Act?
2. Whether in facts and circumstances of the case and in law, the Ld. CIT(A) is legally justified in holding that return of income filed by the assessee in response to notice u/s 153 A of the Act after a delay of more than six months from due date of filing of return as specified in notice u/s 153A could not held as ‘belated return’ if the same was filed within time period as allowed u/s 139 (5) of the Act?
3. Whether in facts and circumstances of the case and in law, the Ld. C1T(A) is legally justified in holding that even if the assessee had not filed return of income within time specified in the notice u/s 153A of the Act it was entitled for carry forward of losses?
4. Whether on the fact and circumstances of the case and in law, the Ld. CIT(A) is legally justified in ignoring clear and explicit language of clause (a) of section 153A of the Act. Which empower the Assessing Officer to specify time limit to file return of Income and that provision of section 139(5) of the Act was not applicable to the fact of this case?
5. That the appellant craves leave to add, amend alter or forgo any ground/(s) of appeal either before or at the time of hearing of the appeal.
Briefly stated facts of the case are that: (i) The assessee company filed its return of income (original return) in terms of section 139(1) of the Income-tax Act, 1961 (in short ‘the Act’) on 30/11/2006, declaring loss of ₹ 1,82,31,067/-. (ii) Subsequently, a search and seizure action under section 132 of the Act was carried out on the premises of the assessee on 01/06/2006 and notice under section 153A of the Act was issued on 30/07/2007,
asking the assessee to file return of income for assessment years falling under the search period, including assessment year 2006-07, i.e., the assessment year under consideration, within 16 days of service of the notice (iii) However, the assessee filed return of income in response to notice under section 153A of the Act on 13/02/2008, declaring loss of ₹ 1,57,26,756/-. (iv) The Assessing Officer completed the assessment under section 153A read with section 143(3) of the Act on 28/11/2008 at returned loss of ₹ 1,57,26,706/-. (v) Subsequently, the Assessing Officer issued notice under section 154 of the Act on 28/03/2013, proposing for denying carry-forward of loss claimed in the return filed under section 153A on the ground that return was not filed within the stipulated period of 16 days. (vi) The Assessing Officer rejected the contention of the assessee and denied to carry forward of the loss of ₹ 1,57,26,756/-reported in return filed under section 153A of the Act. (vii) On further appeal, the Ld. CIT(A) allowed the claim of the assessee of carry-forward of the losses claimed in the year under consideration . (viii) Aggrieved, the Revenue is before the Tribunal raising the grounds as reproduced above.
We have heard rival submission of the parties, who appeared through Video Conferencing facility and perused the relevant material on record.
The learned DR relied on the order of the Learned Assessing Officer and submitted that in view of the return of income under section 153A not filed by the assessee within the stipulated period, the Assessing Officer is justified in denying the carry- forward of the loss in view section 153A(1)(a) of the Act which prescribe that the provisions of this Act, including section 71 shall be applied on the return filed under section 153A also. 5. On the other hand, the learned Counsel of the assessee submitted that assessment in the year under consideration were already completed prior to the date of search and, therefore, in the return of income filed under section 153A, only addition based on incriminating material could have been done and no other adjustment is permitted under the law. In support of his contention, he relied on the decision of the Tribunal, Pune Bench in the case of Sanjay Nandlal Vyas Vs ITO, Central-2 in to 774/PN/2010. 6. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The undisputed fact in the case is that the return of income filed under section 139(1) of the Act on 30/11/2006, declaring loss of ₹ 1,82,31,067/- for the year under consideration, is within the due date provided under the Act. In terms of section 139(3) of the Act, loss claimed in the return of income can be allowed to carry forward, if the return is filed within the time allowed under section 139(1) of the Act. Further, section 80 of the Act has also laid down that loss shall not be carried forward under section 72 of the Act, if same is not determined in pursuance of the return filed under section 139(3) of the Act. So as far as carry forward of the loss of ₹ 1,82,31,067/- under regular provisions of the Act is concerned, it has not been disputed. The dispute arose when the assessee filed return of income under section 153A of the Act. The Assessing Officer directed the assessee to file return of income under section 153A within 16 days of the issue of the notice dated 30/07/2007. However, the assessee filed return of income declaring loss of ₹ 1,57,26,756/- on 13/02/2008. In this return under section 153A, the assessee has reduced its claim of carry- forward of the losses. Now the contention of the Learned Assessing Officer is that in view of section 153A(1)(a) of the Act, provision of section 139 applies on the return to be filed under section 153A of the Act. The relevant part of the provision is reproduced as under: “Assessment in case of search or requisition. 153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003 9[but on or before the 31st day of March, 2021], the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) ……………………………………………………………………………”
6.1 The section prescribe that ‘so far as may be’ the return filed under section 153A shall be treated as if it was required to be furnished under section 139. Therefore, according to the Assessing Officer, once the return under section 153A has been filed beyond the due date prescribed in the notice, the assessee is not entitled for carry-forward of the losses. 6.2 In our opinion, the Assessing Officer has not correctly interpreted the provision. In our view, two situations arise in 153A proceedings, firstly where assessment proceeding get abetted and; secondly, where assessment proceeding are not abetted. The consequence of notice under section 153A(1)(a) of the Act is that the assessee is required to furnish fresh return of income for each of the six assessment years. If assessment proceedings in particular assessment year are pending as on the date of the search, same get abated and in consequence to notice under section 153A, assessment of such year would be subject to assessment by the revenue for the first time and the earlier return filed for the purpose of assessment would be treated as non est in law. Consequently, the return filed under section 153A(1)(a) is return furnished under section 139 of the Act. Therefore, the provision of the Act which would be otherwise applicable in the case of return filed under section 139(1) of the Act would also apply in case of return filed under section 153A of the Act. 6.3 But where the assessments are not abated or no assessments are pending as on the date of the search, the return of income filed under section 139 cannot be treated as non est. In such completed assessments, addition if any can be made on the basis of the income relating incriminating material otherwise the position accepted in completed assessment has to reiterate. The word “so far as may be” in section 153A(1)(a) applies for assessment year which get abated and not otherwise. In the year under consideration, it is undisputed that no assessment was pending as on the date of the search and, therefore, the Assessing Officer is not permitted to make changes in the whatever determined in regular assessment proceeding on the basis of the return of income filed, in absence of any incriminating material. Since in the regular proceeding, the assessee is entitled to carry forward the losses in terms of the provision of the Act, the action of the Assessing Officer in denying the carry forward of the loss on account of the late filing of the return under section 153A of the Act, is not justified. Accordingly, we dismiss the grounds raised by the Revenue on this issue.
7. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 25th August, 2021.