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2013 (2) TMI 260 - AT - Income TaxAcceptance of the loss in the revised returns u/s 139(5) Change of status of assessee - Whether Order of CIT(A), was justified, where the assessee has to be assessed as Artificial Juridical Person when he accepted the revised return filed by the assessee including the brought forward losses as a local authority - Artificial Judicial Person (AJP) or A Local Authority Change the status of the assessee - Exemption u/s 10(20A) - Held that - No reason was assigned by the A.O. to correlate the discrepancies observed in the original and revised returns insofar as it was not the assessee s endeavour to explain the brought forward losses in the revised return. The CIT(A), confirming the status as assessed by the A.O. but not indicating as to how the brought forward losses could change the status of the assessee. Remand back to AO
Issues Involved:
1. Acceptance of loss in the revised return. 2. Status of the assessee as Artificial Juridical Person vs. Local Authority. Analysis: 1. Acceptance of Loss in the Revised Return: The Revenue's appeal contested the CIT(A)'s direction to accept the loss in the revised return, arguing that the books of account were not produced for verification before the AO, and discrepancies in the figures between the revised and original returns were unexplained. The AO disallowed the total loss claimed due to non-production of books of account and details during the assessment proceedings. The CIT(A) directed the AO to accept the loss as shown in the revised return, referencing the judgment in CIT v. Periyar District Cooperative Milk Producers Union Ltd., which allowed the revision of loss returns filed within time under Section 139(5). The CIT(A) noted that the AO did not make specific inquiries into the income/expenditure that could impact the loss shown in the revised return. The Tribunal agreed with the CIT(A), stating that the revised return should be accepted as the discrepancies were not adequately addressed by the AO, and the revised return was filed within the permissible time frame under Section 139(5). 2. Status of the Assessee as Artificial Juridical Person vs. Local Authority: The assessee objected to the CIT(A)'s confirmation of its status as an Artificial Juridical Person instead of a Local Authority. The genesis of the assessee was from the Orissa Development Authorities Act, 1982, and it was previously availing exemption under Section 10(20A) until it was omitted by the Finance Act, 2002. The CIT(A) upheld the AO's view that the assessee was an Artificial Juridical Person, not a Local Authority. The Tribunal found that the assessment was not made in accordance with the provisions of the Income-tax Act, as the discrepancies in the original and revised returns were not adequately explained. The Tribunal noted that the CIT(A) should have clarified why the status of the assessee was changed despite accepting the revised return with brought forward losses. The Tribunal restored the matter to the CIT(A) to adjudicate the basis for changing the status, considering the assessee's submission that its status remained the same as a Local Authority. Conclusion: The Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objection for statistical purposes, directing the CIT(A) to re-examine the basis for changing the assessee's status while accepting the revised return.
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