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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI V. DURGA RAO & SHRI G. MANJUNATHA
PER G.MANJUNATHA, AM:
This appeal filed by the Revenue is directed against
order passed by the learned Commissioner of Income Tax
(Appeals)-11, Chennai, dated 22.04.2016 and pertains to
assessment year 2005-06.
The Revenue has raised following grounds of appeal:-
“1. The order of the learned CIT(A) is contrary to law and facts and circumstances of the case.
2.1 The learned CIT(A) erred in directed the Assessing Officer to allow the benefit of carry forward of loss to the assessee as
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per the revised return, treating the first return filed without Tax Audit Report as valid return of income.
2.2 It is submitted that the decision of the Hon’ble ITAT in the assessee’s own case for AY 2003-04 has not been accepted by the Department and appeal u/s 260A was filed before the Hon’ble High Court. The appeal was dismissed by the Hon’ble High Court with the direction to obtain the Committee of Dispute and to file the appeal afresh to decide the issue on merit and hence the issue has not reached finality.
2.3 It is also submitted that as per Board’s letter in F.No.279/M-30A12011-TJ, dated 12.12.2011 in pursuant to the order of the Hon’ble Apex Court in the case of M/s. Electronics Corporation of India, there is no requirement for permission from Committee of Disputes for filing appeal against the Government owned Companies.”
At the outset, the learned DR submitted that there is a
delay of 3 days in filing appeal filed by the Revenue for which
necessary petition for condonation of delay along with affidavit
explaining reasons for the delay in filing appeal has been filed.
The learned DR further submitted that the delay in filing appeal
was due to delay in getting approval from the concerned CIT
and during this process, due to inadvertent mistake files got
mixed up with other files. As soon as records pertaining to this
appellant was traced, appeal papers were prepared for
submission and appeal was filed, which caused delay of three
days. Therefore, considering reasons given by the Department,
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3 days delay in filing appeal may be condoned. The learned
AR, on the other hand, did not oppose for condonation petition
filed by the revenue.
Having heard both the sides and considered petition filed
by the Revenue for condoning delay in filing appeal, we find
that reasons given by the Department for 3 days delay in filing
appeal appears to be bonafide and further, comes under
reasonable cause as provided under the Act, for condoning of
delay in filing appeal. Therefore, 3 days delay in filing appeal by
the Revenue is condoned and appeal is admitted for
adjudication.
Brief facts of the case are that the assessee is a statutory
body came into existence through an enactment by legislative
assembly by Government of Tamil Nadu and is engaged in the
business of generation, transmission and distribution of
electricity in the State of Tamil Nadu. The appellant prepares its
financial statement in compliance with the provisions of
Electricity Supply Act, 1948. The appellant company comprises
of 67 accounting units, for generation, transmission and
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distribution spread all over the State of Tamil Nadu. The annual
accounts are prepared after compiling information from all
locations and once this compilation is over, same is submitted
to tax auditors for audit report. The company accounts are
audited by C&AG and invariably, audit process is not within
control of the Appellant company and this results in delay for
finalization of accounts. The assessee company has filed its
original return on 28.10.2005 within due date of filing return
u/s.139(1) of the Act on the basis of provisional financial
statements as there was no audit completed at the time of filing
return of income. The assessee had subsequently filed revised
return of income ion 30.10.2006 and such return was within the
prescribed date u/s.139(4) of the Income Tax Act, 1961. The
Assessing Officer has disallowed set off of brought forward
loss of the assessee against income of the current year on the
ground that original return filed by the assessee u/s.139(1) is
defective and thus, revised return filed by the assessee
u/s.139(5) of the Act, after due date for filing of return of
income u/s.139(1) cannot be considered as valid return and
thus, disallowed set off of brought forward business loss against
current year income. The assessee carried the matter in
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appeal before learned CIT(A). Before the learned CIT(A), the
assessee contended that this issue is covered in favour of the
assessee by the decision of the ITAT., Chennai in assessee’s
own case for the assessment year 2003-04 in ITA
No.1639/Chny/2006, where the Tribunal after considering
necessary facts has directed the Assessing Officer to allow set
off of business loss.
The learned CIT(A), after considering relevant facts and
also by relied upon the decision of ITAT., Chennai in ITA
No.1474/Mds/2007 for the assessment year 2003-04 and his
predecessor CIT(A)’s decision in assessee’s own case for
assessment year 2003-04 in ITA No.233/07-18 dated
11.12.2008 held that when the assessee has filed original
return of income within due date as prescribed u/s.139(1) and
also revised return was filed within due date as per section
139(5) of the Act, then claim of the assessee towards set off
of brought forward loss cannot be denied. The relevant findings
of the learned CIT(A) are as under:-
9.3.1 The AO has rejected the appellant’s claim for carry forward and set off of business loss on the ground that the
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appellant’s original return of income was only provisional and therefore, the appellant’s claim for set off and carry forward of business loss filed in the revised return is not allowable. The appellant has objected to the AO’s denial of appellant’s claim of carry forward of business loss by clarifying the facts related to the disallowance as mentioned above under para.
9.2. The appellant has submitted that the original return was filed within the due date as per Sec. 139(1) and the revised return was filed within the due date as per Sec. 139(5). In order to treat the original return filed u/s. 139(1), the AO must have invoked Sec. 139(9) by giving an opportunity to the appellant which the AO has failed to do so. The appellant has objected by stating that without issuing a notice u/s. 139(9) of the IT Act, the AO has unilaterally decided that the original return of income filed by the appellant was defective and has denied the appellant’s claim of carry forward of loss u/s 80 of IT Act. The appellant has further relied on the decisions of Hon’ble ITAT, Chennai and the CIT(A) in its own case on this issue decided in favour of the appellant. I have perused the aforesaid decisions which have been reproduced above under para 9.2.3 and 9.2.4 respectively. 9.3.2 Respectively following the decision of Hon’ble ITAT, Chennai in the appellant’s own case in the assessment year 2003-04 and in line with my predecessor’s decision in ITA No.233/07-08 dated 11/12/2008, the AO is directed to allow the appellant’s claim of carry forward and set off of business loss.”
The learned DR submitted that although issue involved in
the present case is covered in favour of the assessee by the
decision of ITAT., Chennai in assessee’s own case for the
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assessment year 2003-04, but fact remains that the assessee is
in the habit of filing return of income on the basis of provisional
accounts and subsequently filing revised returns once audit is
completed. Therefore, when the assessee has filed invalid
return, though it was filed within due date u/s.139(1) of the Act,
then even if the assessee files revised return within due date
prescribed u/s.139(5) of the Act, the brought forward loss
cannot be allowed to be set off. The learned CIT(A) without
appreciating facts has simply directed the Assessing Officer to
allow set off of brought forward loss against income of current
year.
The learned AR, on the other hand, submitted that the
issue is squarely covered in favour of the assessee by the
decision of the ITAT., Chennai in assessee’s own case for
assessment year 2003-04 in ITA No. 1474/Mds/2007, where
the Tribunal after considering relevant facts has rightly held
that when the assessee has filed revised return within due date
prescribed u/s.139(5) of the Act, then revised return filed,
would be valid return and on that basis the Assessing Officer
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should allow set off of carry forward losses of earlier year. The
relevant findings of the Tribunal are as under:-
“4.5 In the assessee’s own case in I.T.A.No.1639/Mds/06 the Tribunal has held in paragraph 11 as under:
“In view of the discussions in the foregoing paragraphs and in the light of the judgments of the High Courts discussed above, we direct the Assessing Officer to allow carry forward of loss mentioned in the revised return.”
4.6 In view of the facts and circumstances of the case as well as the legal proposition profounded in the judgements supra. we are of the view that the defect of non—filing of audit report under section 44AB as well as audited accounts, profit and loss account and balance—sheet was due to the fact that the assessee’s account could not be audited first by the Auditor General as required by the Electricity Supply Act whereby the Board is required to get its accounts audited by Accountant General at the first instance and thereafter the accounts are to be audited under section 44AB. Thus it is clear that the defect in the original return should have been allowed to be removed before making the assessment. Since in the course of removing the defect the assessee has filed the revised return after getting the accounts audited as per the statutory requirement then the revised return filed by the assessee should be allowed after condoning the delay giving due regard to the facts and circumstances of the case . since the delay in removing defect is not deliberate or due to negligence on the part of the assessee but due to various formalities to be complied with and as the assessee is a State Govt. undertaking and lots of administration hurdles are to be cleared, we are of the view that the rejection of the original return being held as defective ab initio is not justified. The Commissioner (A) has also not taken a correct view in this regard. Accordingly we set aside the orders of the lower authorities and direct the Assessing Officer to accept the revised return as the same is filed before the completion of the assessment and allow the carry forward losses as per law.”
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In this view of the matter, and consistent with the view
taken by the co-ordinate Bench in the assessee’s own case for
earlier assessment year, we are of the considered view that
there is no error in the reasons given by the learned CIT(A)
and direct the Assessing Officer to accept revised return filed
by the assessee u/s.139(5) of the Act, and allow set off of
brought forward losses of earlier years against current year
income. Hence, we are inclined to uphold findings of the
learned CIT(A) and dismiss appeal filed by the Revenue.
In the result, appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 23rd February, 2022
Sd/- Sd/- (वी. दुगा� राव) (जी. मंजुनाथ) (V.Durga Rao) (G.Manjunatha) $या�यक सद'य /Judicial Member लेखा सद'य / Accountant Member
चे$नई/Chennai, *दनांक/Dated 23rd February, 2022 DS
आदेश क� ��त,ल-प अ.े-षत/Copy to: 1. Appellant 2. Respondent 3. आयकर आयु/त (अपील)/CIT(A) 4. आयकर आयु/त/CIT 5. -वभागीय ��त�न3ध/DR 6. गाड� फाईल/GF.