Assessee while removing defect u/s 139(9) can not revise income originally returned. A corrected return does not have an independent existence and only aids to validate the original return of income filed by the assessee
In a recent judgment ITAT has quashed the demand raised by CPC holding that assessee was not vested with any right to revise income in the garb of the corrected return filed u/s 139(9) of the Income Tax Act, 1961 (the Act).
ABCAUS Case Law Citation:
ABCAUS 3878 (2024) (02) ITAT
Important Case Laws relied upon by parties:
Kunal Structure (India) Private Limited Vs. Deputy Commissioner of Income Tax (2020) 422 ITR 482 (Guj.)
Balmukund Acharya Vs. DCIT (2009) 310 ITR 310
Nirmala L. Mehta Vs. A. Balasubramaniam, CIT (2004) 269 ITR 1
Sanchit Software & Solutions (P) Ltd. Vs. CIT (2012) 349 ITR 404
CIT Vs. Smt. Malti Mishra (2013) 38 taxmann.com 160
Vikas Mandge vs. ITO
In the instant case, the assessee had challenged the order passed by the CIT(A), National Faceless Appeal Centre confirming the addition made by CPC Bengaluru.
The assessee was a doctor by profession had filed her return of income disclosing income under the deeming provisions of Section 44AD of the Act. Thereafter, a notice u/s 139(9) of the Act was issued to the assessee, wherein, she was called upon to remove certain defects in her return of income being not filled Balance sheet and PL Account.
The assessee filed her corrected return in compliance to notice issued u/s.139(9) of the Act after removing the defects.
The return of income filed by the assessee u/s 139(9) of the Act was processed by the CPC, Bengaluru vide intimation u/s.143(1) of the Act after accepting the income that was disclosed
by the assessee in her return filed u/s. 139(9) of the Act. However, a demand was raised in her hands.
The CIT(Appeals) dismissed the assessee’s appeal.
Before the Tribunal, the assessee referred to the mistake that had inadvertently crept in the return of income that was filed by the assessee u/s.139(9) of the Act. It was submitted that due to the assesse’s bonafide mistake of not filling the columns in Schedule BP-Computation of income from business or profession, the total income of the assessee was doubled i.e. profit or loss (after depreciation) and profit u/s 44ADA.
It was submitted that though it is a matter of an admitted fact that the corrected return filed by the assessee u/s 139(9) of the Act revealed double income but the said amount was not liable to be considered by the CPC, Bengaluru u/s 143(1) of the Act.
It was argued that the scope of the corrected return of income filed u/s.139(9) of the Act is confined to removing the defects in the original return of income filed u/s139 or in compliance to notice u/s.142(1) of the Act, and there was no scope to revise the income that was originally returned, therefore, the CPC, Bengaluru was not justified in adopting the income disclosed by the assessee u/s139(9) of the Act.
The Tribunal observed that nothing is discernible from a bare perusal of the statutory provision of section 139(9) from where it could be gathered that the assessee while removing the defect can also revise the income that was originally returned by him. In fact, the remedy available to an assessee to revise his return of income can only be traced in sub-section (5) of Section 139 of the Act, and that too within the specified time period therein contemplated.
The Tribunal further noted that the above view is fortified on a perusal of the notice u/s 139(9) of the Act issued by the CPC, Bengaluru stated that while correcting the defects, if any changes are being made, leading to change of income and/or taxation under other heads of income, the assessee should file a revised return (and not a corrected return) as per the provisions of the Income Tax Act, 1961. Thus, as observed by the CPC, Bengaluru, the assessee pursuant to the notice u/s 139(9) of the Act was only vested with the right to remove the defect in her return of income, and in case if she sought to make any changes, which would have resulted to change of income, then the same could have only be done by filing a revised return of income and not in the garb of the aforesaid corrected return.
The Tribunal opined that the CPC had only called upon the assessee to remove the defect in her return of income, which on being corrected would validate the original return of income so filed by her. This view is all the more fortified by the fact that the time limit prescribed for selection a case for scrutiny assessment u/s143(2) of the Act, even where the return of income was rectified u/s.139(9) of the Act is to be reckoned from the date of filing of the original return of income and not the corrected return.
The Tribunal opined that in sum and substance, a corrected return in my view does not have an independent existence and only aids to validate the original return of income filed by the assessee u/s139 or u/s.142(1) of the Act.
The Tribunal pointed out that the Hon’ble High Court after, inter alia, deliberating upon the scope and domain of a corrected return filed u/s. 139(9) of the Act had observed that the expression “corrected income “in the notice under sub-section(9) of section 139 of the Act does not mean that a fresh return of income has been filed under that sub-section. Under sub-section (9) of section 139 of the Act, it is only the original return which gets corrected and no new return is filed.
In view of the above, the Tribunal opined that when the assessee was not vested with any right to revise her income in the garb of the corrected return filed u/s. 139(9) of the Act, which was filed by her only with a standalone purpose of validating her original return of income filed u/s.139 of the Ac, therefore, the income disclosed by her in the corrected returned could not have been processed by the CPC/A.O u/s 143(1) of the Act. To sum up, after the corrected return of income was filed by the assessee under sub-section (9) of Section 139 of the Act, the original return of income was validated, and thus, it was the said original return (after removal of the defects) that could have been processed by the CPC, Bengaluru u/s 143(1) of the Act.
The Tribunal concurred with the contentions of the assessee that now when the corrected return of income filed by the assessee u/s 139(9) of the Act had no independent existence and thus, could not have been processed u/s 143(1) of the Act, therefore, the A.O, based on the income disclosed by the assessee in such corrected return had wrongly determined her income at double the income in original return and raised the consequential demand in her hands.
Accordingly, the appeal of the assessee was allowed.
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