2019 (8) TMI 605 - AT - Income Tax

Disallowance of claim of loss which was not part of return filed U/s 153A - Addition has been made by the A.O. in respect of loss which was appearing in acknowledgement of return filed U/s 139 which was also appearing in the Schedule CFL of the ITR-6 filed U/s 153A, however, inadvertently the same did not add up in the Total loss carried forward column of Form HELD THAT - As decided in M/S O.K. SILK MILLS LTD. VERSUS D.C.I.T. 2019 (5) TMI 749 - ITAT JAIPUR claim of the assessee for earlier years loss, which is inclusive of the loss of the preceding AY has been duly allowed by the AO and the same has not been disputed by Ld. CIT(A). This further strengthens our conclusion that the current years losses were not shown in the acknowledgement generated for returns filed u/s 153A were due to some inadvertent technical error, and in no manner ought to have been considered as additional income declared by the assessee pursuant to the search operations carried out in the group. It is not a case where the claim of any deduction has not been lodged in the original return filed u/s 139(1) and now the assessee wants to take the benefit of the same in the return of income filed u/s 153A. Assessee has claimed the business loss and carried forward the loss in the original return of income filed u/s 139(1) and again in the return filed in response to notice issued u/s 153A, however due to some error the claim was not properly appearing in the acknowledgment of return generated and for such genuine error the assessee should not be penalized. Respectfully following the order of the Tribunal in O.K. SILK MILLS LTD(supra), we do not find any merit in the addition so made by the A.O. by ignoring the assessee s claim of loss so filed in the return U/s 139(1) - decided in favour of assessee.

Summary

Issues:
Appeals against orders of ld.CIT(A)-IV for A.Ys. 2011-12 to 2013-14 under Sec 143(3) read with Sec 153A of IT Act.

Analysis:
The appeals filed by the assessee challenged the orders of ld.CIT(A)-IV for A.Ys. 2011-12 to 2013-14 under Sec 143(3) read with Sec 153A of the Income Tax Act, 1961. The main contention was the addition made by the Assessing Officer (A.O.) in respect of loss that was not carried forward in the "Total loss carried forward" column of the ITR-6 filed under Sec 153A. The Tribunal noted a similar issue decided in a previous order dated 09/05/2019. The Tribunal held that the assessee had not declared any additional income post-search and had duly shown current year losses in various sections of the ITR. The A.O. wrongly observed the current year income as NIL without considering the detailed return filed under Sec 153A, which clearly indicated the current year loss. The Tribunal found that the technical error in acknowledgment generation did not warrant treating the current year losses as additional income. The Tribunal emphasized that the assessee had genuinely believed the losses were being assessed correctly. Therefore, the Tribunal directed the A.O. to allow the benefit of carry forward of losses as claimed in all the assessment years involved.

The ld. CIT(A) had rejected the carry forward of current year losses in all the assessment years, alleging that the assessee did not claim the losses in the return filed under Sec 153A. However, the Tribunal found that the assessee had consistently claimed the losses in both returns filed under Sec 139(1) and Sec 153A, but a technical error led to the losses not reflecting in the acknowledgment. The Tribunal noted that the assessee had not offered any additional income post-search and had disclosed all relevant details in the ITR. The Tribunal emphasized that the A.O. failed to consider the detailed return filed under Sec 153A, which clearly showed the current year losses. The Tribunal concluded that the assessee should not be penalized for a genuine technical error in acknowledgment generation and directed the A.O. to allow the carry forward of losses as claimed in all the assessment years involved.

In conclusion, the Tribunal allowed all the appeals filed by the assesses, following the reasoning and decision given in the previous order dated 09/05/2019. The Tribunal found no merit in the addition made by the A.O. by disregarding the assessee's claim of loss filed in the return under Sec 139(1) of the Act. The Tribunal emphasized the importance of considering the complete return filed under Sec 153A and not solely relying on the acknowledgment for assessing the current year income or losses.