Income Tax Appellate Tribunal

Harvinder Singh Girgla, Delhi vs. Commissioner of Income Tax

MANU/ID/1537/2022

15.09.2022

Direct Taxation

Once the defects in the return filed under Section 139(1) of IT Act are removed within the time permitted, the same would relate back to the original date of filing of the return

The assessee is an individual who filed his original return of income for the A.Y. 2017-18 declaring total income of Rs.11,43,530. The assessee had received intimation under Section 143(1) of the Act wherein the total income was determined at Rs.15,41,050 by disallowing the claim of set off of brought forward loss of Rs.3,97,520.

Aggrieved by the order of CPC, assessee carried the matter in appeal before the Learned CIT(A). Before the Learned CIT(A), the grievance of the assessee was that the claim of set off of capital loss at Rs.3,97,520 which was brought forward from earlier years should have been allowed to assessee but the same has not been allowed to the assessee.

The Learned CIT(A) noted that, assessee had filed the original return of income for the A.Y. 2016-17 on 5th August, 2016 which was within the due date. However, notice under Section 139(9) of the Income Tax Act, 1961 (IT Act) was issued to the assessee to rectify the defects in the return filed therein. He noted that since assessee had filed the revised return on 12th November, 2016 which was after the due date of filing the return of income, the benefit of carry forward of losses cannot be allowed to assessee. He thus upheld the order of CPC. The issue in the present case is with respect to set off of brought forward long term capital losses.

Sub Section (9) of Section 139 of the IT Act is attracted, when the AO considers the return of income filed by the assessee to be defective. If the AO considers the return of income to be defective, he is required to intimate such defects to the assessee and give him an opportunity to rectify such defect within a period of 15 days from the date of such intimation or within such further time as granted by the AO. If the defects are not removed within 15 days or such extended time granted by AO, then the return of income shall be treated as invalid return and the provisions of the Act would apply as if the assessee has failed to furnish his return of income. Once the defects which existed into original return of income are removed within 15 days or such extended time granted by AO, the original return upon removal of defects under Section 139(9) of the Act becomes a valid return.

Bombay High Court in the case of Prime Securities Ltd vs. Varinder Mehta has held that, once the defects in the return filed under Section 139(1) of IT Act are removed within the time permitted by the Department, the same would relate back to the original date of filing of the return.

In the present facts, once the defects in the original return of income have been removed, then seen in the light of the ratio of Bombay High Court decision, it would relate back to the original date of filing of return of income, which was within the prescribed time and therefore, the benefits of filing the return of income under Section 139(1) of the Act shall follow. In such a situation, the CPC and CIT(A) was not justified in denying the benefit of setting of brought forward losses of A.Y. 2016-17 while computing the total taxable income for A.Y. 2017-18. The order of CIT(A) is set aside and it is directed that the benefit of carry forward of losses of A.Y. 2016-17 be allowed for set off against the income for A.Y. 2017-18 to the assessee. Appeal allowed.

Tags : Carry forward Losses Benefit

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