ITO, WARD-16(1),, HYDERABAD vs. M/S LANCO HILLS TECHNOLOGY PARK (P) LIMITED,, HYDERABAD

Page 2 of 9 slowdown. He submitted that the price of SFT was reduced from Rs. 4520/- per sft to Rs. 3000/- per sft and the revision is not on account of claim of any deduction/exemption or any omission or wrong statement. According to him, the revision of income because of revision of accounts under Companies Act is highly objectionable, and as per scheme of taxation, preparation of accounts one for Companies Act and other for Income Tax Act is not permissible. learned DR, therefore, places heavy reliance on the observations of the learned Assessing Officer and submits that the original return of income dated 29/09/2009 and revised return dt. 04/05/2010 were filed as per the annual results and audited books of accounts since the sales declared in these returns are same, whereas in the subsequent return filed on 01/09/2010, the assessee reduced the sales from Rs.157,44,46,969/- to Rs.90,76,13,532/-, which means the assessee deviated from the audited book results. learned DR highlighted the observations of the learned Assessing Officer that reducing sales cannot be claimed as omission/wrong statement within the meaning of Section 139(5) of the Act, and the further revised return was filed on 06/06/2011, beyond the time limits prescribed and accordingly the same has been considered as invalid.

Per contra, learned AR strongly supported the decision of the learned CIT(A) in quashing the assessment order that was passed considering the earlier Revised ROI and by ignoring the subsequent Revised Return of Income. In support of his contention that the assessment order is voidable for it was based on second ROI ignoring the subsequent valid revised ROI, though it was filed beyond the period of limitation u/s 139(5) of the Act, learned AR placed reliance on the decision of the coordinate bench of the Mumbai Tribunal in the case of LOK Housing & Constructions Limited vs ACIT, 27 Taxmann.com 15.

Further according to the learned AR, it is incorrect to say that the sale price revision is not an omission under section 139(5) of the Act, and any discrepancy in turnover qualifies as an omission for revised returns. He submitted that the decision of the coordinate bench of the tribunal in the case of Lok Housing & Constructions Ltd. v ACIT holds that revised returns due to market price changes are valid under section 139(5), and the Bombay High Court approved this. He furthered submitted that the assessee filed a revised return on 06.06.2011, correcting income due to a CIT(A) order clarifying that income during the construction period isn’t taxable and should be netted with the expenditure. According to him, even though the return was filed after the due date, it was based on the CIT(A)'s order and is valid as a claim in a revised return. He placed reliance on the decisions like CIT v. Pruthvi Brokers in support of his contention justifying the validity of claims in revised returns. He argued that the CIT(A) rightly allowed the revised claim, and it is well within his jurisdiction being the first appellate authority. He further argued that since the learned Assessing Officer did not issue a notice under section 143(2) after the third and fourth revised returns, assessment under section 143(3) is invalid, inasmuch as the notice under section 142(2) issued earlier is not valid. For this preposition, he placed reliance on the decisions reported in MBS Implex Pvt. Ltd., Ashok Reddy Chevvurru, Hotel Blue Moon, and Laxman Das Khandelwal, basing on the premise, learned AR submitted that the assessment order is liable to be quashed for non-compliance with statutory procedures by the AO, rendering the assessment invalid. AO has completed the assessment without considering the concept of real income theory and also as per the Act actual income is to be assessed and not fictitious, unreal income.

We have gone through the record in the light of the submissions made on either side. It remains an undisputed fact that the assessee revised the return of income twice after the second revised return of Page 4 of 9 income and according to the assessee, the reason for such revision of the return was that due to the economic slowdown and market recession, the assessee revised its sale price from Rs. 4,250 per square foot to Rs. 3,000 per square foot to retain existing customers and attract new ones, which included public advertising; that the sale agreements with old customers were also revised, and new agreements followed the revised rates; and that based on the learned CIT(A) decision for the AY 2007-08, regarding the treatment of pre-construction expenditure and income like interest had to be netted off.

While computing the income of the assessee and completing the assessment, learned Assessing Officer based on first Revised Return of Income dated 04/05/2010, and did not consider the subsequent revised returns. According to the learned Assessing Officer, assessee deviated from the audited books of accounts while filing the 2nd revised Return of Income on 01/09/2010 and that the reduction of sales cannot be claimed as omission or wrong statement within the meaning of Sec139(5) of the Act. Learned Assessing Officer returned a finding that the Return of Income filed on 06/06/2011 does not merit consideration since it was filed beyond the time limits prescribed under law.

According to the learned CIT(A), learned Assessing Officer taking into account the Second Revised Return of Income and not considering the subsequent validly revised Returns of Income is not as legal. Further according to the learned CIT(A), the revised Return of Income, though filed beyond limitation time, but during the course of scrutiny proceedings merits consideration by the learned Assessing Officer for completion of assessment u/s 143(3) of the Act, and that the learned Assessing Officer is duty bound to adjudicate upon such claim even though preferred through the Return filed is out of time. To conclude so, learned CIT(A), placed reliance on the decision of Pune bench of ITAT in Page 5 of 9 the case of DCIT vs Lab India Instruments Private Limited (2005) 93 ITD 120 Pune, wherein it was held that when a valid return is revised with new facts, the assessment based on the original return is unsustainable and against legislative intent; that the learned Assessing Officer must accept and consider the revised return, even if it is filed after the prescribed deadline, as long as it is submitted before the completion of the assessment; that the learned Assessing Officer should review the revised return and allow the claims based on the new information; and that in view of the view taken in the decision reported in DCIT vs. Lab India Instruments Pvt. Ltd., confirming that even a late revised return should be considered during the assessment process, the assessment based on the original return was invalid, and the assessment was cancelled. Assessee is also placing reliance on the decision rendered in Lok Housing & Construction Limited and DCIT vs Kamadhenu Builders and Developers also.

In light of the above factual matrix and the judicial pronouncements cited, what falls for our consideration in this appeal is, can the learned Assessing Officer disregard a revised return, which is filed before the completion of assessment proceedings, and deny a claim made by the assessee in the subsequently revised return of income solely because the claim was not made in the original return of income, even though the original return was filed within the due date and the revised return complies with all the conditions for the deduction? 11. In the case of Lok Housing & Construction Limited the Mumbai Bench of ITAT clearly held that, if by way of a revised return of income, certain wrongly declared income was withdrawn, revised return being a valid return under section 139(5) of the Act, has to be taken into account for making assessment”. In the case of Lab India Instruments Private Limited, Pune Bench of the Tribunal decided the issue relating to the Page 6 of 9 permissibility of making a claim for deduction during the assessment or appellate proceedings, even if the claim is not made by way of a revised return after a statutorily specific period and held that the assessee has the right to claim a deduction at any stage of the proceedings, including the appeal stage, and that the learned Assessing Officer is obligated to inform the assessee of such claims available under the law. The Tribunal rejected the argument that the assessee cannot make a claim simply because the revised return was not filed within the statutorily specific period and clarified that such claims do not necessarily need to be made through a revised return. Tribunal emphasised that claims for deductions can be made directly during the assessment process or even during appellate proceedings, which are considered part of the assessment process, thereby answered the issue in favour of the assessee.

In DCIT vs Kamadhenu Builders and Developers, a Mumbai bench of the Tribunal held that the revised return filed by the assessee was valid and should be considered by the learned Assessing Officer, even though the original return did not include the claim; that there is no requirement under the law for the claim to be made in the original return, and as long as the revised return was filed before the completion of the assessment, it should be accepted, and that the learned Assessing Officer has no valid grounds to deny the claim.

We, therefore, find force in the submissions made on behalf of the assessee that the learned Assessing Officer erred in not considering the information that was filed with the revised Return of Income before the completion of the assessment in making the final assessment, and in accordance with the established legal principles, the learned Assessing Officer is required to examine and take into account the details provided in the most recent ROI, even if they differ from those in the original return. It follows that the rejection of claim made by the assessee in the Page 7 of 9 revised ROI before the assessment is completed violates this legal requirement, which mandates that all relevant information submitted during the assessment proceedings must be considered fairly and judiciously.

With this view of the matter, we hold that there is no legal infirmity in the impugned order, and consequently there are no grounds to interfere with the same. Appeal preferred by the revenue is, therefore, devoid of merits and is liable to be dismissed. Grounds are answered accordingly.

In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on the 23rd January, 2025.