2022 (3) TMI 375 - AT - Income Tax

Validity of Revised return u/s 139(5) - Benefit of carry forward of loss to the assessee as per the revised return, treating the first return filed without Tax Audit Report as valid return of income - HELD THAT - As decided in assessee s own case for assessment year 2003-04 where the Tribunal after considering relevant facts has rightly held that when the assessee has filed revised return within due date prescribed u/s.139(5) of the Act, then revised return filed, would be valid return and on that basis the Assessing Officer should allow set off of carry forward losses of earlier year. As consistent with the view taken by the co-ordinate Bench in the assessee s own case for earlier assessment year, we are of the considered view that there is no error in the reasons given by the learned CIT(A) and direct the Assessing Officer to accept revised return filed by the assessee u/s.139(5) of the Act, and allow set off of brought forward losses of earlier years against current year income - Decided against revenue.

Summary

Issues:
- Delay in filing appeal by the Revenue
- Validity of original and revised return for carry forward of loss

Analysis:
1. Delay in filing appeal by the Revenue:
- The Revenue filed an appeal against the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2005-06. The Revenue sought condonation for a 3-day delay in filing the appeal, attributing it to administrative reasons. The Department's explanation for the delay was considered reasonable, and the delay was condoned after both parties did not oppose the condonation petition. The appeal was then admitted for adjudication.

2. Validity of original and revised return for carry forward of loss:
- The case involved the denial of set off of brought forward loss against the current year's income by the Assessing Officer, based on the argument that the original return filed by the assessee was defective. The assessee, a statutory body engaged in the electricity business, filed its original return on provisional financial statements and later submitted a revised return after the audit was completed.
- The learned CIT(A) directed the Assessing Officer to allow the claim of carry forward and set off of business loss, emphasizing that when the assessee filed the original return within the due date as per the law and the revised return within the prescribed date, the claim for set off of brought forward loss should not be denied.
- The Revenue contended that even if the revised return was filed within the due date, the habit of filing returns based on provisional accounts should not validate the set off of brought forward loss. However, the learned AR argued that the ITAT decision in the assessee's own case for the assessment year 2003-04 supported the allowance of set off based on a revised return filed within the due date.
- The ITAT upheld the decision of the learned CIT(A) and directed the Assessing Officer to accept the revised return filed by the assessee and allow the set off of brought forward losses against the current year's income. The Tribunal found no error in the CIT(A)'s reasoning and dismissed the appeal filed by the Revenue.

In conclusion, the ITAT Chennai upheld the decision of the CIT(A) regarding the validity of the revised return for carry forward of loss, emphasizing compliance with the due dates for filing returns as per the Income Tax Act. The Tribunal dismissed the Revenue's appeal, directing the Assessing Officer to allow the set off of brought forward losses against the current year's income.