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TMI Blog2024 (3) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... ther on the facts and in circumstances of the case and in law, Ld. CIT(A) has erred in making addition of Rs. 55,91,349/- on account of difference in receipt between "Form 26AS" and "Profit and Loss account"? 4. Whether on the facts and in circumstances of the case and in law, Ld. CIT(A) has erred in making disallowance of Rs. 1,31,527/- for interest on payment of TDS u/s 40(a)(ii) of the Act? 5. Whether on the facts and in circumstances of the case and in law, Ld. CIT(A) has erred in making disallowance of Rs. 17,790/- for penalty expenses? 6. Whether on the facts and in circumstances of the case and in law, Ld. CIT(A) has erred in making addition of Rs. 1,68,54,746/- on account of unsecured loan u/s 68 of the Act? 7. Whether on the facts and in circumstances of the case and in law, Ld. CIT(A) has erred in making addition of Rs. 32,95,776/- u/s. 269SS of the Act? 8. Whether on the facts and in circumstances of the case and in law, Ld. CIT(A) has erred in making disallowance of Rs. 75,07,072/- for employees benefit expenses? 9. Whether on the facts and in circumstances of the case and in law, Ld. CIT(A) has erred in making disallowance of Rs. 1,00,53,319/- for Web Desig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and liable to be quashed. In this regard, he placed reliance on the decision of the Hon'ble jurisdictional High Court in the case of Kunal Structure (India) (P.) Ltd. Vs. DCIT, [2020] 113 taxmann.com 577 (Gujarat). Copy of the order was placed before us. 6. The ld. DR, however, contended that the assessee had cured the defect beyond the period prescribed u/s 139(9) of the Act dealing with defective returns. That, therefore, the decision of the Hon'ble High Court is of no assistance to the assessee. He further relied on the decision of the Hon'ble Supreme Court in the case of Deputy Commissioner of Income-tax (Exemption) Vs. Kalinga Institute of Industrial Technology, [2023] 151 taxamnn.com 434 (SC), for the proposition that where the assessee had not challenged the defect in the notice and participated in the proceedings, he thereafter subsequently was debarred from challenging jurisdiction of the Assessing Officer in terms of Section 124 of the Act. Copy of the order was placed before us. To this, the ld. Counsel for the assessee countered by stating that the decision of the Hon'ble Apex Court was not applicable to the facts of the present case since it is dealt with the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.]" 10. The contention of the Ld. Counsel for the assessee is that notice u/s 143(2) of the Act is to be issued within the time prescribed from the date of filing return of income. Therefore, as per law the notice u/s 143(2) of the Act in the present case ought to have been issued by 30.09.2018. That in the present case the limitation for issuance of notice has been taken from the date of defect in the return being cured by the assessee, which as per the Ld. Counsel for the assessee is of no relevance for the same. That in the facts of the present case, the notice having been issued on 22.09.2019 is clearly beyond time prescribed as per law. That jurisdiction assumed to frame assessment in pursuance to such notice is therefore invalid as also the order passed u/s 143(3) of the Act in consequence to assessment proceedings conducted in lieu of such time barred jurisdictional notice. 11. The case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming of the assessment. This clearly implies that the Assessing Officer can proceed with the assessment without waiting for the removal of defects, which as per law can be removed upto or before the assessment is made. 14. This is further clarified from the fact that the defects which can be cured are in relation to non-filing of documents corroborating the return of income filed by the assessee like computation of income , proof of tax deducted at source , financial statements audited/ unaudited, personal accounts and such other financial data of assesses. These are not such grave defects to invalidate the return of income on the occurrence of such defects, but are curable and hence opportunity is given to the assessee to cure the same and only when it remains uncured despite opportunity given that the return is treated as invalid. This is evident from the Explanation to Section 139(9) of the Act which lists the defects which can be cured u/s 139(9) as under:- "Explanation.-For the purposes of this sub-section, a return of income shall be regarded as defective unless all the following conditions are fulfilled, namely :- (a) the annexures, statements and columns in the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of account are not maintained by the assessee, the return is accompanied by a statement indicating the amounts of turnover or, as the case may be, gross receipts, gross profit, expenses and net profit of the business or profession and the basis on which such amounts have been computed, and also disclosing the amounts of total sundry debtors, sundry creditors, stock-in-trade and cash balance as at the end of the previous year." 15. It is abundantly clear therefore that as per law there is no bar in proceeding with assessment where returns are found defective and therefore the limitation for issuing notice u/s 143(2) of the Act for assuming jurisdiction to frame assessment will logically run from the year in which return is filed and not when the defect is removed by the assessee. 16. Even the Hon'ble jurisdictional High Court in the case of Kunal Structure (India) (P.) Ltd. (supra) noted the same from the reading of section 139(9) of the Act, finding that a defect in a return does not requiring any fresh return to be filed but only the defect to be removed. It was held that this act of removal of defect would relate back to the filing of return of income. The Hon'ble high court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a company or a firm; or (b) being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed: ** ** ** Explanation 2.- In this sub-section, "due date" means,- (a) where the assessee other than an assessee referred to in clause (aa)] is (i) a company; (ii) a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force; or (iii) a working partner of a firm whose accounts are required to be audited under this Act or under any other law for the time being in force, the 30th day of September of the assessment year; (aa) in the case of an assessee who is required to furnish a report referred to in section 92-E, the 30th day of November of the assessment year; (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsection (1) thereof, an assessee is required to file return on or before the due date. As to which is the due date for filing of return has been provided under Explanation 2 to sub-section (1) of section 139 of the Act. Sub-section (3) of section 139 contemplates filing of a return of income by any person who has sustained a loss in any previous year as provided thereunder, and further provides that all the provisions of the Act shall apply as if it were a return filed under subsection (1). Therefore, a return filed under sub-section (3) of section 139 of the Act is treated as a return under sub-section (1) thereof. Sub-section (5) of section 139 of the Act provides that if a person who has filed a return under sub-section (1) or in pursuance of a notice under sub-section (1) of section 142, discovers any omission or wrong statement in such return, he can furnish a revised return within the time provided therein. Thus, sub-section (1) of section 139 of the Act contemplates filing of a return of income, sub-section (3) also contemplates filing of a return of income to which all the provisions of the Act apply as if it were a return filed under sub-section (1) and sub-section (5) p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed further under the Act. In case such defects are not removed within the time allowed, such return of income would be treated as an invalid return. 13. In view of what is discussed hereinabove, the contention that the return under sub-section (9) of section 139 of the Act was filed by the petitioner on 07.07.2017, and that it was this return which was selected for scrutiny under the CASS system in August 2018 and not the defective return filed on 10.09.2016, does not merit acceptance. While the impugned notice under sub-section (2) of section 143 of the Act does say that the return filed by the petitioner on 07.07.2017 has been selected for scrutiny, in the opinion of this court, the reference to the return as the return filed on 07.07.2017 is incorrect, inasmuch as sub-section (9) of section 139 of the Act, does not contemplate filing of a return of income. As noticed hereinabove, it is the original return filed by the assessee which gets rectified upon the removal of the defects contained therein. 14. At this juncture, it may be germane to refer to the notice issued under subsection (9) of section 139 of the Act, the relevant part whereof has been extracted in the objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r subsection (9) of section 139 of the Act and becomes a valid return. Thus, as held by the Bombay High Court in the decisions cited by the learned counsel for the petitioner as referred to hereinabove, the action of removal of the defects would relate back to the filing of the original return of income and accordingly, it is the date of filing of the original return which has been considered for the purpose of computing the period of limitation under sub-section (2) of section 143 of the Act and not the date on which the defects actually came to be removed. 17. Reference may also be made to the decision of this court in case of Babubhai Ramanbhai Patel (supra), on which reliance has been placed by the learned senior standing counsel for the respondents, wherein this court has placed reliance upon a decision of the Allahabad High Court in case of Dhampur Sugar Mills v. CIT [1973] 90 ITR 236, wherein it has been held that there is a clear distinction between revised return and a correction of return. Once a revised return is filed, the original return must be taken to have been withdrawn and substituted by a fresh return for the purpose of assessment. Thus, when a revised return i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner, but such notice must be served within a period of six months from the end of the financial year in which such return is furnished. Thus, if, after furnishing a return of income, the assessee does not receive a notice under subsection (2) of section 143 of the Act within the period referred to in the subsection, the assessee is entitled to presume that the return has become final and no scrutiny proceedings are to be started in respect of that return. It is only after the issuance of notice under sub-section (2) of section 143 of the Act that the Assessing Officer can proceed further under sub-section (3) thereof to make an assessment order. Therefore, the notice under section 143(2) of the Act is a statutory notice, upon issuance of which, the Assessing Officer assumes jurisdiction to frame the scrutiny assessment under sub-section (3) of section 143 of the Act. Consequently, if such notice is not issued within the period specified in sub-section (2) of section 143 of the Act viz. before the expiry of six months from the end of the financial year in which the return is furnished, it is not permissible for the Assessing Officer to proceed further with the assessment. 20. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lid and limitation for issuing notice u/s 143(2) of the Act be determined from the date of removal of defect, we find, is a self-defeating argument. Going by this argument, if the original return is to be treated invalid since the defect was not cured in time, then considering the fact that no other return was filed by the assessee, we fail to understand how notice for framing assessment, u/s 143(2) of the Act, could be issued in the absence of any valid return of income. 19. Even otherwise as per the proviso to the section 139(9) of the Act, as noted above by us, the Assessing Officer is empowered to condone the delay in the removal of the defect which, we have noted, he has done by accepting the defect removed by the assessee and subsequently processing the return u/s 143(1) of the Act and issuing refund to the assessee. So much so that as per the case of the Revenue itself, after removal of the defect, the Assessing Officer went on to issue notice u/s 143(2) of the Act. Meaning thereby that he had condoned the delay in removal of defect, which he was empowered to do in terms of Section 139(9) of the Act. In view of the above, all the arguments of the ld. DR are rejected, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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