2023 (5) TMI 828 - AT - Income Tax

Validity of intimation issued u/s 143(1) when the return of income filled was held as invalid return u/s 139(9) - Invalid or defective return - HELD THAT - An order u/s 139(9) is on record by which return of income filed by the assessee has been treated as invalid return. Despite treating the return as invalid return, it has been processed by CPC, u/s 143(1)(a) by disallowing the claim of the assessee. We have also noted that there is a pre-requisite of return to be available u/s 139 or 142(1) for issuance of an intimation u/s 143(1) - Since the return has been held to be invalid by CPC, there exists no return u/s 139 which could have been processed u/s 143(1). Accordingly, processing done by CPC of an invalid return is improper and not in accordance with the provisions of the Act and Rule 8 of the aforesaid scheme. We are of the considered view that ld. CIT(A) is wrong in holding the processing of return of income u/s 143(1) as valid when prior to such processing, an order u/s 139(9) was passed treating the return as invalid resulting into situation as if no return has been filed. Accordingly, grounds taken by the assessee are allowed.

Summary

Issues:
The issues involved in the judgment are:
1. Validity of processing return of income under section 143(1) after it was held invalid under section 139(9).
2. Condonation of delay in filing the appeal.

Issue 1: Validity of Processing Return of Income:
The case involved an appeal arising from the order of CIT(A) against the assessment order passed under section 143(1) of the Income-tax Act, 1961. The appellant contested the intimation issued under section 143(1) after their return of income was held invalid under section 139(9). The appellant argued that once a return is deemed invalid under section 139(9), it ceases to exist for processing under section 143(1). The Tribunal noted the provisions of sections 139(9) and 143(1) which specify the treatment of invalid returns. The Tribunal found that processing an invalid return is improper and not in accordance with the law. Therefore, the Tribunal allowed the grounds taken by the appellant, ruling in favor of the appellant.

Issue 2: Condonation of Delay:
There was a delay of 165 days in filing the appeal, for which a petition for condonation of delay was submitted along with an affidavit. The delay was attributed to medical exigencies and the pandemic situation. The Tribunal considered the explanation provided by the appellant and decided to condone the delay, admitting the appeal for adjudication.

The Tribunal, comprising Shri Sonjoy Sarma, Judicial Member, and Shri Girish Agrawal, Accountant Member, reviewed the case involving the validity of processing a return of income under section 143(1) after being declared invalid under section 139(9). The Tribunal found that the processing of an invalid return was improper and not in line with the provisions of the Income-tax Act. Additionally, the Tribunal condoned the delay in filing the appeal due to medical exigencies and the pandemic situation. Ultimately, the Tribunal allowed the appeal of the assessee, ruling in their favor.