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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT:
These appeals by the assessee are arising out of the common order of the Commissioner of Income Tax (Appeals)-18, Chennai in & 65/CIT(A)-18/2021-22 dated 22.12.2022. The return of income for the assessment year 2018-19 was processed and intimation u/s.143(1) of the Income Tax Act, 1961 (hereinafter the - 2 - & 236/Chny/2023 ‘Act’) was issued by the Asst. Director of Income Tax, Central Processing Center (CPC), Bengaluru vide order dated 20.02.2020 and assessment was framed by the DCIT, Central Circle 1(3), Chennai u/s.143(3) of the Act vide order dated 19.08.2021 for the assessment year 2018-19.
First we will deal with ITA No.236/CHNY/2023.
At the outset, the ld.counsel for the assessee stated that the assessee filed original return of income on 31.10.2018 declaring a loss of Rs.78,62,15,002/- and claimed refund of Rs.68,76,200/-. The Department issued defect notice u/s.139(9) of the Act on 10.04.2019 on account of failure to annex audit report. The assessee filed revised return u/s.139(5) of the Act on 19.10.2019 along with audit report in Form No.3CD and revised computation of income declaring loss at Rs.4,25,00,920/- and claimed refund of Rs.71,32,470/-. The Revenue processed the return u/s.143(1) of the Act vide dated 04.12.2019 and pointed out mismatch between the return of income and audit report and consequently, intimation u/s.143(1) of the Act was issued by the CPC, Bangalore on 20.02.2020 converting loss into income at Rs.20,09,57,255/- as against loss claimed of Rs.78,62,15,002/-. Subsequently, the AO
- 3 - & 236/Chny/2023 issued notice u/s.143(2) of the Act and original return of income was picked for scrutiny assessment vide notice dated 23.09.2019 and also issued notice u/s.142(1) of the Act, dated 19.02.2021, calling for certain details. The AO along with notice u/s.142(1) of the Act also issued show-cause notice proposing to make certain additions and assessee made submissions in response to show-cause notice along with supportive documents on 07.08.2021. The AO then passed the impugned assessment order u/s.143(3) of the Act, vide order dated 19.08.2021.
Subsequently, the assessee filed rectification application dated 13.09.2021 claiming that the intimation issued by the CPC after processing of return u/s.143(1) of the Act dated 20.02.2020 by making addition of Rs.91,38,44,613/- to the returned loss of Rs.78,62,15,002/-, in the said intimation, the CPC, Bengaluru omitted to allow brought forward loss to the extent of Rs.2,80,71,54,398/- comprising of various assessment years. Therefore, in the intimation u/s.143(1) of the Act, the total income arrived at Rs.20,09,57,255/-. In this rectification application, the assessee only claimed that brought forward loss is to be adjusted against income and remaining loss is to be carried forward. This - 4 - & 236/Chny/2023 rectification application is still pending and no adjudication has been done by the AO.
Now, the ld.counsel for the assessee took us through the assessment order passed by the AO dated 19.08.2021 u/s.143(3) of the Act, wherein the AO has computed the total income / loss as under:- “Total income / loss declared : (-) Rs.4,25,00,920/- Total income / Loss as per order : Rs.20,09,57,255/- 143(1) Total income / Loss assessed : Rs.20,09,57,255/- Aggrieved, assessee preferred appeal before CIT(A).
5. Before CIT(A), the assessee challenged the following items:- i. Amount disallowed under Sec.43B Rs.91,38,44,618 ii. Amount disallowed u/s.40(a)(ia) Rs. 7,06,20,284 iii. Disallowance under Sec.36(i)(va) Rs. 27,07,405 iv. Net effective of disallowance of depreciation Under Companies Act, and allowed Depreciation under I.T.Act (5,31,04,480 – 5,02,98,664) Rs. 28,05,816 The assessee also challenged the assessment order passed u/s.143(3) of the Act that the AO has wrongly adopted computation filed originally and not considered the revised computation filed by way of revised return of income on 19.10.2019 along with tax audit
- 5 - & 236/Chny/2023 report in Form No.3CD. The CIT(A) confirmed the various disallowances and gave his finding in regard to disallowance u/s.43B of the Act amounting to Rs.91,38,44,618/- that the assessee did not make this disallowance specifically in the original return of income but reported in the audit report in Form No.3CD and hence, he noted that there is no dispute with regard to this disallowance and it cannot be double addition and hence, dismissed this ground. The CIT(A) also not considered the assessee’s computation filed along with the revised return filed along with audit report dated 19.10.2019 by holding that the revised return is invalid one because it is a belated return and the same cannot be acted upon by the AO as a return filed u/s.139 of the Act. Therefore, the CIT(A) considered the comparative statement of total income filed by assessee originally on 31.10.2018 and subsequently in the revised return on 19.10.2019 and thereafter dismissed the claim of deduction made by assessee u/s.43B of the Act, which was disallowed by AO amounting to Rs.91,38,44,618/-. Since the return was not taken into cognizance and revised computation was not considered, the CIT(A) also not considered the brought forward losses amounting to Rs.2,80,71,54,398/- which comprises of various assessment years and therefore, he uphold the action of AO by observing that brought forward losses is allowable for set-off against current year income
- 6 - & 236/Chny/2023 provided that the specified conditions prescribed in provisions of sections 70 to 80 of the Act are satisfied. According to CIT(A), since the return is not in time and simply on the basis of computation, the assessee cannot claim set-off of brought forward losses, he confirmed the action of AO. Aggrieved, assessee is in appeal before the Tribunal.
We have heard rival contentions and gone through facts and circumstances of the case. We have gone through the grounds raised by assessee and noted that the assessee has filed revised computation and claimed that the disallowance of Rs.91,38,44,618/- made by AO u/s.43B of the Act has already been considered in its revised computation and revised return of income and hence, only revised return and revised computation of income should be considered for purpose of computation of income u/s.143(3) of the Act. Another ground raised is as regards to delayed remittance of provident fund of Rs.27,07,405/- and disallowance of expenses claimed by assessee of Rs.7,06,20,234/- for non-deduction of tax u/s.40(a)(ia) of the Act. The assessee has already disallowed these two expenses in its revised return and revised computation of income filed on 19.10.2019 and the same may be considered for the purpose of computation of income u/s.143(3) of the Act.
- 7 - & 236/Chny/2023
The ld.counsel for the assessee before us stated that in case, revised return of income filed during the course of scrutiny assessment or even prior to that on 19.10.2019 if considered, then the double disallowance made by AO on account of section 43B and delayed remittance of provident fund contribution and also disallowance of expenses for non-deduction of TDS need not be disallowed again and further, the brought forward losses are to be considered for the purpose of computation which are comprising of various assessment years while arriving at taxable income.
When these facts were confronted to ld.CIT-DR, he only stated that the AO cannot consider revised return for the reason that the revised return filed is a belated one and simpliciter, the assessee cannot claim the alleged deductions or disallowances or brought forward losses by way of computation in view of the decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd., vs. CIT, reported in [2006] 284 ITR 323. The ld.CIT-DR in view of this stated that the decision of Hon’ble Supreme Court clearly applicable to the AO and he has rightly not considered the revised return of income and revised computation of income filed on 19.10.2019.
- 8 - & 236/Chny/2023
We noted that the admitted facts are that the assessee filed original return of income within the due date i.e., on 31.10.2018 for the relevant assessment year 2018-19 and claimed loss at Rs.78,62,15,002/-. The AO also issued defect notice u/s.139(9) of the Act on 10.04.2019 / 05.10.2019. The assessee after going through the defect notice filed revised return of income along with revised computation and audit report in Form No.3CD dated 19.10.2019. In the revised return of income, the assessee declared loss of Rs.4,25,00,920/- and claimed refund of Rs.71,32,470/-. We also noted one peculiar fact in this case that the scrutiny assessment was framed on the original return of income by issuing notice u/s.143(2)of the Act dated 23.09.2019. Admittedly, the assessee’s revised return is a belated return but the assessee along with this return of income has filed revised and correct computation of income along with audit report in Form No.3CD. This is done during scrutiny assessment proceedings after issuance of notice u/s.143(2) of the Act. The complete information in regard to the assessee making disallowance u/s.43B of the Act amounting to Rs.91,38,44,618/-, disallowance of delayed remittance of provident fund contribution of Rs.27,07,045/- and disallowance of expenses relatable to non- deduction of TDS amounting to Rs.7,06,20,234/- u/s.40(a)(ia) of the Act was already done by assessee in its computation of income.
- 9 - & 236/Chny/2023 Further, the assessee in its revised return of income has made claim of brought forward losses to the extent of Rs.280,71,54,398/- which comprises of various assessment years and allowed time and again. No doubt, the decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd., supra, clearly applies to AO but that has given liberty to the appellate authorities to consider the claim made before these authorities as the assessee has made this specific claim before CIT(A) again. Even this claim was made by the AO during assessment proceedings. Hence, we admit these claims and consider the revised computation of income in view of decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd., supra, and direct the AO to make the basis of computation of income to the revised computation of income and after verification of facts allow the claim of assessee considering the brought forward losses of the assessee. In term of the above directions, matter is restored back to the file of the AO and allowed for statistical purposes.
Coming to against the assessment u/s.143(3) of the Act, the present appeal against 143(1) of the Act becomes academic. Hence, need not to be adjudicated. Therefore, this appeal of the assessee is dismissed.
- 10 - & 236/Chny/2023
In the result, the appeals filed by the assessee in is allowed for statistical purposes.
Order pronounced in the open court on 20th March, 2024 at Chennai.