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Deficiencies in ITR form should not prevent assesse from preferring legal claims. |
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Deficiencies in ITR form should not prevent assesse from preferring legal claims. |
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Synopsis: ITR Forms must be as per law: Physical ROI allowed by High Court so as to enable legal claims which could not be put in E-ITR Relevant provisions: Sections 139, 139D and other provisions relating to ROI and rules providing for prescribed forms of ITR and E-ITR etc. Sections 70, 71 and 72 and other provisions about set off of losses. Recent Judgment: Cases referred in above:
Some earlier judgments on shortcomings of E-ITR: ITR Forms general discussions: ITR forms are prescribed by CBDT vide Income-tax Rules. ITR forms are part and parcels of IT Rules, a subordinate legislation to carry out purposes and scope of IT Act and its implementation. Therefore, ITR forms must also confirm the provisions. If a form does not provide for correct computation of income, tax, surcharge, cess, interest etc. the tax payer is in a problematic situation as he cannot pay tax correctly and may have to pay higher tax and other levies. If he makes a claim which is not allowed, he can face penal provisions, if he does not make a claim that cannot be allowed by the AO and assesse lose his rights because it is not possible to pursue appeal / revision proceedings if small sums are involved. Complex tax laws: Tax laws are very complex and therefore all situations cannot be dealt with in standard forms. Some claims which are not in found ITR form for fill in or working out calculations either by assesse or by the system software but are allowable on interpretation of law, pose difficulties in preferring claims. When last date for filing of ROI is approaching fast and assesse faces such problem, the assesse is in dilemma. For small claims one cannot approach High Court, by way of Writ Petition for directions to department to accept paper ITR and to consider claim of assesse to be made otherwise than in ITR form. In case of Samir Narayan (supra.) the assesse had big claims and assesse is source full, so he could approach High Court, but for general tax payers it is not possible. As per judgment of the Supreme Court in case of Goetz (supra.) the AO cannot entertain a claim which is not made in ITR or by way of revised ITR. This put restrictions on discretion of AO. In such situations assesse has to adopt course of appeal or revision proceedings to seek relief. Fortunately, in the same judgment in case of Goetz, referring to earlier judgments on powers of CIT(A) and ITAT, the Supreme Court , did not differ from earlier judgments and powers of CIT(A) and ITAT still includes to consider additional claims. This has created a problem in administration of tax matters by the income tax payer and income tax department. In fact, the judgment in case of Goetz (supra.) is causing unreasonable difficulties because unless a claim is made it cannot be allowed by AO, and if a claim on disputed and contentious issue is made, assesse may suffer penalty proceedings and levy of penalty and therefore litigation. The judgment in case of Goetzs therefore, need a reconsideration, particularly in view of E-ITR wherein there is no scope of making explanations and further claims for consideration of the AO. Limitations and defect in E-ITR- assesse had to approach High Court for directions to accept paper ROI so as to claim set off of losses which were not accepted in E-ITR, can be preferred and authorities are directed to consider the claim, though not preferred in ROI, due to limitations of E-ITR form. Case of Samir Narayan: Assessee found that in the form of return to be filed electronically he is not able to claim set off of current and brought forwarded business loss against capital gains( which also arose from business assets). The assesse relied on judgments of Tribunal for set off of such losses but could not claim through E-ITR. Therefore assesse had to file a Writ Petition to seek directions to tax department to accept paper ROI and to consider claim of assesse which could not be made in the E-ITR. The Court inter alia considered issues like (a) the return of income in electronic form is self populted i.e. on filling in some entries, the other entries in the return are indicated by the system itself. (b) the petitioner is unable to make a claim which according to him, he is entitled to in law. (c ) In case, the petitioner is compelled to file in the prescribed electronic form, it could be declared by the Assessing Officer as defective (if all entries are not filled) (d ) the department , even at stage of filing of return indicate tax dues and later AO can demand for tax on the basis of the declared income under in intimation under section 143(1) of the Act and also if the assessment is taken to scrutiny under Section 143(3) of the Act, (e ) the petitioner will not be entitled to raise a claim of set off under Section 72 of the Act during the assessment proceedings. Therefore, the Court observed and held that the petitioner without prejudice to his rights and contentions would file the return of income in electronic form on the system before the last date. Petitioner / assesse will also file his return of income for the subject assessment year in paper form with the Assessing Officer before the last date. It would be appropriate that the petitioner make a representation on the above issue to the CBDT, who would then consider it in the context of facts involved in the present case and issue necessary guidelines for the benefit of the entire body of the assessees, if the petitioner is right in his claim that the prescribed return of income to be filed electronically prohibits an assessee from making its claim. Direction to department: The return of income in paper form would be accepted by the Assessing Officer without prejudice to the Revenue’s contention that such a return cannot be filed. Directions to CBDT to consider representation and also to issue necessary guidelines for the benefit of the entire body of the assesses. In ITR forms- scope for further claims should be provided: As suggested in some other articles published long ago, author again suggest that In ITR forms scope for further claims and explanations on contentious issues should be provided. A separate sheet can be added in which assesse can furnish description, details and reasoning for further claims with request to the AO to consider the same and the AO should be empowered to consider such additional claims , though not made in computation furnished in ITR form. Another sheet can be added for explanations which assesse can add to substantiate his claims on which more than one view is prevalent, which can be considered by the AO. Sheets can be designed with flexibility by way of columns and rows for remarks and notes. This will avoid need of assesse to approach High Courts to seek directions to authorities and will reduces litigation
By: CA DEV KUMAR KOTHARI - November 6, 2019
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