2022 (9) TMI 588 - AT - Income Tax

Validity of revised return filed vis-a-vis claims made thereunder - revised return treated as non-est - original return of income was filed belatedly u/s 139(4) - Validity of action of the ACIT not considering the revised return of income filed by the appellant u/s 139(5) of the ITA 1961 as original return of income was filed beyond time limit prescribed u/s 139(1) - whether income reported by filing belated return filed can be varies by filing revised return u/s 139(5) of the Act? - HELD THAT - It is enough to state that the provisions relating to furnishing of a revised return is provided u/s 139(5) which entitles an assessee to furnish a revised return if he discovers any omission or any wrong statement in the original return hitherto filed however the very fact that for the impugned assessment year this right or entitlement of revision was given to an assessee who has filed his original return either u/s 139(1) or in pursuance of notice u/s 142(1) of the Act this by necessary implication means that such a right was denied and not at all available to the assessee who has filed the return u/s 139(4) this view has been historically held in Kumar Jagdish Chandra Sinha Vs CIT 1996 (4) TMI 5 - SUPREME COURT . Thus in the case before us the appellant filed his original return otherwise than u/s 139(1) or 142(1) the revised return filed u/s 139(5) of the Act became non-est in the eyes of law consequently the claim of capital loss made by the appellant in his revised return. Whether income reported under belated return can be varied on the pretext of its un-realisation or unearned for any good and sufficient reasons? - As the evidential documents as regards to re-computation of capital loss were duly placed before the Ld. AO during the course of scrutiny assessment proceedings and after considering them the assessment was culminated assessing the taxable income in terms of belated return consequently it concludes that the income actually earned by the appellant as verified from the records was taxed and not the unreal income and nothing contrary has shown to us in the present facts which would warrant taking a diverse view. In omnibus we find no substance in the claim of the appellant vis-a-vis no infirmity with the order of tax authorities below to deviate ground number 1 to 4 raised stand dismissed. Appeal of the appellant assessee is dismissed.

Summary

Issues:
Validity of revised return filed under section 139(5) of the Income Tax Act, 1961 when the original return was filed belatedly under section 139(4) for assessment year 2012-13.

Detailed Analysis:

1. The primary issue in this case revolves around the validity of the revised return filed by the appellant under section 139(5) of the Income Tax Act, 1961, considering the original return was filed belatedly under section 139(4) for the assessment year 2012-13. The appellant contended that the revised return should be considered as the original return as the latter was filed beyond the prescribed time limit. The appellant also argued for the consideration of Short Term Capital Loss instead of the unrealized Short Term Capital Gain reported in the original return.

2. The facts of the case reveal that the appellant initially filed the Income Tax Return (ITR) under section 139(4) on 28/02/2014, declaring a total taxable income. Subsequently, on 18/03/2014, the appellant revised the return due to a change in capital gain computation. During the scrutiny assessment proceedings, the Assessing Officer (AO) considered the original return as the basis for assessment, disregarding the revised return. The AO added a differential amount of interest earned by the appellant to the assessment.

3. In the first appellate proceeding, the appellant challenged the taxability of unreal income, arguing that the correct position of capital loss should be considered. Despite the appellant's submissions and detailed reasoning, the Commissioner of Income Tax (Appeals) upheld the assessment without any variation.

4. During the physical hearing, the appellant reiterated the reasons for filing both returns and strongly opposed the taxation of unreal income. The Departmental Representative relied on legal precedents and argued that the AO had duly considered the circumstances leading to the filing of both returns, thus justifying the assessment based on the original return.

5. The Income Tax Appellate Tribunal (ITAT) analyzed the case in light of the legal provisions and precedents cited by both parties. The ITAT addressed two key questions for the assessment year: (a) Whether the income reported in the belated return can be varied by filing a revised return under section 139(5) of the Act, and (b) Whether the reported income can be varied based on unrealization or unearned income for valid reasons.

6. The ITAT concluded that the right to furnish a revised return under section 139(5) is not available to an assessee who filed the original return under section 139(4). Citing the Supreme Court's decision in "Kumar Jagdish Chandra Sinha Vs CIT," the ITAT held that the revised return filed by the appellant was non-est in the eyes of the law. Additionally, the ITAT found no merit in the appellant's claim regarding the capital loss, as the assessment was based on the income actually earned by the appellant, as verified from the records.

7. Consequently, the ITAT dismissed the appeal of the appellant, upholding the assessment based on the original return filed belatedly under section 139(4) for the assessment year 2012-13.