2017 (12) TMI 179 - AT - Income Tax

Validity of revised return - assessee being a working partner in VCE, and of it being an assessee covered u/s. 44AB - Held that - In the present case, the claim is for negation or declaring invalid the assessee s return in law and, consequently, the assessment framed in pursuance thereto, which the assessee is well entitled to make, provided there is no dispute qua facts required to determine the issue arising. Where the relevant facts are not on record, or the material or record points otherwise, or are to be brought on record, the claim cannot be admitted. At this stage, we may also clarify another aspect of the matter. It may be argued that the partnership deed of VCE shall bear out whether the assessee is or is not a working partner in the said firm for the relevant year. True, but the instrument of partnership shall be a part of the assessment record of the said firm and not of its partners. Further, even if, for the sake of argument, the assessment record or return for the earlier year indicates the assessee to be not a working partner, it cannot be said that the same position continues, or its accounts are subject to audit under law for the current year. That is, there is nothing on record to exhibit that the assessee is a working partner or not so, i.e., one way or the other, except the averment per Gd. 5.3 supra. Rather, the contrary claims by the assessee, stating the due date filing of return as 31.08.2012 (in the computation of income for the year), while at the same time preferring a revised return, i.e., u/s. 139(5), as well as contending per the grounds of appeal to be a working partner, so that the due date is 30.09.2012, makes his claim untenable, i.e., in the absence of any material establishing same. Our order stating the assessee s legal claim as to the invalidity of his second return as being inadmissible in view of indeterminate facts, being in fact subject to contrary claims and, in any case, answerable only against the assessee in view of its avowed stand in the assessment (filing a revised return, which can only be u/s. 139(5)) and appellate proceedings (per Gd.5.3 supra). The Revenue cannot treat the assessee s first return as a valid return u/s. 139(1), so that it could be revised u/s. 139(5), and at the same time charge interest u/s. 234A (i.e., for the delay in filing the return), implying it to be a belated return, filed u/s. 139(4), again showing, if that was still necessary, indeterminate facts. We, accordingly, direct its deletion.

Issues Involved:
1. Validity of the revised return filed on 21.10.2013.
2. Determination of the due date for filing the original return.
3. Legality of the assessment based on the revised return.
4. Applicability of interest under Section 234A.

Issue-wise Detailed Analysis:

1. Validity of the Revised Return Filed on 21.10.2013:
The primary issue is whether the revised return filed by the assessee on 21.10.2013 is valid under law. The assessee initially filed a return on 29.09.2012, declaring nil income, followed by a revised return on 21.10.2013, also declaring nil income but claiming a tax refund. The assessment was framed based on this revised return. According to Section 139(5) of the Income Tax Act, a return can only be revised if the original return was filed under Section 139(1) or in response to a notice under Section 142(1). The Hon'ble Apex Court in Kumar Jagdish Chandra Sinha v. CIT [1996] 220 ITR 67 (SC) held that a belated return under Section 139(4) cannot be revised under Section 139(5). Thus, if the original return was not filed under Section 139(1), the revised return would be invalid.

2. Determination of the Due Date for Filing the Original Return:
The due date for filing the original return is crucial in determining the validity of the revised return. The assessee contended that the due date was 31.07.2012, not 30.09.2012, as he was not a "working partner" in the partnership firm VCE. However, the assessee had earlier claimed to be a working partner, which would make the due date 30.09.2012. The CIT(A) presumed the assessee to be a working partner and held the original return filed on 29.09.2012 as valid under Section 139(1). The appellate authority must base its decision on clear, undisputed facts, which were not adequately presented in this case.

3. Legality of the Assessment Based on the Revised Return:
The legality of the assessment hinges on whether the revised return was valid. If the original return was filed under Section 139(4), the revised return under Section 139(5) would be invalid, making the subsequent assessment invalid. The CIT(A) admitted the additional grounds challenging the validity of the assessment but did not have sufficient material to conclusively determine the facts. The appellate authority should have required the assessee to provide evidence, such as the partnership deed and audit reports, to establish his status as a working partner.

4. Applicability of Interest under Section 234A:
The assessee was charged interest under Section 234A for the delay in filing the return. The CIT(A) did not delete this interest, which was inconsistent with the finding that the original return was valid under Section 139(1). The tribunal directed the deletion of this interest, as the Revenue cannot treat the return as valid under Section 139(1) for the purpose of revision and simultaneously charge interest for late filing under Section 234A.

Conclusion:
The appellate authority must base its decisions on clear, undisputed facts. The assessee's claims were inconsistent, and the necessary facts to determine the validity of the revised return were not adequately presented. Consequently, the legal ground raised by the assessee was inadmissible due to indeterminate facts. The tribunal directed the deletion of interest under Section 234A, highlighting the inconsistency in the Revenue's treatment of the return. The assessee's appeal was disposed of on these terms.

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