2018 (1) TMI 457 - HC - Income Tax

Time limit for issuance of notice u/s 143(2) for scrutiny assessment u/s 143(3) - furnishing of ITR-V forms in case of electronic filing of return - Period to be computed from expiry of 30 days from the date of filing of ITR or from the extended date - assessee contended that the assessee had in fact furnished the ITR-V forms within the period of 30 days through mail and the Circular No.3 of 2009 had not formulated any specific procedure - Held that - In the present case, the assessee had filed its return electronically on 30.09.2009. It says that it availed of the filing of the ITR-V forms through post. The Revenue is not in a position to verify either way. It is precisely to cater to this circumstance that the circular of 01.09.2010 (especially para 2) extended the period. The extension of this period necessarily meant that ITR-V forms received during such extended period validated the returns originally filed. The interpretation sought to be placed by the Revenue now that fresh returns were necessary, in the opinion of the Court, flies against the opinion of the CBDT and the circumstances, under which, both the circulars were framed and published. In other words, these circulars were necessitated on account of the legislative gap even conflict between the Rules on the one hand, which mandated electronic filing and other provisions of the Statute, which prohibited the attachment of annexures along with returns, which resulted in ITR-V form, as were in the present case. Thus the Court is of the opinion that the question of law framed in this case is to be answered in favour of the assessee

Summary

Issues:
- Interpretation of the notice under Section 143(2) of the Income Tax Act, 1961 regarding the time limit for filing returns electronically and the validity of the assessment.

Analysis:
1. Interpretation of Section 143(2) Notice:
The case revolved around whether the Income Tax Appellate Tribunal (ITAT) erred in holding that the notice under Section 143(2) of the Income Tax Act was time-barred. The appellant filed returns electronically for A.Y. 2009-10 but did not submit the ITR-V form, leading to the Revenue treating the documents as a "Nil" return. The Tribunal and Commissioner accepted the appellant's argument that without a notice under Section 143(2) within the stipulated time, scrutiny assessment under Section 143(3) could not be completed.

2. Revenue's Argument:
The Revenue contended that the return was invalid without the ITR-V form, as per Circular No.3 of 2009, which required the form to be received by the Revenue Authorities within 30 days for a valid return. The Revenue argued that until a valid return with the ITR-V form was on record, no notice under Section 143(3) could be issued. The Revenue also highlighted the appellant's participation in the proceedings and awareness of the circular's requirements.

3. Appellant's Defense:
The appellant argued that the circular of 01.09.2010 catered to the confusion after the earlier circular of 2009, allowing for an extended period to file the ITR-V form. The appellant submitted the ITR-V form within the extended time, and the initial return filing was valid. The appellant emphasized that the statutory period under Section 143(2) had elapsed, rendering the assessment under Section 143(3) invalid.

4. Analysis of Circulars and Amendments:
The Court analyzed Circular No.3 of 2009 and the subsequent circular of 01.09.2010, noting the CBDT's awareness of implementation difficulties. The circulars aimed to address the conflict between Rule 12(3) of the Income Tax Rules and statutory provisions, providing a 30-day extension for filing the ITR-V form. The Court emphasized that the circulars validated returns filed electronically without the ITR-V form within the extended period.

5. Court's Decision:
After detailed analysis, the Court ruled in favor of the appellant and against the Revenue, dismissing the appeal. The Court held that the circulars and legislative gaps necessitated the extended period for filing the ITR-V form, validating the original returns. The Court concluded that the notice under Section 143(2) was invalid, rendering the assessment order void.

In conclusion, the judgment clarified the interpretation of the notice under Section 143(2) in the context of electronic filing and the validity of returns without the ITR-V form. The Court's decision favored the appellant, emphasizing the significance of circulars and legislative intent in addressing procedural gaps and ensuring the validity of returns filed electronically within the extended period.