2021 (2) TMI 1001 - AT - Income Tax

Assessment u/s 153A - Disallowance of loss to be carried forwarded - addition of income tax expenses wrongly made by assessee company in original computation due to some clerical error - HELD THAT - We find that both the authorities have not appreciated the exact reasons for the difference in the loss figures as per the original return and return filed in response to notice u/s 153A and has summarily rejected the assessee s position and as we have noted above, it is a case of mistake whereby the income tax expense which has been disallowed twice while filing the original return of income has been corrected while filing the return of income under section 153A of the Act and there is no fresh claim of any expenditure or loss which was not claimed earlier and has now been claimed for the first time while filing the return in response to notice u/s 153A of the Act. Though the original return of income was filed on 21.09.2012 and the time limit for filing the revised return had expired as contended by the ld CIT/DR, however, being a mistake apparent from record, the assessee can invoke the provision of section 154 and seek rectification of intimation issued u/s 143(1) dated 15.03.2013 before expiry of four years and which has not expired at the time of issuance of notice u/s 153A of the Act on 1.04.2015. Therefore, when the assessee filed the return in response to notice u/s 153A, the assessee still had time to rectify the original return of income and where such rectification is sought as part of return of income filed u/s 153A instead of initiating separate proceeding by way of filing a rectification application, no fault can be said to arise in such a case. We are of the considered view that it is a not a case of fresh claim of loss in the return filed u/s 153A and therefore, the decision of Hon ble Rajasthan High Court in case of Jai Steels ( 2013 (6) TMI 161 - RAJASTHAN HIGH COURT ) doesn t support the case of the Revenue. Decided in favour of assessee.

Summary

Issues:
1. Disallowance of loss to be carried forward due to clerical error.
2. Whether a fresh claim can be filed in the return filed under section 153A of the Act.

Issue 1: Disallowance of loss to be carried forward due to clerical error:
The assessee filed an appeal against the order of the ld. CIT(A)- 4, Jaipur confirming the disallowance of loss to be carried forward, which was caused by the addition of income tax expenses due to a clerical error. The Assessing Officer (AO) did not allow the excess loss claimed by the assessee in the return filed under section 153A, holding that only the loss claimed in the original return filed under section 139(1) would be allowed. The CIT(A) relied on the decision of the Hon’ble Rajasthan High Court in a specific case and upheld the disallowance of the loss. The assessee argued that the difference in the loss claimed in the two returns was due to a clerical error of doubly adding the income tax expense. The assessee rectified this mistake in the return filed under section 153A, where no fresh claim was made, only the clerical error was rectified. The Tribunal found that the disallowance of the income tax expense twice was a mistake apparent on record, and the assessee was correcting the error, not making a fresh claim. The Tribunal held that the disallowance was incorrect, and the decision of the lower authorities was set aside in favor of the assessee.

Issue 2: Fresh claim in the return filed under section 153A of the Act:
The Revenue argued that the revised loss claimed in the return filed under section 153A was a fresh claim that could not be allowed, citing the decision of the Hon’ble Rajasthan High Court. The Revenue contended that since the original return of income was filed earlier, the assessee had ample time to file a revised return, which was not done. The Tribunal, however, noted that the correction made by the assessee in the return under section 153A was not a fresh claim but a rectification of a mistake in the original return. The Tribunal emphasized that the disallowance of the income tax expense twice was an error that needed correction, and there was no new claim being made. Additionally, the Tribunal highlighted that the assessee could have rectified the mistake under section 154 before the expiry of the time limit, and filing the corrected return under section 153A was a valid course of action. Therefore, the Tribunal ruled in favor of the assessee, setting aside the decisions of the lower authorities.

In conclusion, the Appellate Tribunal ITAT Jaipur ruled in favor of the assessee, allowing the appeal against the disallowance of loss to be carried forward due to a clerical error and rejecting the contention that a fresh claim was made in the return filed under section 153A of the Act. The Tribunal found that the correction made by the assessee was a rectification of a mistake, not a new claim, and therefore, the decision of the lower authorities was set aside.