LEARNING UNIVERSE LLP,NEW DELHI vs. DDIT , DDIT CPC BANGALURU

There is a delay of 8 days in filing of this appeal before the Tribunal, for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay. After considering the contents of the condonation application filed along with the affidavit and after hearing the Ld. DR, the delay in filing of the appeal is condoned and the appeal is admitted for adjudication.

Facts of the case, in brief, are that the assessee is a Limited Liability Partnership firm and filed its return of income on 23.10.2023 declaring total income at ‘Nil’. The CP vide intimation passed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 18.01.2024 rejected the claim of brought forward losses for assessment years 2015-16 and 2017-18 to be carried forward.

The assessee filed an appeal before the Ld. Addl./JCIT(A) against the intimation passed by the CPC which was rejected by the Ld. Addl./JCIT(A) by observing as under: “6.2. Further, the appellant in its reply has discussed the provision of Rule 24(8) of the LLP Rules, 2009. In this regard it is clarified that the provision of Income Tax Act supersedes the provision of LLP Rules, 2009. 6.3 The appellant has filed its return for A.Y. 2016-17 on 13.09.2016 whereas the due date for filing of return was on 05.08.2016 and for A.Y. 2018-19 on 13.09.2018 whereas the due date for filing of return was on 31.08.2018. From the above, it is clear that both the returns i.e. for AY 2016-17 and for A.Y. 2018-19 have been filed after the due date i.e. have not been filed as per the provisions of section 139(1) of the Act. 6.4. As discussed above to carry forward loss the return for previous year must be filed as per the provisions of section 139(1) of the Act and in this case the same has not been filed. Therefore, the appellant is not eligible to carry forward of losses for the AY. 2016-17 and 2018-19. Hence, the CPC is justified in not allowing the carry forward of losses for A.Y. 2016-17 and A.Y. 2018-19. Accordingly, the grounds raised

Aggrieved with such order of the Ld. Addl./JCIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:

For that on facts and law, the 1st impugned order passed by the Ld. CIT(A) dated 23.06.2024 erred in not appreciating that the 2nd impugned order dated 18.01.2024 passed by the CPC merely rejects the set off of losses of AY 2015- 16 and AY 2017-18 against the taxable income of the present AY on the erroneous ground that the Return for the said AYs was filed after the due date as provided u/s 139(1) of the Act.

For that Ld. CIT (A) failed to consider that vide the 2nd impugned order, the CPC erred in disallowing the set off of losses without considering the fact that the Appellant, being a Limited Liability Partnership, is statutorily required to get its books of accounts audited u/s 34(4) of the Limited Liability Partnership Act, 2008 r/w Rule 24(8) of the Limited Liability Partnership Rules, 2009, and hence the Appellant would be eligible to extension for filing the income tax return till 30th of September of the relevant AY as per the Explanation 2 (a)(ii) of Section 139(1) of the Act, wherein also the words used are "required to be audited under this Act or under any other late for the time being in force".

For that the Appellant having filed its Income Tax Return for AY 2015-16 on 13.09.2016 and for AY 2017-18 on 13.09.2018 (i.e. well within the extended time limit of 30th September of the relevant AY as per Explanation 2 (a)(ii) of Section 139(1), has in fact not crossed the last date for filing its Return u/s 139 of the Act and hence the disallowance made by the CPC as per Section 139(3) of the Act on the ground of late filing of the return is non-existent, hence, is patently illegal, non-est and bad in law.

For that the Ld. CIT(A) has gravely erred vide para 6.2 of the 1st impugned order dated 23.06 2024 in refusing to observe the fact that the Appellant is statutorily mandated to get its accounts audited as per the LLP Rules, 2009 which are enacted by virtue of the LLP Act, 2008, and the same being a codified Central Government Act, cannot be ignored to have no meaning and also failed to appreciate that the provisions of the Income Tax Act, 1961 could not supersede another codified Act, the same would violate the principles of harmonious construction while interpreting statutes.

That the Appellant craves leave to add, delete or modify the aforementioned Grounds of Appeal

The Ld. Counsel for the assessee at the outset submitted that the Ld. Addl./JCIT(A) has given an erroneous finding that the due date for filing of the returns for assessment year 2016-17 was 05.08.2016 and for assessment year 2018- 19 was 31.08.2018 whereas the due dates for filing of the returns for both the years was 30.09.2016 and 30.09.2018 respectively which is well within the extended time limit of 30th September of the relevant assessment year as per Explanation 2(a)(ii) of section 139(1) of the Act. Since the assessee has not crossed the last date for filing of the returns u/s 139 of the Act, therefore, the disallowance made by the CPC is not justified. He further submitted that the order passed by the Ld. Addl./JCIT(A) is a non-speaking one wherein he merely upheld the order of the CPC rejecting the setting off of the losses for assessment years 2015-16 and 2017- 18 against the taxable income of the present assessment year. He submitted that the assessee being a Limited Liability Partnership is statutorily required to get its books of account audited u/s 34(4) of the Limited Liability Partnership Act, 2008 read with rule 24(8) of the Limited Liability Partnership Rules, 2009 and therefore, the assessee would be eligible for extension of time for filing of the return of income till 30th September of the relevant assessment year as per Explanation 2(a)(ii) of section 139(1) of the Act. He accordingly submitted that since the assessee has filed its return of income within the due date prescribed under the Act, therefore, the CPC was not justified in rejecting the claim of set off of the brought forward losses from the current year’s income and the Ld. Addl./JCIT(A) was not justified in upholding the action of the CPC.

The Ld. DR on the other hand submitted that there is some confusion in the order of the Ld. Addl./JCIT(A) vis-à-vis the grounds raised by the assessee in the grounds of appeal. The Ld. Addl./JCIT(A) has given a finding that the returns for assessment years 2016-17 and 2018-19 were not filed within the due date whereas the grounds raised by the assessee mentions that the returns for assessment years 2015-16 and 2017-18 are the subject matter for deciding the appeal. He accordingly submitted that the matter may be set aside to the file of the Ld. Addl./JCIT(A) for fresh adjudication.

We have heard the rival arguments made by both the sides and perused the orders of the Assessing Officer and Ld. Addl./JCIT(A). We find the CPC in the instant case rejected the claim of set off of brought forward losses of earlier years i.e. assessment years 2016-17 and 2018-19. We find the assessee in its grounds of appeal has stated that the assessee has filed its returns of income for assessment year 2015-16 on 13.09.2016 and for assessment year 2017-18 on 13.09.2018. It is also his submission that the assessee being LLP is statutorily required to get the accounts audited and file the income tax returns before the due date which is 30th September of the relevant assessment year. We find the order of the Ld. Addl./JCIT(A) is a bit sketchy, non speaking one and does not address the issue properly especially when he has not given any finding as to whether the assessee is a LLP or not and if an LLP, then what is the due date for filing of the returns and whether in the intervening period any such carry forward of loss is allowed or not. The assessee also has not given any details to substantiate its case that in the intervening period i.e. in assessment years 2016-17, 2018-19 to 2023-24 whether any such claim of carry forward of business losses have been allowed or not and whether claimed or not and if claimed, thereafter whether allowed or not, etc. Since nothing is coming out clearly from the order of the Ld. Addl./JCIT(A), therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. Addl./JCIT(A) with a direction to grant one more opportunity to the assessee to substantiate its case by filing the requisite details before the Ld. Addl./JCIT(A). The Ld. Addl./JCIT(A) shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. The assessee is also hereby directed to submit the details before the Ld. Addl./JCIT(A) on the appointed date without seeking any adjournment under any pretext, failing which the Ld. Addl./JCIT(A) is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

S.No. Details Date Initials Designation 1 Draft dictated on 10.12.2024 Sr. PS/PS 2 Draft placed before author 11.12.2024 Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to the Head 9 Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order