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TMI Blog2023 (11) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Note on Tax Audits under section 44AB of the Act issued by ICAI and on perusal of Para 5.13 of the Guidance note it is apparent that the Sales proceeds of Fixed Assets would not form part of gross receipts in business for the purposes of section 44AB of the Act. As decided in Y.K. Patel Securities (P) Ltd. [ 2023 (6) TMI 1327 - ITAT MUMBAI] there is merit in the submission of the assessee that it is not required to get its accounts audited u/s 44AB - Accordingly, we are of the view that the defect notice issued by CPC u/s 139(9) of the Act is not in accordance with law and accordingly, we quash the said defect notice, meaning thereby, the return of income filed by the assessee should be considered as valid return. As defect notice issued by CPC u/s 139(9) of the Act is not in accordance with law and accordingly, we quash the said defect notice, meaning thereby, the return of income filed by the assessee should be considered as valid return. Accordingly, we direct the AO/CPC to treat the return of income filed by the assessee as valid return and process the same in accordance with law. Thus the appeal of the assessee is allowed. - SHRI SANDEEP GOSAIN, JM SHRI RATHO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot required to get his accounts audited u/s 44AB of the Act. This was the mistake apparent from the face of record and was duly rectifiable u/s 154 of the Act. The CIT (A) and Id. AO both the authorities did not considered to this vital fact and summarily rejected the plea of the applicant. 21 Brief facts of the case are that the assessee filed an application for rectification u/s 154 of the IT Act, 1961 stating for rectification of mistake of law apparent in the order passed by the DCIT, CPC, Bangalore on 01.03.2019 for invalidating the return filed by the Assessee for AY 2017-18. The application of the assessee had been considered by the AO who on perusal of application filed by the assessee found that order u/s 139(9) has been passed by the Ld DCIT, CPC, Bangalore on 01.03.2019 treating the return as invalid return with remarks as In spite of being afforded adequate opportunities, the Assessee has not rectified all the aforementioned defects noticed in the return of income. Accordingly, as per the provisions of Section 139(9) of the Income Tax Act, 1961, the return of income for AY 2017-18 filed by the on 21.03.2018, vide Acknowledgement No. 473392361210318 is treated as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant has filed the return of income u/s 139(1) of the Income Tax, 1961 and CPC has issued the notice of defective return u/s 139(9) of the Income Tax Act, 1961. The appellant has not Corrected the defect raised by CPC in due time and in the result, the return filed u/s 139(1) has been treated as invalid. The appellant has filed application u/s 154 of the Income Tax Act, 1961 before the AO. In this regard, it is important to mention here that the AO can only rectify the below mistake u/s 154 of the Income Tax Act, 1961: a) amend any order passed by it under the provisions of this Act (b) amend any intimation or deemed intimation under sub-section (1) of section 143 of the Income Tax Act, 1961 In this case, the rectification application filed by the appellant u/s 154 of the Income Tax Act, 1961 before the Ld. AO has no legal validity, as the assessee has moved application u/s 154 of IT Act, 1961 against the return which has been declared invalid and defective and nonest u/s 139 (9) of IT Act, 1961 and such type of declaration by CPC cannot be subject matter of rectification by AO as per the provision of section 154 of IT Act, 1961. Therefore, keeping in view of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Profit on Sales of Fixed Assets , which for the purpose of section 44AB of the Act cannot be included in gross receipts of the business. In this regard the kind attention is drawn towards the Guidance Note on Tax Audits under section 44AB of the Act issued by ICAI and on perusal of Para 5.13 of the Guidance note (Copy at PB Page 89) it is apparent that the Sales proceeds of Fixed Assets would not form part of gross receipts in business for the purposes of section 44AB of the Act. 2.3 Mistake of CPC is curable u/s 154 Since, the assessee was not required to got its accounts audited u/s 44AB of the Act and in the order passed u/s 139(9) of the Act, it was wrongly held that the books of accounts have not been audited. Therefore, this was an apparent mistake of law which is well apparent from the record and duly curable u/s 154 of the Act. For the sake of ready reference, the provisions of section 154(1) is reproduced as under: - [(1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may,- (a) amend any order passed by it under the provisions of this Act ; [(b) amend any intimation or deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to get its accounts audited u/s 44AB of the Act. Thus, the order u/s 139(9) was passed by giving the wrong finding and such fact is duly verifiable from the ITR of the assessee. If an order is passed by giving wrong finding or against the provisions of law, which are which is apparent from the record, then the authorities are bound to rectify such mistakes either suo-moto or as and when the same brought in their knowledge. This can only be done by passing the order under section 154 of the Act and thus the ld. AO wrongly held that this is not the mistake apparent from record and also no cogent reason behind to this finding has been given. ii) Since, the assessee did not seek any rectification in the return, which has been treated as invalid but it sought rectification in the order passed u/s 139(9) of the Act, therefore the rectification application filed by the assessee was noting to do with the invalid ITR and the Ld. AO wrongly held that due to invalid return for the AY 2017-18 the rectification application is rejected. The Ld. A.O failed to appreciate that if the apparent mistake is in the finding of the order passed u/s 139(9) of the Act, same is curable u/s 154. Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submission of the assessee that it is not required to get its accounts audited u/s 44AB of the Act. Accordingly, we are of the view that the defect notice issued by CPC u/s 139(9) of the Act is not in accordance with law and accordingly, we quash the said defect notice, meaning thereby, the return of income filed by the assessee should be considered as valid return. In view of the above, the response given under E-Nivaran would get nullified. Accordingly, we direct the AO/CPC to treat the return of income filed by the assessee as valid return and process the same in accordance with law. The copy of judgement is enclosed with this submission. 2.7(ii) Hon ble ITAT Pune in the case of Mahila Seva Mandal V/s ITO (2022 (8) TMI 248). (Copy at PB Page 75 to 76). In this case the assessee filed its return of income for the present assessment year on-line The ACIT (CPC), Bangalore issued communication stating the return filed on 17-06- 2015 is inconsistent and defective u/s. 139(9) of the Act and requested to rectify the return within the period of 15 days from the receipt of notice. Consequently, the CPC, Bangalore passed an order u/s 139(9) by treating the return filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income filed by the assessee on 17-06-2015 as valid return and complete the assessment thereon. The assessee is liberty to file evidence, if any, in support of its claim. Thus, the grounds raised by the assessee are allowed for statistical purpose. 2.7(iii) Hon ble Bombay High Court in the case of Future Corporate Resources Private Limited vs DCIT, CPC and ORS. (2023 (6) TMI 1041) (Copy at PB Page 73 to 74). 2.7(iv) Hon ble ITAT Pune in the case of Deere and Company C/o John Deere India Private Limited v/s DCIT (2021 (11) TMI 503). (Copy at PB Page 77 to 81). On the other hand, the ld. DR supported the orders of the lower authorities below. 2.4 We have heard both the parties and perused the materials available on record. The crux of the issue is that the DCIT, CPC, Bengaluru passed an order u/s 139(9) of the on 01-03-2019 wherein the return filed by the assessee was treated as invalid for the following reasons. Tax Payer has shown gross receipt or income under the head profit and gains of Business or Profession more than Rs. 1 Crore, however Part A of the Profit and Loss Account and/or Balance Sheet have not been filed and/or the books of accounts have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent mistake then it is curable u/s 154 of the Act. Since there is no defect in the ITR filed by the assessee, therefore it is a valid Income Tax Return. The submission of the assessee was that the order passed by the CPC u/s 139(9) of the Act was having the apparent mistake of law which resulted the wrong invalidation of return of the assessee. It is also noted that the gross receipts from the business of the assessee is less than Rs.1.00 crore then it is not required to get the accounts audited u/s 44AB of the Act. It is imperative to mention that the gross receipt of the assessee from the business carried out by the assessee was not more than to Rs. 1 Crore, therefore the assessee was not required to get his accounts audited u/s 44AB of the Act. In this regard the reference is drawn at Page 10 of ITR form (Copy at PB Page 11) and Profit and Loss A/c at PB page 58 and on perusal of the record, it is found that the revenue from operation i.e. from business operation was of Rs. 69,43,977/- only, which is less than to Rs. 1 Crore. The other receipts of Rs. 74,58,325/- was Profit on Sales of Fixed Assets , which for the purpose of section 44AB of the Act cannot be included in gross r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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