Whether Revised Return can be filed after intimation is issued u/s 143(1) of Income Tax Act, 1961?

[ACIT v. Padma Logistics &Khanij (P.) Ltd. – dated 22 May, 2020]

In the present case, Kolkata Tribunal ordered that the intimation issued u/s 143(1) of the Act does not preclude the assessee from filing a revised return of income.

It is submitted that the assessee has not filed the return of loss in time as prescribed u/s. 139(3) of the Income Tax Act, 1961 (‘the Act’) hence the return filed on 09.06.2011 was not accepted by the Assessing Officer(‘AO’). It is further submitted that the assessee company has filed a revised return after intimation u/s. 143(1) dated 14.04.2011 was passed against the assessee and hence the revised return u/s. 139(5) of the Act was not filed on time of the assessment order.

It is clear that section 139(3) of the Act stipulates that loss of previous year under the head “Income from Business/ profession” and under the head “Capital Gains” cannot be carried forward unless the return of loss is submitted before the due date of filing the return u/s 139(1) of the Act. So, losses of earlier years for which return of loss need to be filed within the prescribed due date then only it can be carried forwarded to subsequent years.

It was submitted that the ROI was filed by assessee on 28.09.2010. At that time the assessee was not having any loss of the previous year to be carried forward. Only after the demerger order of Vortel division of M/s. SYK Ltd. stood vested with the assessee company by virtue of Hon’ble High court order in March/April, 2011, the assessee filed revised ROI on 09.06.2011 and said losses does not pertain to the losses incurred by the assessee during the relevant previous year under the heads of income- (a) Income from Business/Profession, (b) Capital Gains.

In the present matter, the Kolkata Tribunal opined that section 139(3) of the Act is not applicable to the facts of the case as contended by the AO and therefore this ground raised by the AO in rejecting the revised return filed by the assessee is baseless.

Another angle to it is that when the assessee filed the original ROI on 28.09.2010, the application for demerger was only filed before the Hon’ble High Court and it was only in the pipe line and the Hon’ble High court sanctioned the demerger scheme only in March/April, 2011, so the assessee filed revised ROI on 09.06.2011.

So, when the assessee filed the original ROI on 28.09.2010, it cannot predict the outcome of its application for demerger filed before the Hon’ble High Court and it is quite impossible for the assessee to file any return as contemplated u/s. 139(3) of the Act. So, section 139(3) of the Act would not come in the way in the facts and circumstances of this case.

The Tribunal said that it was brought to our notice that in the instant case, the assessee had filed a ‘nil’ revised Return of income and not a loss return of income as misunderstood by the AO. In the revised return of income filed by the assessee on 09- 06-2011, the assessee has claimed the benefit of set off of business losses and unabsorbed depreciation losses brought forward from earlier years by SYK Ltd in respect of its ‘Vortal Undertaking” and carried forward the balance unabsorbed losses pertaining to the said demerged undertaking to subsequent years.

The AO has himself accepted that the assessee has computed revised total income as Nil after making adjustments on account of set off and carry forward of losses of the demerged undertaking pursuant to the scheme of demerger. The assessee had carried forward the balance unabsorbed depreciation to subsequent years. On such facts, we find that the AO erred in his understanding on this issue and erred in rejecting the revised return for this reason.

The other reason given by the AO to reject the revised return was that the assessee company has filed the revised return after receipt of intimation u/s. 143(1) of the Act and hence do not fulfill the conditions as laid down in sec. 139(5) of the Act which provision required the filing of revised return prior to completion of assessment.

The Tribunal said that in the instant case the assessee filed ROI on 28.09.2010 and intimation u/s. 143(1) was issued on 14.04.2011 and the revised ROI was filed on 09.06.2011, after the Hon’ble High Court’s order of demerger was passed on (08.03.2011 and 21.04.2011) with effect from the appointed date 01.03.2010. So from the dates of events given above, it is clear that assessee could not have filed the revised return claiming set off u/s. 72A(4) of the Act of the demerged company without the Hon’ble High Court’s sanctioned the demerger scheme on 08.03.2011 and 21.04.2011. The intimation was issued by the department u/s. 143(1) of the Act on 14.04.2011. So, the AO by raising this objection is asking the assessee to do an impossible thing. Be that as it may be intimation u/s. 143(1) of the Act is not strictly assessment, when the AO has passed in the relevant year scrutiny assessment u/s. 143(3) of the Act.

The Kolkata Tribunal held that the right to file a revised return of income does not lapse with the issuance of intimation under section 143(1) of the Act. Intimation u/s 143(1) of the Act cannot be said to be a ‘completion of assessment’ and more so, when assessment has subsequently been completed under section 143(3) of the Act. Reliance is placed on the judgment of the Hon’ble Supreme Court in the case CIT v Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2007) 291 ITR 500 (SC) wherein it was held that, “The expressions ‘intimation’ and ‘assessment order’ have been used at different places. The contextual difference between the two expressions has to be understood in the context the expressions are used. The assessment is used as meaning sometimes ‘the computation of income’, sometimes ‘the determination of the amount of tax payable’ and sometimes ‘the whole procedure laid down in the Act for imposing liability upon the tax payer’. In the scheme of things, as noted above, the intimation under section 143(1)(a) cannot be treated to be an order of assessment.

Moreover, Section 139(5) of the Act states that an assessee can file a revised return of income before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

In the instant case the assessee had furnished the revised return of income u/s. 139(5) of the Act on 09-06-2011. The last date of filing the revised return of income was 31-03-2012, being one year from the end of the relevant assessment year. And the assessment order u/s. 143(3) of the Act was passed on 28-03-2013.

As such, the return of income was filed on time by the assessee. However, the AO has opined that since the intimation u/s. 143(1) of the Act was passed on 14-04-2011, the assessee lost its right to file a revised return thereafter, is on wrong understanding of law and so the reason of AO fails.

The Kolkata Tribunal held that the intimation issued u/s 143(1) of the Act does not preclude the assessee from filing a revised return of income. More so, when assessment order u/s 143(3) of the Act was also passed in the present case of the assessee, thus the intimation u/s 143(1) of the Act loses its importance. And we find in this case the assessee has rightly filed the revised return of income u/s 139(5) of the Act within the stipulated time frame as per statute. And as such, this contention of the AO is incorrect in law.

Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.

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