M/S. SUBHAM,PUNE vs. INCOME-TAX OFFICER, WARD - 3(4), PUNE

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by assessee is emanating out of the order of 1. Commissioner of Income Tax (Appeals) – 3, Pune dated 14.01.2019 for A.Y. 2015-16.

Assessee is a partnership firm stated to be engaged in dealing in readymade garments and hosiery. Assessee electronically filed its

return of income on 30.10.2015 declaring total income of

Rs.19,03,485/-. Subsequently assessee on 13.02.2016 revised its

return of income declaring total income of Rs.5,50,420/-. The revised

return was processed u/s 143(1) of the Act. Thereafter, the case was

selected for scrutiny and consequently assessment was framed u/s

143(3) of the Act vide order dated 28.12.2017 and the total income was

determined at Rs.19,03,490/-. Aggrieved by the order of AO, assessee

carried the matter before Ld.CIT(A), who vide order dated 14.01.2019

(in appeal No.PN/CIT(A)-3/Wd 3(4), Pn/308/2017-18) dismissed the

appeal of the assessee. Aggrieved by the order of Ld.CIT(A), assessee is

now in appeal and has raised the following grounds :

“1. The learned CIT(A) erred in confirming the action of the A.O. in rejecting the total income of Rs.5,50,4201- declared by the assessee as per the revised return filed u/s 139(5) and assessing he total income at Rs.19,03,485/- as per the original return filed u/s 139(1) without appreciating that the said action was not justified on facts and in law

assessee had revised the original return of income by revising the total

income declaring therein. The reason for revising the return of income

was stated to be considering the wrong figure of sales for computing of

business profit. The assessee was asked to substantiate the revised

sales figure, to which the assessee submitted the details and also

produced sales bills of one month for random checking. Assessee also

filed the revised service tax return filed by it with the appropriate

authorities. The submissions of the assessee were not found

acceptable to the AO. AO was of the view that assessee could not

justify the revised return by adopting revised sales. He therefore

rejected the sales figure disclosed by the assessee in the revised

return of income and considering the return of income originally filed,

determined the total taxable income at Rs.19,03,490/-. Aggrieved by

the order of AO, assessee carried the matter before Ld.CIT(A), who

upheld the order of AO.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal.

and Ld.CIT(A) and further submitted that in the original return of

income the quantum of sales was inadvertently considered at

overstated figure. Subsequently, it came to notice of the assessee the

mistake of overstated sales and assessee thereafter on the basis of

correct quantum of sales, filed revised return of income u/s 139(5) of

the Act on 13.02.2016 wherein the total income was revised at

Rs.5,50,420/-. He submitted that the revised return was also

processed u/s 143(1) of the Act and the same is mentioned in the

assessment order. He submitted that before the lower authorities

assessee had explained about the necessity for revising the return of

income. He further submitted that to substantiate the actual

quantum of sales, assessee had produced the entire record along with

sales bills before the AO. The AO after having satisfied herself on the

basis of verification made on test check basis, did not ask the assessee

to substantiate sales declared by the assessee in the revised return of

income u/s 139(5) of the Act. He submitted that there is no material

before the Department to demonstrate that the sales declared by the

assessee in the revised return u/s 139(5) of the Act is not correct. He

submitted that once a valid return u/s 139(5) of the Act is filed by the

assessee then the original return u/s 139(1) of the Act is substituted

by the revised return and the original return filed u/s 139(1) of the Act

gets obliterated for all the purposes under the Act. In such a

situation, the AO cannot consider the original return of income during

the course of assessment proceedings for determining the total income

of the assessee. In support of his contention that when valid return is

filed u/s 139(5) of the Act, the original return u/s 139(1) of the Act

cannot be taken into account for making the assessment, he relied on

the following decisions :

a) CIT Vs. Mangalore Chemicals & Fertilizers Ltd. [191 ITR 156 (Kar)] b) CCIT Vs. Machine Tool Corporation of India Ltd. [201 ITR 101 (Kar)]. c) Beco Engineering Co. Ltd Vs. CIT [148 ITR 478 (P&H)] d) CIT Vs. Arun Textile [192 ITR 700 (Guj)].

He therefore submitted that the assessment of total income by the AO

by rejecting the revised return u/s 139(5) of the Act was contrary to

law. He therefore prayed that the total income of Rs.5,50,520/-

declared by the assessee in the revised return of income be considered.

Ld. D.R. on the other hand supported the order of AO and Ld.CIT(A).

record. The issue in the present ground is with respect to rejecting the

revised return filed by the assessee and the act of AO in proceeding to

frame the assessment on the basis of the original return of income. It

is an undisputed fact that assessee had filed original return of income

u/s 139(1) of the Act for A.Y. 2015-16 on 30.10.2015 by declaring

total income at Rs.19,03,485/-. Subsequently, assessee filed revised

return of income u/s 139(5) of the Act on 13.02.2016 wherein the

total income was revised at Rs.5,50,420/-. The last date to file the

revised return u/s 139(5) of the Act for A.Y. 2015-16 was 31.03.2016.

It is also a fact that the revised return of income filed by the assessee

was within the prescribed time limit prescribed under the Act. It is

also a fact that the revised return was duly processed u/s 143(1) of

the Act. I find that Hon’ble Karnataka High Court in the case of CIT

Vs. Mangalore Chemicals and Fertilizers reported in [191 ITR 156

(Kar)] has held that once the original return is withdrawn or is

substituted by filing a valid return, the only consequence is that the

earlier return is effaced or obliterated for all purposes under the Act. I

further find that Hon’ble Gujarat High Court in the case of CIT Vs.

Arun Textile [192 ITR 700 (Guj)] has held that once the revised return

is filed u/s 139(5) of the Act, the original return is substituted by the

revised return and it is not open to the AO to advert to the original

return of income or the statement filed along with it. I further find that

Hon’ble Punjab and Haryana High Court in the case of Beco

Engineering Co., Ltd., Vs. CIT reported in [148 ITR 478] has held that

in a case assessee files the revised return then it is to be taken into

consideration for the purpose of making an assessment and the

original return cannot be adverted. Before me, Revenue has not

pointed to any contrary binding decision in its support nor pointed as

to why the ratio of decisions relied upon by assessee and referred to

hereinabove are not applicable to the case of assessee. I therefore

following the aforesaid decisions of various High Courts cited

hereinabove hold that once the revised return has been filed by the

assessee u/s 139(5) of the Act and the same has been accepted, then it

is not open to the authorities to take into consideration the original

return of income for determining the total income in the assessment

proceedings. I therefore set aside the order of AO and direct the AO to

consider the total income declared by the assessee u/s 139(5) of the

Act for determining the total income. Thus, the grounds of the

assessee are allowed.

Order pronounced on 25th day of October, 2019.

Sd/- (ANIL CHATURVEDI) लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 25th October, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-3, Pune. 4. Pr. CIT-2, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक सद�य” / 5 DR, ITAT, “SMC” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.