Income Tax Appellate Tribunal

Sri P C Mohan , Bangalore vs Assistant Commissioner Of Income Tax

MANU/IL/0481/2020

08.12.2020

Direct Taxation

The revised return of income filed within the prescribed time limit replaces the original return of income

The assessee has filed present appeal challenging the order passed by learned Commissioner Of Income Tax (CIT(A)). The assessee is challenging the disallowance made by the Assessing Officer, (AO) under Section 14A of the Income-tax Act,1961 [IT Act] read with Rule 8D(2)(ii) of the Income Tax Rules, 1962 out of interest expenditure. Besides the above, the assessee has also raised a legal ground contesting that, the AO should have issued notice under Section 143(2) of the IT Act in respect to the revised return filed by the assessee.

The assessee is deriving salary income and business income. He filed his return of income for the year under consideration. The AO issued notice under Section 143(2) of the IT Act and completed the assessment by adopting the total income returned by the assessee in the original return of income filed by the assessee.

The original return of income was filed by the assessee on 30th September, 2012 and the revised return of income was filed on 18th October, 2012, i.e., within 18 days from the date of filing of original return of income. The AO has issued notice under Section 143(2) of the Act on 6th August, 2013, i.e., the notice under Section 143(2) itself was issued after filing of revised return of income. Under the scheme of the Act, the assessing officer is entitled to assume jurisdiction to scrutinize the return of income filed by assessee only after the issue of notice under Section 143(2) of the Act within the prescribed time limit. If the AO has validly assumed jurisdiction over the original return of income filed by the assessee by issuing notice under Section 143(2) of the Act and if the assessee files any revised return of income after so assuming the jurisdiction, there is no requirement of issuing another notice under Section 143(2) of the Act in response to the revised return of income, since there is no requirement of assuming jurisdiction again.

It is well established proposition of law that, the revised return of income filed within the prescribed time limit replaces the original return of income. Hence, there is no merit in the contentions of the assessee that, the AO should have issued another notice under Section 143(2) of the IT Act against the revised return of income. The coordinate bench of the Tribunal in the case of ACIT Vs. Shilpa Medicare Ltd. has held that, there is no requirement of issuing notice under Section 143(2) of the IT Act in response to the revised return of income filed by the assessee, when the AO had already issued notice under Section 143(2) of the IT Act against the original return of income.

The next issue urged on merits relate to disallowance made under Section 14A of the Act. It is the contention of the assessee that, the interest free funds/own funds available with the assessee is more than the value of investment made in the partnership firm. Hence, as per decision rendered by Hon'ble Karnataka High Court in the case of Micro Labs Limited, no disallowance out of interest expenditure is called for. However, the above said contention of the assessee requires to be examined on the basis of financial statements of the assessee. Hence, this issue is restored to the file of the A.O. for examining the same afresh. Accordingly, the order passed by Ld. CIT(A) on the issue of disallowance made out of interest expenditure under Rule 8D(2)(ii) is set aside. The appeal filed by the assessee is treated as partly allowed.

Tags : Assessment Disallowance Legality

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