2023 (9) TMI 151 - AT - Income Tax

Filing of revised return - denial of loss - Considering the revised return date as belated return, whereas original ITR was filed in time - return of income filed by the appellant u/s 139(4) was processed by the CPC, Bengaluru u/s 143(1) disallowing current year losses (Bonus and Interest) - HELD THAT - The original return filed by the assessee is well within time. Subsequently, the assessee revised the return on 15.01.2020 while processing that return the CPC has considered that return as original and accordingly the current year losses were in the light of that fact denied to the assessee. On careful perusal of the records we observed that the intimation under challenge has not considered the fact that the return filed on 15.01.2020 was not the original return but was revised one and therefore, the denial of loss is not correct based on the set of facts and evidence available on records. Based on these set of facts ground is allowed. Assessee has prayed to award the cost of filling this appel, travelling expenses and advocate fees that is incurred on account of the revenues negligence - Since, the appeal of the assessee has been disposed under the faceless regim the contention that the officer should be made responsible is not possible under this faceless regime, where the personal contact is avoided and therefore, no prejudiced caused to the assessee. The judgement based on the set of facts understood by the ld. CIT(A) while discharging duty, action might have caused some hardship to the assessee due to error of judgement but that in our opinion does not warrant levy of cost on the Department. In the instant case, there is no such action of search and seizure which causes serious invasion in the privacy of the person. The Commissioner was discharging her quasi-judicial duty. Further, there is nothing on record to suggest that the action of the Commissioner of Income-tax was mala fide. Therefore, we do not find any merit in the submission of assessee to award cost. The decisions relied on by the assessee are distinguishable as in the decision of case of Chiranji Lal Tak 2001 (7) TMI 78 - RAJASTHAN HIGH COURT there also facts were different. In that case, the respondent Income-tax Officer issued illegal notice to the petitioner and later withdrew the same. Under these circumstances, the court directed the respondent to pay for the advocate fee and litigation expenses incurred by the petitioner in prosecuting writ proceedings. As in the instant case, there is no prime facie illegality in issuing the intimation which is also system based and even the proceeding before the first appellate authority was on faceless regime. We, therefore, do not find any merit in the argument of learned counsel for the assessee to award cost. The ground raised by the assessee is accordingly dismissed.

Issues Involved:
1. Legality of the assessing officer's order.
2. Acceptance of the revised return.
3. Reasonableness and justification of the CIT(A)'s order.
4. Awarding of costs to the assessee.
5. Legality of the addition of Rs. 3,51,811.
6. Tax exemption on income.

Summary:

1. Legality of the Assessing Officer's Order:
The assessee contended that the order passed by the assessing officer was illegal and against the law. The appellate tribunal noted that the original return of income was filed on 30.10.2019, within the extended due date. The return was later revised on 15.01.2020. The CPC processed this revised return as the original return, resulting in the disallowance of current year losses of Rs. 3,51,811. The tribunal observed that the CPC's action was incorrect as the return filed on 15.01.2020 was indeed a revised return, not the original one. Thus, the denial of loss was not correct, and the ground was allowed.

2. Acceptance of the Revised Return:
The assessee argued that the assessing officer should have accepted the revised return filed on 15.01.2020. The tribunal found that the original return was filed within the stipulated time and the revised return should have been considered accordingly. Therefore, this ground was also allowed.

3. Reasonableness and Justification of the CIT(A)'s Order:
The assessee claimed that the CIT(A)'s order was not reasoned and was against the principles of natural justice. The tribunal noted that the CIT(A) dismissed the appeal in ten lines without considering the arguments and documents submitted by the assessee. The tribunal found merit in the assessee's contention and allowed the ground.

4. Awarding of Costs to the Assessee:
The assessee requested the tribunal to award costs for filing the appeal, traveling expenses, and advocate fees due to the revenue's negligence. The tribunal, however, did not find any mala fide intention or irreparable loss caused to the assessee by the lower authorities. It was noted that the faceless regime avoided personal contact, and the error was due to a misunderstanding of facts. Thus, the tribunal dismissed the ground for awarding costs.

5. Legality of the Addition of Rs. 3,51,811:
The assessee argued that the addition of Rs. 3,51,811 was illegal and due to negligence. The tribunal found that the original return was filed within the extended due date, and the revised return should have been considered correctly. Hence, the addition was deemed incorrect, and the ground was allowed.

6. Tax Exemption on Income:
The assessee claimed that the income in question was exempt under section 10, and no tax should be charged. The tribunal did not specifically address this issue in the judgment, focusing instead on the procedural aspects of the return filing and the disallowance of losses.

Conclusion:
The tribunal allowed the appeal in part, correcting the procedural errors regarding the revised return and the disallowance of losses but dismissed the request for awarding costs.

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