2021 (12) TMI 1252 - AT - Income Tax

Disallowance of setting off of the carried forward loss - return filed beyond the due date specified under subsection (1) of section 139 - It was argued that the delay has happened for the first time in the last 25 years for a situation totally beyond his control. - HELD THAT - Assessee was not able to enter into the terrace portion of his flat in Vasant Kunj where all his business and financial documents were kept due to the restraint order passed by the court, in my opinion, cannot be a ground to enable the assessee to claim the benefit of set off of carried forward loss of AY 2017-18 since the said return was not filed on or before the specified date. The statute is very clear on this issue that for claiming the benefit of setting off of carried forward loss against the income of the subsequent year, the return for the assessment year in which loss was incurred has to be filed in time as specified u/s 139(1). If the assessee was prevented from filing the return within the due date, the remedy lies elsewhere, but, definitely not before the Tribunal. Since the assessee, in the instant case, has not filed the return of income for AY 2017-18 within the due date returning the loss of ₹ 8,67,803, therefore, the same cannot be carried forward to the subsequent assessment year to be set off against the income of AY 2018-19. We not find any infirmity in the order of the CIT(A) upholding the intimation issued by the CPC, Bangalore rejecting the claim of set off of carried forward loss of ₹ 8,67,803/- pertaining to AY 2017-18 from the income of AY 2018-19. The order of the CIT(A) is accordingly upheld and the grounds raised by the assessee are dismissed.

Issues:
1. Disallowance of setting off carried forward loss due to late filing of return for AY 2017-18.
2. Rejection of claim for setting off carried forward loss by CIT(A).
3. Appeal against the order passed by the Assessing Officer and CIT(A).

Issue 1: Disallowance of setting off carried forward loss due to late filing of return for AY 2017-18

The appellant, an individual assessee, filed the return of income for AY 2018-19 on 29th August, 2018, declaring taxable income and claiming a carried forward loss of &8377; 8,67,803 from AY 2017-18. The CPC disallowed the setting off of the loss as the return for AY 2017-18 was filed beyond the due date specified under section 139(1) of the IT Act. The appellant argued that the delay was due to a matrimonial dispute and a court order preventing access to crucial documents. However, the CIT(A) upheld the disallowance, stating that the b/f losses can only be allowed if the return is filed on time, and the action of the Assessing Officer was justified.

Issue 2: Rejection of claim for setting off carried forward loss by CIT(A)

The appellant contended before the CIT(A) that the delay in filing the return for AY 2017-18 was due to circumstances beyond control, such as a court order restricting access to necessary documents. The CIT(A), however, was not convinced by the arguments presented and upheld the disallowance of setting off the carried forward loss. The CIT(A) emphasized that for claiming the benefit of setting off carried forward loss, the return for the relevant assessment year must be filed within the specified due date under section 139(1) of the IT Act. Therefore, the CIT(A) rejected the appellant's claim based on the clear statutory provisions regarding the filing timeline for carrying forward losses.

Issue 3: Appeal against the order passed by the Assessing Officer and CIT(A)

The appellant raised multiple grounds in the appeal before the Tribunal, challenging the orders passed by the Assessing Officer and CIT(A). The appellant argued that the Assessing Officer's order was without jurisdiction and illegal, and the CIT(A) erred in disallowing the set off of carried forward losses without considering the facts and submissions made. The Tribunal, after considering the arguments from both sides and examining the records, affirmed that since the return for AY 2017-18 was not filed within the due date, the appellant could not carry forward the loss to AY 2018-19 for set off. The Tribunal concurred with the CIT(A)'s decision, upholding the disallowance of setting off the carried forward loss. Consequently, the Tribunal dismissed the appeal filed by the assessee.

In conclusion, the Tribunal upheld the disallowance of setting off the carried forward loss due to the late filing of the return for AY 2017-18, emphasizing the importance of adhering to the statutory timelines for claiming such benefits. The decision highlights the significance of timely compliance with tax regulations to avail of deductions and set off provisions under the IT Act.

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