NON RECEIPT OF ITR-V FORM ELECTRONICALLY FILED WITHIN TIME – VALIDITY OF RETURN?

[Mr. M. GOVINDARAJAN]

                        Income Tax returns may be filed electronically now-a-days.   The Income Tax Department received 1.64 crores e-returns in the year 2011 -12.  Returns may be filed electronically either with digital signature or without digital signature.   Digital signature was made mandatory for firms and individuals whose accounts are to be audited under Section 44AB of the Income Tax Act.  After filing return electronically the assesssee is to forward ITR-V form to the Centralized Processing Centre (CPC), Bangalore within 120 days from the date of upload of the return.  The said ITR-V form should be sent only by ordinary post.   This completes the return filing process for non digitally signed returns.  It shall not be sent either by registered post or speed post or by courier.   If the said form is sent by the above mode except ordinary post the same will not be accepted by the CPC.  At the same time the assessee could not able to prove the delivery of ITR-V form by ordinary post to the CPC.  In this situation whether the return filed electronically can be declared as invalid.  It could not be do so.  The assessee has to be given an opportunity to rectify any defect under the provisions of Section 139(9) of the Income Tax Act, 1961.   If the assessee does not rectify the defect within the period allowed then the return may be declared as invalid.   This has been elaborately discussed by the High court in the case law discussed below. 

                        In ‘Crawford Bayley and Co. V. Union of India and others’ – 2011 (12) TMI 64 (HC).  The petitioner, a firm of solicitors, uploaded its return of income on 27.03.2010 for the assessment year 2009 – 10 on the official web site of the Income Tax Department.  An electronically generated mail from the Department acknowledging the e-filing of return of income was received by the petitioner.  On 05.04.2010 the petitioner sent a copy of ITR-V form duly signed by one of its partners in accordance with the instructions  of the Department by ordinary post.  On 26.05.2010 the petitioner received a communication from the Department that ITR-V Form had not been received and he was directed to furnish a copy on or before 31.03.2010 or within a period of 120 days of the uploading of the electronic return data, whichever is later.  Again the petitioner submitted the ITR-V form on 18.05.2010.

                        On 18.11.2010 the petitioner again received a communication from Centralized Processing Centre, Bangalore that the form had not been received by them.  On 21.03.2011 the petitioner was informed that though the electronic return was uploaded it is deemed never to have been filed since it was not duly verified in terms of the provisions of Sec. 139 of the Income Tax Act, 1961.  The Department therefore treated the return as invalid.  The petitioner pointed out to the Department that they had sent ITR-V form by ordinary post on 05.0.42010, 18.05.2010 and 18.11.2011 and also contended that they had send a representative to Bangalore to deliver the form on 05.04.2010 but the representative was not allowed to meet the Assistant Commissioner of Income Tax of the Central Processing Centre.

                        The petitioner challenged the communication of the Department on 21.03.2011 treating the return invalid before the High Court.  The court was informed that the problem has arisen in the present case since for the assessment years 2009-10 arrangements were not made by the Department for verification of returns uploaded electronically by digital signature.   Such an arrangement has now been made from the assessment year 2011-12.

                        The Court analyzed the Section 139(9) of the Income Tax Act, 1961.   Sec. 139(9) provides that where the Assessing officer considers a return of income furnished by the assessee is defective, he may intimate the defect to the assessee and furnish an opportunity to rectify the defect within a period of 15 days or within such further period which, on an application made on that behalf, the Assessing Officer may allow.   If the defect is not rectified within a period of 15 days or the extended period as allowed, the returns, notwithstanding the provisions of law, be treated as invalid  return and the provisions of the Act shall apply as if the assessee has failed to file the return.  Where the assessee rectifies the defect after the expiry of the said period of 15 days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as valid return.  The explanation to this sub section provides that a return of income shall be treated as defective unless all the conditions that the annexure, statements and columns in the return of income relating to computation of  income chargeable under each head of income, computation of gross total income and total income have been duly filled in.

                        The High Court held that to treat a return filed by an assessee as invalid return the Assessing Officer is to furnish in the first instance a period of fifteen days to rectify a defect in the return.  If it is not done within 15 days extension of period, within which the defects are to be rectified, may be given.  Where an assessee rectifies a defect even after the expiry of fifteen days or the further period allowed but before an assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return.    The ITR-V form containing the due verification of the return of the assessee was required to be filed only by ordinary post.  The ITR-V form should not be sent either by speed post or by registered post or courier.   The assessee has produced adequate material before the court in support of its contention that having filed the return electronically, it has also submitted ITR-V form by ordinary post on 05.04.2010, 18.05.2010 and also on 18.11.2010.  The Court held that they are of the view that the communication issued by the Department on 21.03.2011 was misconceived.  The order of assessment for the year 2009-10 has not been still passed.  The Court directed that the provisions of Section 139(9) can be fulfilled by permitting the assessee to file a verification of the return of the Assessing officer within a period of one week from the date of order.  The High Court quashed and set aside the impugned order dated 21.03.2011.