2015 (8) TMI 984 - HC - Income Tax

Interpretation of Section 139(5)- whether Tribunal is right in law in holding the revised return of income filed by the assessee beyond the time limit prescribed under section 139(5) of the Income Tax Act is admissible? - Held that - It is open to an assessee to point out mistakes committed by it in the return filed and that the authorities under the Income Tax Act are bound to assess the income and loss of the assessee in terms of the provisions of the Act. Accordingly, the Tribunal concluded that it was open to the assessee to bring to the notice of the authorities the finalised accounts and the variation that has occurred in the loss in the return originally filed by it on 30.11.2004. It was on that reasoning that the Tribunal has directed the Assessing Officer to reconsider the matter. Although it is true that by the time audited accounts and the revised return was submitted, the time limit provided in Section 139(5) of the Income Tax Act had expired that, in our view, did not stand in the way of the assessee in taking advantage of the principle laid down by the Apex Court in its judgment in Shelly Products (2003 (5) TMI 4 - SUPREME Court ). It is true that the learned Senior Counsel for the Revenue contended that the law declared by the Supreme Court is understood in the light of the provisions of Section 139(5). In our view, that principle does not in any manner come in conflict with the view taken by the Tribunal and, therefore, in the facts of the case, we are unable to accept the contention. - Decided against revenue

Summary

Issues:
1. Interpretation of Section 139(5) of the Income Tax Act regarding admissibility of a revised return filed beyond the time limit.
2. Understanding the decision of the Supreme Court in Shelly Products in relation to Section 139(5) of the Income Tax Act.
3. Determining whether a revised return filed beyond the time limit prescribed under Section 139(5) for the assessment year is admissible.

Issue 1 - Interpretation of Section 139(5) of the Income Tax Act:
The case involved a challenge by the Revenue against an order passed by the Income Tax Appellate Tribunal regarding the admissibility of a revised return filed by the assessee beyond the time limit provided under Section 139(5) of the Income Tax Act for the assessment year 2003-2004. The Tribunal directed the Assessing Officer to re-examine the matter, leading to the Revenue filing an appeal raising questions of law on the interpretation of Section 139(5). The High Court, after considering the arguments, upheld the Tribunal's decision, citing the Supreme Court's judgment in Commissioner of Income Tax v. Shelly Products. The Court emphasized that the assessee has the right to bring to the authorities' attention any mistakes in the return filed, ensuring a fair assessment of income and loss as per the provisions of the Act.

Issue 2 - Understanding the decision of the Supreme Court in Shelly Products:
The Tribunal's decision was based on the principles outlined by the Supreme Court in the Shelly Products case. The High Court noted that the Supreme Court emphasized the importance of not placing the assessee in a more disadvantageous position due to the Revenue's failure to frame a fresh assessment. The Court reiterated that the assessee can highlight errors or variations in the return, even if filed beyond the prescribed time limit under Section 139(5). The High Court rejected the Revenue's argument that the Supreme Court's decision conflicted with Section 139(5), stating that the two can be harmoniously interpreted to protect the assessee's rights.

Issue 3 - Admissibility of the revised return filed beyond the time limit:
Despite the revised return being filed after the expiration of the time limit under Section 139(5), the High Court held that the assessee could still benefit from the principles established in the Shelly Products case. The Court emphasized that the assessee's ability to point out mistakes in the return and seek a fair assessment should not be hindered by technical time constraints. The High Court concluded that the Tribunal's decision to direct the Assessing Officer to reconsider the matter was justified, as it aligned with the principles of fairness and justice outlined in the Supreme Court's judgment.

In conclusion, the High Court ruled in favor of the assessee, dismissing the Revenue's appeal and upholding the Tribunal's decision to re-examine the matter in light of the principles established by the Supreme Court in the Shelly Products case.