2021 (12) TMI 649 - HC - Income Tax

Carry forward of losses - ITR-V filed belated - CBDT Circulars issued relaxing the time of fifteen days for filing the ITR-V Form at CPC pursuant to filing of the E-return of income - HELD THAT - The comprehensive reading of Section 80 and Section 139 3 of the Act read with Notification dated 27.07.2007 issued by the CBDT would make it clear that the e-Return i.e., electronically transmitted return furnished under the Scheme has to be supported by a duly verified Form ITR-V by the eligible person which is required to be furnished under Section 139 of the Act for the assessment year 2007-08 or any subsequent assessment years to a e-Return Intermediary who shall digitize the data of such return and transmit the same electronically to a server designated for this purpose by the e-Return Administrator on or before the due date. It is true that this Circular No.13/2016 relates to the assessment years 2009-10 to 2014-15 and Circular No.3/2020 relates to the assessment years 2015-16 to 2019-20 wherein it refers to filing of tax returns electronically without digital signature and ITR- V Form to be send to the CPC, Bengaluru whereas for the assessment year under consideration i.e., 2008-09, duly verified ITR-V Form was required to be sent by the eligible person to the AO. No discrimination could be made between the asessee, if such ITR-V Form are required to be submitted by the Assessing Officer or before the CPC in relaxing the time prescribed in sub-paragraph 2 of the paragraph 3 of the Notification dated 27.07.2007. The view of the Department is hyper-technical for the reason that the e-filed return data indeed was transmitted on the date of such return filed electronically to the server designated by the e-Return Administrator which necessarily contains the data of the claim made by the assessee for carry forward of losses. ITR-V is verification Form which would be construed as Annexure of statement to be made to the e-filed return of income. Time relaxation is permitted by the CBDT for verification of such returns either by sending a duly signed physical copy of ITR-V to CPC, Bengaluru through speed post. Merely for the reason that ITR-V Forms are required to be sent to Assessing Officer, the relaxation extended for the subsequent Assessment Years cannot be denied. In our considered view, the delay caused in submitting the ITR-V does not make the return submitted on 30.09.2008 e-filed return invalid for denying the carry forward of losses in future years. The Hon ble High Court of Bombay in the case of Crawford Bayley Co 2011 (12) TMI 64 - BOMBAY HIGH COURT while considering the issue of non-receipt of Form ITR-V by the Department, though the department has made the provision of electronic filing of returns, Form ITR-V containing the due verification was required to be remitted by an ordinary post, held that treating e-return filed by the assessee well within the period of limitation cannot be treated as a invalid return and the same has serious consequences. Reference has been made to sub- Section 9 of 139 wherein adequate provisions for the Assessing Officer has been made to furnish in the first instance a notice granting a period of fifteen days to rectify the defect in the return, a provision made for extension of the period within which the defects are to be rectified has also been considered. Though the contention of the assessee in the said proceedings was that ITR-V was submitted by ordinary post well within the period prescribed under the Scheme, that would not make any major distinction if such ITR-V Form is submitted belatedly under the Scheme since the data available in the e-filed return of income is not disputed by the Department inasmuch as the claim of carry forward of losses claimed by the assessee for future years. The significance of filing an e- filed return cannot be effaced and the claim of the assessee cannot be denied on hyper-technicalities. Moreover, system of e-filing of tax returns was in the initial stages for the assessment year in question and if the delay in filing the ITR-V, if is relaxable for the subsequent assessment years, the same cannot be restricted in stricto sense for the initial years of the Scheme - Substantial question of law in favour of the assessee.

Summary

Issues:
Challenge to order of the Income Tax Appellate Tribunal regarding the assessment year 2008-09.

Analysis:
1. The appeal was filed by the Revenue challenging the Tribunal's order. The substantial question of law was whether the delay in submitting the ITR-V form invalidated the return for denying carry forward of losses in future years.

2. The assessee e-filed the return on 30.09.2008 and submitted the ITR-V form on 31.03.2009. The Assessing Officer denied carry forward of losses based on a CBDT Notification. The Commissioner of Income Tax [Appeals] upheld the denial, but the Tribunal allowed the appeal, directing the carry forward of losses. The Revenue appealed.

3. The Revenue argued that the ITR-V had to be submitted within 15 days of e-filing, as per the Notification. They cited relevant sections of the Income Tax Act to support their stance.

4. The assessee's counsel referred to judgments and Circulars, arguing that the time for submitting ITR-V had been extended. They highlighted the relaxation provided by CBDT Circulars for verification processes.

5. The Court analyzed Section 80, Section 139[1], and Section 139[3] of the Act along with the CBDT Notification. It was noted that the e-filed return was within the due date. The Notification required ITR-V submission within 15 days, leading to the Assessing Officer's denial of carry forward.

6. The Court discussed Circulars extending the time for ITR-V submission for subsequent assessment years. They emphasized that the delay in ITR-V submission should not invalidate the e-filed return, considering the relaxation provided.

7. Referring to the judgment of the Hon’ble High Court of Bombay, the Court highlighted that treating a timely e-filed return as invalid due to delayed ITR-V submission could have serious consequences.

8. The Court found no perversity in the Tribunal's decision and ruled in favor of the assessee, dismissing the Revenue's appeal. The delay in ITR-V submission did not warrant denying the carry forward of losses.

In conclusion, the Court upheld the Tribunal's decision, emphasizing that the delay in submitting the ITR-V form should not invalidate the timely e-filed return, especially considering the relaxation provided in subsequent assessment years.