Assessment made on revised ITR with fake figures filed for bank loan purpose quashed as the original return was belated and revised return was invalid legally.
ABCAUS Case Law Citation:
ABCAUS 2202 (2018) (02) ITAT
Brief Facts of the Case:
The appellant assessee was an individual engaged in the business of trading. The return of income for the relevant assessment year was originally filed by him in the physical form belatedly. Thereafter, the return of income was again filed electronically giving higher figures of sale, purchase and other expenses.
The said e-return filed subsequently was selected for scrutiny. During the course of assessment proceedings, the assessee submitted that subsequent return in electronic form was not filed by him, hence it should be ignored. It was also submitted that the said e-return was filed by somebody else with ill intention.
This stand of the assessee was not accepted by the AO who found that figures of sales, purchases and profits were substantially higher in the electronic return as compared to the original return. Also, there was a remarkable difference in the balance sheet figures as well as the deductions claimed by the assessee under Chapter VIA.
During the course of assessment proceedings, the assessee could not produce the books of accounts so as to enable the AO to verify as to which of the figures furnished in the two returns of the assessee were correct. The assessee agreed that no regular books of accounts were maintained by him. The AO treated the subsequent e-return filed by the assessee and selected for scrutiny as the revised return and completed the assessment/s 143(3) making additions for various expenses and deductions claimed under Chapter VIA.
Before the CIT(A), the assessee conceded that the subsequent return of income filed electronically was by him. It was submitted that the same was filed with the sole motive of obtaining bank loan. The assessee, however, was not able to produce any evidence to support and substantiate the figures furnished either in the return originally filed in physical form or in the returns subsequently filed in electronic form.
The CIT(A), against the turnover of more than Rs. 20 crores declared in electronic return, estimated the profit of the assessee by applying a net profit rate of 2% at Rs. 40 lakhs and deleted the individual additions made by the AO under the various heads. He however upheld the disallowance of deductions claimed under Chapter VIA as the assessee did not produce any evidence in their support.
Contentions made on behalf of the Petitioner Assessee:
The assessee raised a preliminary ground challenging the assessment made u/s 143(3) on the basis of return of income subsequently in electronic form by treating the same as the revised return.
In this regard, it was contended that the original return of income filed by the assessee was a belated one and therefore the e-return of income filed subsequently and treated by the Assessing Officer as the revised return was not a valid return as the assessee was not entitled to file the revised return as per the provisions of sub-section 5 of section 139.
Thus it was contended that AO was not justified in making the assessment on the said return by treating it as revised return.
Observations made by the Tribunal:
The preliminary objection raised by the assessee found favour with the ITAT which found merit in the contention of the assessee.
The Tribunal set aside the impugned order passed by the CIT(A) and restored the case to the file of the AO for making the assessment afresh in pursuance of the return of income originally filed by the assessee as the same was the only return validly filed by the assessee for the year under consideration.
Appeal of the assessee was allowed