There is no bar in filing revised return of income after issue of income tax notice u/s 143(2). There is no such provision in section 139(5) of the Income Tax Act that the assessee cannot file a revised return of income after issuance of notice – ITAT
ABCAUS Case Law Citation:
ABCAUS 2379 (2018) 06 ITAT
The instant appeal was filed by the appellant assessee against the order passed by the CIT(A) confirming the action of the Assessing Officer (AO) in denying claim of deduction under section 54 of the Income Tax Act, 1961 (the Act).
The assessee was an individual who had filed his return of income for the relevant assessment year within the prescribed time. Subsequently, the assessee filed a revised return of income under section 139(5) of the Act declaring a higher income.
In the said revised return of income the assessee while offering long term capital gain, claimed deduction of the said amount under section 54 of the Act towards investment in a new residential house. Thus, in effect, no effective capital gain was liable to tax.
However, the Assessing Officer held that the said revised return of income filed by the assessee claiming deduction under section 54 of the Act being filed after issuance of notice under section 143(2) of the Act was invalid and not acceptable and accordingly.
Accordingly, the AO completed the assessment rejecting assessee’s claim of deduction under section 54 of the Act.
Aggrieved with the disallowance of deduction claimed under section 54 of the Act, assessee preferred appeal before the first appellate authority (CIT-Appeals). The CIT-A upheld the disallowance of deduction claimed under section 54 of the Act by concurring with the reasoning of the AO that the revised return of income filed under section 139(5) of the Act was invalid.
Before the Tribunal, the assessee submitted that there is no bar under the provisions of section 139(5) of the Act that the assessee cannot file revised return of income after issuance of notice under section 143(2) of the Act. It was submitted that once the assessee had filed the revised return of income fulfilling the conditions of section 139(5) of the Act, such revised return of income has to be taken into consideration.
It was pointed out that while the AO had rejected the revised return of income as invalid, at the same time he had accepted the income offered in the revised return of income including the long term capital gain and had only rejected assessee’s claim of deduction under section 54 of the Act. It was also contended that even if the assessee had not claimed deduction under section 54 of the Act before the AO, he can claim such deduction before the Appellate Authorities. However, the first appellate authority, had not considered the same in accordance with law.
Also, it was submitted that if the assessee was otherwise eligible for a deduction under section 54 of the Act, the Departmental Authorities cannot deny such claim by raising technical objections.
The Tribunal observed that from the assessment order it was evident that though, the AO had accepted the long term capital gain offered in the revised return of income, however, he had denied assessee’s claim of deduction under section 54 of the Act by stating that the revised return of income filed by the assessee was invalid since it was filed after issuance of notice under section 143(2) of the Act. Thus, the AO himself had not entirely rejected the revised return of income filed by the assessee.
It was observed that the provisions contained under section 139(5) of the Act makes it clear that if an assessee discovers any omission or wrong statement in the original return of income he can file a revised return of income at any time before the expiry of one year from the end of the relevant assessment year or before completion of the assessment whichever is earlier. There was no dispute to the fact that both the conditions imposed under section 139(5) of the Act stood complied in case of revised return of income filed by the assessee. There was no bar / restriction in the provisions of section 139(5) of the Act that the assessee cannot file a revised return of income after issuance of notice under section 143(2) of the Act.
The Tribunal stated that it is trite law, the assessee can file a revised return of income even in course of the assessment proceedings, provided, the time limit prescribed under section 139(5) of the Act is available. Therefore, the revised return of income filed by the assessee under section 139(5) of the Act could not be held as invalid.
The Tribunal further opined that before the CIT-A, the assessee took an additional ground in respect of deduction claimed under section 54 of the Act irrespective of the fact that it had filed a revised return of income before the Assessing Officer claiming such deduction. However, the Commissioner (Appeals) had completely ignored assessee’s claim by mechanically accepting the reasoning of the Assessing Officer. In the process, he had failed to act in accordance with the ratio laid down by the Hon’ble Supreme Court.
The Tribunal opined that when the assessee had made a claim of deduction under section 54 of the Act, it was incumbent on the part of the Departmental Authorities to examine whether assessee was eligible to avail the deduction claimed under the said provision. The Departmental Authorities are not expected to deny assessee’s legitimate claim by raising technical objection.
The Tribunal set–aside the impugned order of the Commissioner (Appeals) and restored the issue to the file of the Assessing Officer for examining and allowing assessee’s claim of deduction under section 54 of the Act subject to fulfillment of conditions of section 54 of the Act.
Download Full Judgment Click Here >>
----------- Similar Posts: -----------
