2022 (12) TMI 1155 - AT - Income Tax

Adjustment u/s 143(1) - Set off of brought forward long term capital loss - HELD THAT - We find that, as evident from a copy of the income tax return for the assessment year 2010-11 that the assessee had duly filed the income tax return, for the assessment year 2010-11, well within the time permitted u/s. 139 (i) i.e. on 31st July 2011. In this view of the matter, the very foundation of impugned adjustment under section 143(1) is wholly unsustainable in law. We, therefore, vacate the impugned action of the AO to allow the set off of loss brought forward from the assessment year 2010-11. The assessee, accordingly, get the relief for set off of long term capital loss. Assessee appeal allowed.

Summary

Issues:
Challenging correctness of order under section 143(1) for AY 2019-20 - Set off of brought forward long term capital loss - Charging interest under section 234C - Granting refund discrepancy.

Analysis:
The appellant challenged the order dated 25th October 2021, passed by the Commissioner (Appeals) regarding the processing of the return under section 143(1) for the assessment year 2019-20. The grounds of appeal included errors in law and facts related to the set off of brought forward long term capital loss, charging interest under section 234C, and a discrepancy in the granted refund. The Assessing Officer disallowed the set off of the loss claimed by the appellant, citing that the return for the previous year was filed beyond the due date specified under section 139. The appellant disputed this claim, stating that the return was filed in time and requested correction. However, the Assessing Officer dismissed the plea, leading to the appellant appealing to the CIT(A) unsuccessfully and subsequently to the ITAT.

Upon hearing the parties and examining the evidence, the ITAT found that the appellant had indeed filed the income tax return for the assessment year 2010-11 within the time permitted under section 139(i). Therefore, the basis of the adjustment made by the Assessing Officer under section 143(1) was deemed legally unsustainable. Consequently, the ITAT vacated the action of the Assessing Officer and allowed the set off of the long term capital loss brought forward from the assessment year 2010-11, providing relief to the appellant.

In conclusion, the ITAT allowed the appeal, ruling in favor of the appellant on the grounds of the incorrect disallowance of the set off of the brought forward long term capital loss. The judgment was pronounced on the 3rd day of June, 2022.