2021 (12) TMI 312 - HC - Income Tax

Not accepting revised return of the petitioner in violation of Section 139 - scheme of arrangement of the de-merger of the company conceived -time limit to file the revised return under Section 139(5) of the Act had expired - revised return pursuant to the demerger on account of the order of the NCLT - HELD THAT - As the order of the NCLT had come on 17.03.2020 and therefore, it was not possible for the petitioner to so do it within time frame as set under Section 139(5) of the Act as the appointed date as per the order of the NCLT is fixed on 01.04.2017 the petitioner would be entitled to file the revised return and in wake of the decision of this Court in case of Principal Commissioner of Income- Tax Others Vs. Babubhai Ramanbhai Patel 2017 (7) TMI 744 - GUJARAT HIGH COURT the original return under Section 139(1) will pale into insignificance and would not survive. The respondent authority therefore ought to have considered the filing of revised return and as that has not been done, it is a clear breach of statutory provision, indulgence at the end of the Court is a must. Matter has travelled to this Court only because the revised return was not permitted beyond the prescribed time limit as set under Section 139 (5) of the Act. The Apex Court in case of DALMIA POWER LIMITED 2019 (12) TMI 991 - SUPREME COURT when has categorically held and observed that Section 119 of the IT Act in such matters also would not be applicable and therefore, the least respondent authority could have done was to permit revised return. When the respondents have geared up to operate in the regime of electronic and faceless mode for conducting all its operations including the filing of returns document, hearing and assessment, it shall need to improvise the software and closely examine the difficulties experienced by the tax payers because of the limitation of the softwares which can easily be corrected to allow the revised return more particularly, when the law has been made quite clear by virtue of the direction of the Apex Court. Let the requisite care be taken expeditiously in improvising the software wherever necessary since its limitations would have direct bearing on the satisfaction of tendency to swell the Court litigation. The petitioner could have been saved from this ordeal, had such care been taken to permit the revised return in an electronic mode once the direction of the NCLT was communicated along with the decision of the Apex Court. Present petition is allowed and disposed of by quashing and setting aside the order passed by the respondent-authority dated 07.05.2021 under Section 143(3) read with Section 144B of the IT Act.

Summary

Issues:
Challenging non-acceptance of revised return for Assessment Year 2018-19 under Section 129 of the Income Tax Act, 1961.

Analysis:
1. Facts Leading to the Petition:
The petitioner, a company involved in Oil and Gas services, demerged its business, and the scheme was sanctioned by the NCLT with an appointed date of 01.04.2017. The petitioner filed the original return for Assessment Year 2018-19 before the scheme was sanctioned. After the scheme's approval, the petitioner sought to file a revised return, but the time limit had lapsed, and there was no online mechanism available. Despite physically filing the revised return with an explanation, it was not processed by the respondent.

2. Arguments and Counter-Arguments:
The petitioner argued that the delay in filing the revised return was due to obtaining NCLT's sanction and relied on the decision in DALMIA POWER LIMITED case. The respondent contended that the revised return was filed manually, making it invalid as per Board Circular requiring electronic filing. The respondent also highlighted that the revised return was beyond the time limit set by the Act.

3. Court's Decision:
After considering the arguments, the Court found that the petitioner's inability to file the revised return electronically within the time frame was due to the NCLT's order. The Court emphasized that the filing of the revised return should have been permitted, especially after the NCLT's direction and the Apex Court's decision. The Court quashed the assessment order and directed the respondent to process the revised return filed by the petitioner, either electronically or by physical copy, granting a minimum of two weeks for compliance.

4. Final Remarks:
The Court highlighted the need for authorities to adapt to electronic and faceless operations to address taxpayer difficulties, especially in accepting revised returns. Emphasizing the importance of software improvements to prevent unnecessary litigation, the Court urged for prompt action in enhancing software capabilities to facilitate the acceptance of revised returns in line with legal directives.

In conclusion, the Court allowed the petition, setting aside the respondent's order and emphasizing the importance of accommodating revised returns within the statutory framework, especially in cases where delays are beyond the taxpayer's control.