2019 (12) TMI 597 - AT - Income Tax

Revised return u/s 139(5) rejected - Revision in the sales figure - act of AO in proceeding to frame the assessment on the basis of the original return of income - The submissions of the assessee were not found acceptable to the AO. AO was of the view that assessee could not justify the revised return by adopting revised sales. - HELD THAT - High Court in the case of CIT Vs. Arun Textile 1991 (6) TMI 66 - GUJARAT HIGH COURT has held that once the revised return is filed u/s 139(5) of the Act, the original return is substituted by the revised return and it is not open to the AO to advert to the original return of income or the statement filed along with it. Hon ble Punjab and Haryana High Court in the case of Beco Engineering Co., Ltd., Vs. CIT 1984 (2) TMI 83 - PUNJAB AND HARYANA HIGH COURT has held that in a case assessee files the revised return then it is to be taken into consideration for the purpose of making an assessment and the original return cannot be adverted. once the revised return has been filed by the assessee u/s 139(5) of the Act and the same has been accepted, then it is not open to the authorities to take into consideration the original return of income for determining the total income in the assessment proceedings. Set aside the order of AO and direct the AO to consider the total income declared by the assessee u/s 139(5) of the Act for determining the total income. Thus, the grounds of the assessee are allowed.

Summary

Issues:
Appeal against rejection of revised return and assessment based on original return.

Analysis:
The appeal arose from the Commissioner of Income Tax (Appeals) decision for the assessment year 2015-16. The assessee, a partnership firm dealing in garments, initially filed a return declaring total income of ?19,03,485. Subsequently, a revised return was filed on 13.02.2016 declaring total income as ?5,50,420. The case was selected for scrutiny, and the assessment was framed under section 143(3) of the Income Tax Act, determining total income at ?19,03,490. The primary issue was the rejection of the revised return by the Assessing Officer (AO) and the subsequent assessment based on the original return.

During assessment proceedings, the AO rejected the revised return's sales figure, leading to the determination of total taxable income at ?19,03,490. The assessee contended that the revised return was filed due to an error in sales figure computation. The AO and CIT(A) did not find the assessee's submissions satisfactory, upholding the assessment based on the original return.

In the appeal before the ITAT Pune, the assessee argued that once a valid return is filed under section 139(5) of the Act, the original return under section 139(1) should not be considered for assessment. Citing relevant case laws, the assessee emphasized that the revised return replaces the original for assessment purposes. The ITAT, following precedents, held that once a revised return is filed and accepted, the authorities cannot rely on the original return for assessment. Consequently, the ITAT directed the AO to consider the total income declared in the revised return for assessment, allowing the assessee's appeal.

In conclusion, the ITAT Pune allowed the appeal, setting aside the AO's order and directing the consideration of the total income declared in the revised return for assessment. The judgment highlighted the legal principle that a valid revised return under section 139(5) replaces the original return for assessment purposes, as established by relevant High Court decisions.