2018 (1) TMI 444 - AT - Income Tax

Disallowance of carry forward of losses on the ground that return of income was not filed within the due date as required under section 139(1) - Held that - In the instant case, the ITR-V was filed though belated but on 31.03.2009. The return of income was filed well before the due date of filing of return under section 139(1) of the Act. Mere delay in submitting the ITR-V does not make the return invalid for denying the benefit of carry forward of losses in future years. We therefore hold that the assessee is entitled to carry forward of loss to future years. Accordingly, we set aside the order of the CIT(A) and direct the AO to allow the carry forward of losses to future years. - Decided in favour of assessee.

Issues involved:
- Disallowance of carry forward loss due to delay in filing ITR-V
- Interpretation of electronic filing requirements under section 139(1) of the Act
- Applicability of judicial precedents in similar cases

Issue 1: Disallowance of carry forward loss due to delay in filing ITR-V

The appellant contested the disallowance of carry forward losses based on the argument that the delay in filing the ITR-V should not invalidate the return. The Assessing Officer (AO) concluded that since the ITR-V was filed after the due date, the return was not timely filed under section 139(1) of the Act, leading to the disallowance of losses. The appellant argued that the electronic filing process, once completed, is irreversible, and the ITR-V submission is a procedural step. The CIT(A) upheld the disallowance relying on a Mumbai Bench judgment. However, the Tribunal examined various judicial precedents and highlighted that the electronic filing process, along with ITR-V submission by ordinary post, should not render the return belated or invalid for carrying forward losses.

Issue 2: Interpretation of electronic filing requirements under section 139(1) of the Act

The appellant emphasized that the electronic filing of returns, followed by ITR-V submission, should fulfill the filing requirements under section 139(1) of the Act. The Tribunal referenced specific cases where the procedure for electronic filing and ITR-V submission was discussed. It noted that the return becomes irreversible upon electronic filing and that the ITR-V should be sent by ordinary post only. The Tribunal highlighted that without serving a defect notice or providing an opportunity to rectify any issues, treating the electronically filed return as invalid is unjustified. The Tribunal directed the appellant to submit the signed verification form ITR-V to validate the return and allow the carry forward of losses.

Issue 3: Applicability of judicial precedents in similar cases

The Tribunal considered various judicial precedents cited by the appellant to support the argument that the delay in ITR-V submission should not impact the carry forward of losses. Notably, the Tribunal referenced judgments from different High Courts and the Chennai Tribunal to emphasize that the return filed electronically within the due date should not be invalidated due to a delay in ITR-V submission. The Tribunal highlighted the importance of following prescribed procedures and providing opportunities for rectification before deeming a return as invalid. Ultimately, the Tribunal allowed the appeal, directing the AO to permit the carry forward of losses to future years.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the significance of adhering to electronic filing procedures and ensuring that delays in ITR-V submission do not invalidate the return for carrying forward losses. The judgment underscored the importance of providing opportunities for rectification before deeming a return as invalid and highlighted the procedural aspects of electronic filing in determining the validity of returns for claiming benefits such as carry forward of losses.

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