2007 (11) TMI 263 - HC - Income Tax

Any assessee who had furnished a return u/s 139 (1) or 139(2), discovers any omission or any wrong statement, he can file a revised return at any time before the assessment was made. In this case, as the assessment had not been finalized, the assessee was well within his rights to file a revised return - Tribunal was right in law in holding that the assessee is entitled to the benefits of sections 80HH & 80J even if it was not claimed in the original return, but claimed in revised return

Summary

Issues:
1. Entitlement to benefits under sections 80HH and 80J when not claimed in the original return.
2. Allowing the claim made after completion of the original assessment in the revised return.

Analysis:

Issue 1:
The High Court clarified that an assessee can file a revised return to claim benefits under sections 80HH and 80J, even if not initially claimed in the original return. The court emphasized that the filing of the audit report is not mandatory with the return itself. Referring to precedents, the court highlighted that the filing of the audit report during assessment proceedings constitutes substantial compliance with statutory requirements. The court cited cases from Madhya Pradesh, Punjab and Haryana, and Madras High Courts to support this stance. Section 139(5) of the Income-tax Act allows for the filing of a revised return if any omission or wrong statement is discovered before the assessment is finalized. Therefore, the court ruled in favor of the assessee on this issue.

Issue 2:
Regarding the second question, the court found it irrelevant in the present case. The court provided a detailed account of the assessment process for the relevant years, illustrating that the assessment orders were recalled and returns were reopened before finalization. As the returns were not finalized when the revised returns were filed, the court concluded that the second question did not apply. Consequently, the court deemed the order of reference invalid and returned the question unanswered. The judgment favored the assessee on issue 1 and dismissed issue 2 due to its lack of relevance in the context of the case.

In conclusion, the High Court ruled in favor of the assessee on the entitlement to benefits under sections 80HH and 80J, even if not initially claimed in the original return, and deemed the second question irrelevant based on the assessment process details provided. The judgment highlighted the importance of the right to file a revised return before the assessment is finalized and emphasized the flexibility provided by the Income-tax Act in such situations.