2015 (9) TMI 427 - AT - Income Tax

Benefit of carry forward of set off of loss for A.Y. 2004-05 - non filing of return within due date - assessee is a co-operative bank assessed in the status of AOP and carries on banking business - Held that - Admittedly, in the case of assessee, the return of income was not filed within the due date and therefore the loss for A.Y. 2004-05 has not been determined in accordance with the provisions of sub-section (3) of 139 for A.Y. 2004-05. Such a loss cannot be therefore set off against the profits of A.Y. 2006-07. In terms of section 119(2)(b) of the Act, the CBDT alone has the power to condone the lapse on the part of assessee in not filing the return of income for the A.Y. 2004-05 within the statutory time permitted u/s. 139(3) of the Act. In this case, the time for making such application to CBDT had expired by the time the AO issued show cause notice u/s. 154 to the assessee for the A.Y. 2006-07. Thus, the assessee was taken by surprise and could not exercise the remedies in law, even though it had very genuine and reasonable cause for not filing return of income for A.Y. 2004-05 on or before the due date u/s. 139(1) of the Act. It is not possible to allow relief to the assessee based on equitable considerations, since equity and tax laws are strangers to each other. In view of the specific provisions of section 80 of the Act, we are of the view that claim of the assessee cannot be entertained. We are of the view that the revenue authorities were justified in denying the claim of set off of loss for A.Y. 2004-05 in the assessment of income for A.Y. 2006-07. - Decided against assessee.

Summary

Issues:
1. Delay in filing the appeal by the assessee.
2. Benefit of carry forward of set off of loss for A.Y. 2004-05.

Delay in filing the appeal:
The appeal by the assessee was delayed by about 60 days, which was explained in the application for condonation of delay. The delay was attributed to the involvement of the CEO of the assessee in election-related controversies and court cases, hindering his participation in banking activities, including tax matters. The Tribunal, after verifying the reasons, condoned the delay, considering it to be due to a reasonable and sufficient cause.

Benefit of carry forward of set off of loss for A.Y. 2004-05:
The main issue in this appeal revolved around the benefit of carry forward of set off of loss for the assessment year 2004-05. The Assessing Officer (AO) contended that the assessee was not entitled to carry forward the loss for A.Y. 2004-05 as the return was filed beyond the due date specified under section 139(1) of the Income Tax Act. The AO issued a notice under section 154 to withdraw the set off of loss, resulting in a revised taxable income for the assessee. The assessee argued that the return was filed within a reasonable timeframe considering public holidays and genuine beliefs about office closures. However, both the AO and CIT(A) upheld the decision to withdraw the set off of loss for A.Y. 2004-05.

Legal Analysis:
The provisions of section 72(1) of the Income Tax Act allow for the carry forward of losses under certain conditions. Section 80 of the Act imposes a requirement that losses must be determined in accordance with the provisions of filing returns under section 139(3) to be eligible for carry forward and set off in subsequent years. In this case, since the return for A.Y. 2004-05 was not filed within the due date, the loss could not be set off against the profits of A.Y. 2006-07. The Tribunal emphasized that equity considerations cannot override statutory provisions, and the CBDT alone has the power to condone such lapses in filing returns.

Decision:
The Tribunal dismissed the appeal by the assessee, upholding the decision of the revenue authorities to deny the claim of set off of loss for A.Y. 2004-05 in the assessment for A.Y. 2006-07. The Tribunal found that the specific provisions of section 80 of the Act precluded the assessee from claiming the benefit of carry forward of loss due to the delayed filing of the return for A.Y. 2004-05. The Tribunal's decision was based on the statutory requirements and the lack of grounds to entertain the assessee's claim.