Brief of the case:
ITAT held in ITO Vs Ramesh Kumar Jajodia that if the assessee had filed its original return u/s 139(1) but forgot to claim the speculative loss in its original return and filed revised return u/s 139(5) and claimed the loss in its revised return then the speculative loss should be allowed to be carried forward.
Moreover if there was clerical mistake in filling up the ITR form then then the assessee should not be deprived of the benefit of carrying forward of loss. As per provision of section 139(9), where a return furnished by the assessee was considered defective, the assessing officer may intimate the defect to the assessee giving him opportunity to remove the same within fifteen days or further time allowed. So AO should have given the assesse opportunity to rectify its return.
Facts of the case:
The assessee had filed its return of income before due date mentioned u/s 139(1) but forgot to claim the speculative loss so it filed revised return within the date mentioned u/s 139(5) and also carried forward the speculative loss but AO disallowed the same on the plea that loss could only be carried forward only if the return was filed u/s 139(1) and loss was claimed under that return and in the above case loss was claimed in the return filed u/s 139(5) so loss could not be allowed to be carried forward.
Contention of the assessee:
Assessee was of the view that clerical/typographical mistake in filling of columns while filing the return should not deprive the appellant benefit of carrying forward a loss for which he was otherwise entitled. At most it could be said that the columns of the return have not been filled in properly. As per provision of section 139(9), where a return furnished by the assessee was considered to be defective, the assessing officer may intimate the defect to the assessee giving him opportunity to remove the same within fifteen days or further time allowed. Clause (a) to the explanation to the said sub-section clarifies that unless necessary statements and columns in the return have been duly fill in, the return can be treated as defective. Therefore, this was the case of defective return and the AO should have been given opportunity to remove the defect by filling in the relevant schedules in a correct manner. AO directly disallowed the claim of loss so AO should be directed to give the assessee opportunity of being heard
Contention of the revenue:
Revenue was of the view that as per the provisions of income tax, loss could only be carried forward if the original return was filed u/s 139(1) and the loss was claimed in that return but as the assessee had claimed the speculative loss by filing the revised return u/s 139(5) so loss should not be allowed to be carried forward as it was against the provisions of income tax act.
Held by ITAT:
ITAT held that as the return was filed by the assessee u/s 139(1) The assessee revised the return finally within the time allowed u/s. 139(5) of the Act. Even otherwise, this disallowance off loss claimed in speculative transactions u/s. 143(5) of the Act cannot be disallowed by acting u/s 143(1) of the Act. Because this is a highly debatable issue and debatable issue cannot be adjudicated while passing intimation u/s. 143(1) of the Act.
So appeal of the revenue was dismissed.