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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV & SHRI JASON P BOAZ
O R D E R Per Sunil Kumar Yadav, JM :
This appeal is preferred by the assessee against the order of the CIT(A), inter alia, on the following grounds:
1. On the facts and in the circumstances of the case the learned Commissioner of Income-tax (A) ought to have allowed the carry forward loss as claimed by the appellant.
2. On the facts the learned Commissioner (A) ought to have accepted the explanation of the appellant and refrained from upholding the disallowance of carry forward loss determined for the relevant assessment year as claimed by the appellant.
3. The learned Commissioner (A) ought to have appreciated that the return of income was filed electronically within the due date and filing of ITR-V was a formality and delay in Page 2 of 7 filing ITR-V cannot deprive the assessee from claiming carry forward loss duly determined for the relevant assessment yeare.
The learned Commissioner (A) ought to have appreciated that there was no violation to the provisions of Sec. 139(3) r.w.s.80 of the Act since the appellant had filed the return electronically within the due date as required u/s. 139(1) of the Act and consequently the assessment having been done acting upon the return, the loss determined is liable to be carry forward for set off in the subsequent years.
The learned Commissioner (A) ought to have appreciated that the conditions u/s. 139(1B) r.w.Notification was only a declaratory and the filing of ITR-V well before the computation of the assessment would satisfy the condition as held in various judicial precedence quoted by the appellant which included the jurisdictional High Court judgment and accordingly the disallowance of the benefit of carry forward loss of the relevant year was opposed to law and the order of Commissioner (A) in this regard is liable to be set aside.
6. The learned Commissioner (A) erred in following the Special judgment of the Mumbai Income-tax Appellate Tribunal in preference to the jurisdictional High Court judgment especially when the judgment of the Tribunal, Mumbai was not accepted and the appeal against the said order is pending before the High Court of Mumbai.
7. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed.
Though various grounds are raised, but they all relate to the disallowance of carry forward of losses on the ground that return of income was not filed within the due date as required under section 139(1) of the Act.
The facts borne out from the record are that assessee company has e-filed the return of income on 30.09.2008 and has filed the ITR-V on 31.03.2009. Relying upon the Board’s Notification No. SO 1281(E) dated 27.07.2007, the AO has concluded that the return of income was due to have been filed on the day when ITR-V was filed i.e., on 31.03.2009. Therefore, since return was not filed
Page 3 of 7 within the due date as required under section 139(1) of the Act, no carry forward of losses of Rs.11,00,25,707/- is allowed for future years.
4. Aggrieved, the assessee preferred an appeal before the CIT(A) with the submission that AO should have appreciated the electronic filing of returns that once the data has been electronically transmitted and provisional receipt in Form ITR-V is generated by the system itself, the return becomes irreversible in the present scheme. The submission of Form ITR-V is only procedure to complete the return filing process and the delay during the prescribed time cannot render the return belated or invalid so as to deny the claim of the assessee to carry forward the losses of Rs.11,00,25,707/. It was further contended that the AO ought to have held that the delay in filing the acknowledgement is merely procedure in nature and shall not disable the assessee in carrying forward the losses under the facts and circumstances of the case.
5. The CIT(A) re-examined the issue but was not convinced and relying upon the judgment of the Mumbai Bench in the case of Shri.G. Dwarkadas G. Panchmatiya in the CIT(A) dismissed the appeal of the assessee.
Aggrieved, assessee preferred an appeal before the Tribunal and placed reliance upon the following judgments:
1. 1. Sheonath Sing Vs. CIT (1958) 33 ITR 0591. 2. Gouri Kumari Devi Vs. CIT (1959) 37 ITR 0220. 3. CIT Vs. Masoneilan (India) Ltd., (2000) 242 ITR 0569. 4. Prime securities Ltd., Vs. Varinder Mehta, ACIT & Anr. (2009) 317 ITR 0027. 5. Crawford Bayley & Co Vs. UOI & Ors (2012) 246 CTR 0459. 6. Amsteel Castings P. Ltd., Vs. Jt.CIT (OSD) dt. 05.08.2013 Page 4 of 7 7. CIT Vs. Vegetable Products Ltd., (1973) 88 ITR 0192.
Besides, he has also placed reliance upon the circular No. 2011/8 dated 18.07.2008. The learned counsel for the assessee further contended that after e-filing of the returns in Form ITR-V containing due verification was required to be submitted only by ordinary post. Instructions which were furnished to assessee specifically stipulated that Form ITR-V should not be sent either by Registered Post or by speed post or courier. In such a situation, the assessee cannot keep a track whether the ITR-V sent by him through ordinary post was received by the department or not. The learned counsel for the assessee has placed heavy reliance upon the order of the Tribunal in Chennai Bench in the case of M/s. Amsteel Castings Pvt. Ltd., Vs. Jt.CIT in ITA No.967/Mds/2013. In support of his contention that if any defect is noticed in the return filed by the assessee or the ITR-V is not received, a notice should be issued to the assessee to make the compliance, but without affording an opportunity to the assessee, the return of income filed by him cannot be treated to be invalid or belated return.
The learned DR on the other hand has placed reliance upon the order of the CIT(A) and also the judgments referred to in his order.
Having carefully examined the orders of the authorities below and the judgments referred to by the assessee, we find that CIT(A) has disallowed the claim of the assessee having relied upon the order of the Tribunal in the case of Shri.G. Dwarkadas G. Panchmatiya (supra). But during the course of hearing, the learned counsel for the assessee has invited our attention that judgments of the Kerala High Court in the case of CIT Vs. Masoneilan (India) Ltd., Sheonath Singh Vs. CIT of Calcutta High Court (supra) and the judgment of Bombay High Court in the case of Crawford Bayley & Co. Vs. UOI & others and have also been carried through the judgment of the Chennai Tribunal in the case of Amsteel
Page 5 of 7 Castings Pvt. Ltd., Vs. JCIT (supra). In these cases, the procedure of electronic filing the returns and submission of Form ITR-V was discussed and it has been noticed that once the return is electronically filed, it is irreversible and Form ITR- V containing due verification was required to be submitted only by ordinary post. As per the instructions stipulated in the Form ITR-V, the Form ITR-V should not be sent either by Registered post or Speed Post or Courier. It can only be sent by ordinary post. In the case of Amsteel Castings Pvt. Ltd., the Tribunal has categorically observed that once the Form ITR-V was not received or any defect is noticed in the return, the defect notice should be issued and opportunity of being heard should be granted to the assessee to remove the defects before treating the return to be invalid return. The relevant observations of the Tribunal are extracted hereunder for the sake of reference:
“11. We have considered the rival submissions, perused the orders of the lower authorities and materials available on record. In the instant case, the assessee vide its return of income filed on 29.3.2011 for assessment year 2009-10 claimed deduction u/s 80IA of ` 26,49,816/- in respect of income derived from windmill operation. The said claim of deduction u/s 80IA was denied to the assessee vide order passed u/s 143(3) on the ground that the return of income filed by the assessee on 29.9.2009 was not u/s 139(1) and therefore, due to provisions of section 80AC, the assessee is not eligible for deduction u/s 80IA of the Act. The case of the assessee is that it has filed its return of income on 29.9.2009 which was within the time allowed u/s 139(1) of the Act and therefore, the return filed on 29.3.2011 was a revised return u/s 139(5) of the Act and therefore, the assessee is eligible for deduction u/s 80IA of the Act.
The Revenue also not disputed the fact that if the assessee's return filed on 29.9.2009 is a valid return then the :- 10 -: I.T.A.No.967 & 1194/13 assessee is eligible for deduction u/s 80IA of the Act. But the contention of the Department is that the return filed on 29.9.2009 was not a valid return and consequently, the assessee is not eligible for deduction u/s 80IA of the Act. According to the Assessing Officer, a ITR-V (verification form) of the return filed on 29.9.2009 was not received by the CPC and therefore, the said return was not a valid return. On the above facts, the ld. CIT(A) upheld the order of the Assessing Officer disallowing the deduction u/s 80IA of the Act to the assessee.
Page 6 of 7 13. Before us, the ld. A.R of the assessee contended that it is not in dispute that the assessee filed its return of income electronically on 29.9.2009. The assessee, as per the direction of the Department sent the verification form by ordinary post. No notice to remove the defect, if any, in the original return was served upon the assessee and therefore, the Department was not justified in treating the return filed on 29.9.2009 as 'no return'. For the above contention, he placed reliance on the decision of the Hon'ble Bombay High Court in the case of M/s Crawford Bayley (supra). He further contended that in any view of the matter, as the substantial compliance with the provisions of law was made by the assessee, the denial of deduction u/s 80IA :- 11 -: I.T.A.No.967 & 1194/13 on a very technical ground was not justified for which he placed reliance on the decision of the Hon'ble Supreme Court in the case of Collector Land Acquisition, Anantnag & Anr. Vs MST Katiji & Ors (supra).
On the other hand, the ld. DR contended that the decision in the case of M/s Crawford Bayley(supra) is not applicable in the instant case as in the case before the Hon'ble Bombay High Court the assessee produced evidence to show that verification was dispatched by ordinary post whereas in the instant case, no such evidence was produced.
In the rejoinder, the ld. A.R of the assessee pointed out that before submitting its return of income electronically on 29.9.2009 the assessee paid self-assessment tax of ` 7,62,48,325/-. As the verification form was sent by ordinary post there could not be any positive evidence with the assessee. Moreover, no communication was sent by the IT Department informing the assessee that its return of income filed on 29.9.2009 electronically shall be treated as an invalid return in the absence of receipt of verification form ITR- V.
We find that it is not in dispute that no defect notice u/s 139(9) was served upon the assessee and no opportunity to the :- 12 -: I.T.A.No.967 & 1194/13 assessee was allowed by the Department before treating the return submitted by the assessee electronically on 29.9.2009 as invalid return. In our considered view, in view of the decision of the Hon'ble Bombay High Court in the case of M/s Crawford Bayley(supra) the Department was not permitted to treat the return filed electronically as invalid in absence of receipt of verification form when the Department instructed to dispatch the verification form by ordinary post only and when no notice of defect was served upon the assessee of its intention to treat such return as invalid in absence of receipt of verification form. In these circumstances, we direct the assessee to submit a copy of signed verification form ITR-V to the jurisdictional Assessing Officer within a week of receipt of this order and on so furnishing of the verification form, we direct the Assessing Officer to treat the return filed on 29.9.2009 as valid return and consequently, allow
Page 7 of 7 deduction u/s 80IA to the assessee. Thus, this ground of appeal of the assessee is allowed for statistical purposes. “
9. In the instant case, the ITR-V was filed though belated but on 31.03.2009. The return of income was filed well before the due date of filing of return under section 139(1) of the Act. Mere delay in submitting the ITR-V does not make the return invalid for denying the benefit of carry forward of losses in future years. We therefore hold that the assessee is entitled to carry forward of loss to future years. Accordingly, we set aside the order of the CIT(A) and direct the AO to allow the carry forward of losses to future years.
In the result, appeal of the assessee is allowed.
Pronounced in the open court on 3rd November, 2017.