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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
This appeal by the Assessee is arising out of the order of Commissioner of Income Tax (Appeals)-6, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-6/IT-7/2015-16 dated 27-04-2016. The Assessment was framed by the Deputy Commissioner of Income Tax, Circle 2(3)(1), Mumbai (in short DCIT) for the assessment year 2011-12 vide order dated 09.03.2015 under section 143(3) of the Income Tax Act, 1961(hereinafter ‘the Act’).
The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in not accepting the revised computation filed through second revised return under section 139(5) of the Act on 26-03-2013. For this assessee has raised following three grounds: -
“1. The CIT(A) ought to have held that the appellant is assessable on an income of ₹ 1,26,60,730/-
2. The CIT(A) failed to appreciate that the business income of the appellant ought to have been assessed at ₹ 14,62,183/- as against such income being assessed by the AO at ₹ 1,88,06,035/-. He ought to have held that the amount of ₹ 1,88,06,035/- represented the income as per the profit and loss account, which after the necessary adjustments as per the Act would result in business income.
3. The CIT(A) erred in upholding the assessment based on first revised return of income filed on 16.03.2013 and holding that the second revised return of income filed on 26.03.2013 was not permissible under section 139(5) of the Act. He failed to appreciate that the income as reflected in the first revised return of income at ₹ 3,00,04,590/- was on account of a technical error in the computer software of the income-tax Department. In any event, it is well settled principle of law that, an assessee could be assessed only on income earned by it and not on some notional figure which has got reflected in the return on account of an error in the software of the Income-tax Department.””
Briefly stated facts are that the assessee filed his return of income for the relevant assessment year 2012-13 on 25-09-2012 declaring total income at ₹ 1,40,43,670/-. Subsequently, assessee revised his return of income on 16-03-2013 declaring total income at ₹ 3,00,04,590/-. This return was processed under section 143(1) of the Act and subsequently, case was selected for scrutiny assessment under CASS. The assessment completed by the AO under section 143(3) of the Act assessing total income at ₹ 3,00,04,590/-. The assessee aggrieved against completion of assessment under section 143(3) of the Act that the second revised return filed on 26-03-2013 was not considered by the Assessing Officer. The CIT(A) also dismiss the claim of the assessee by observing in Para 5 as under: -
“5. I have carefully considered the facts of the case and submission made by the Ld. AR. I have also gone through the details submitted by the appellant and tie assessment order passed by AO. The appellant has stated that original return was filed on 25.09.2012 declaring total income at Rs.1,40,43.670/- which is also mentioned by AO in his impugned order. Regarding the filing of revised return on 16.03.2013. there is no dispute that income was shown at Rs.3,0004,590/-, which is also evident from the assessment order. During the present proceedings, the appellant has stated that it filed another revised return on 26.03.2013 declaring total income at Rs.1,26,60,730/-. However, there is no mention regarding such second revised return in the assessment order. As per the provisions of sub- section (5) of section 139 of the Act, if a person having furnished a return u/s.139(1) or u/s.142(1), discovers any omission or wrong statement therein, may furnish a revised return at any time before expiry of one year from the end of relevant assessment year or before completion of assessment, whichever is earlier. Once a revised return is filed, it replaces the original return and the original return is taken to have been withdrawn. The legislative intent is clear from the words a person........may furnish a revised return" employed in section 139(5) of the Act. The use of the word W means that there is no further option to re- revise the return. Once the original return is replaced by revised return uls.139(5), there remains no return ufs.139(1) or 142(1). Hence, it is not permissible to revise such revised return. The AO has, therefore, rightly accepted the revised return filed on 15.03.2013 and assed the income at ₹ 3,00,04,590/- . The ground is accordingly dismissed.”
Aggrieved, now assessee is in second appeal before Tribunal.
Before us, the learned Counsel for the assessee argued that the assessee is a partner in a partnership firm Seed Advisors LLP. According to the learned Counsel, the accounts department of Seed Advisors LLP, reported remunerations which was treated as salary but subsequently, it was realized by the assessee that there was an error in including remuneration from firm under the head of income of salary instead of income from business or profession. It was explained by the learned Counsel for the assessee that part of the remuneration was not allowable in the hands of the firm under section 40(b)(v) of the Act and therefore, firm paid tax on that amount and remuneration amount which was allowable in the hands of the firm as exempt, the assessee should have shown as income and to give correct effect to the remunerations, a revised return was filed on 16-03-2013, but there was software error which considered net profit from the P&L account as business income and that deduction was made from income from other sources and income from capital gains treating the same under the head of income of other sources. Actually, the effect was not given while calculating gross income and computed the income from salary. The learned Counsel for the assessee stated that the tax calculated on gross total income is of ₹ 26,60,730/- but returned income was shown at ₹ 3,00,04,590/-. The learned Counsel for the assessee first of all took us through the original computation of income filed with the original return of income which clearly depicts the gross salary from Seed Advisors LLP at ₹ 45,50,000/- and income from business or profession is shown as under profit at ₹ 17,62,458/-. Subsequently, he took us through the profit and loss account and profit before tax was shown at ₹ 14,62,183/- which is a proprietary concern in the name of Infoquest Consultants. The learned Counsel then took us through the revised computation filed along with the second revised return i.e. filed on 26-03-2013 before the completion of assessment under section 143(3) and salary allowable under section 40(b)(v) has been depicted at ₹ 35,58,619/-. When this was pointed out by the learned Counsel, the learned Sr. Departmental Representative stated that the assessee cannot file second revised return. On this the learned Counsel countered that in view of the decision of the Hon’ble Bombay High Court CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom) and Goetze (India) Ltd. vs. CIT [2006] 284 ITR 323 (SC), the assessee can make a claim before completion of assessment and the same should be considered by the authorities.
We have heard the rival contentions and gone through the facts and circumstances of the case. We find that there is an error committed by assessee while filing its return of income and even in revised return the computation was wrongly filed. But the assessee has filed a claim by way of filing of second revised return on 26-03-2013, wherein a correct computation was filed whereas, the assessment completed on 09-03- 2015 under section 143(3) of the Act, it means that the AO should have considered the revised computation. In term of the above, we are of the view that let this issue be set aside if the facts are correct, the AO can verify and entertained the claim of the assessee and decide the same. In term of the above, we allow the appeal of the assessee for statistical purposes.
In the result, the appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court on 24-01-2018.