CHALET HOTELS LTD., MUMBAI V. DY CIT-CC-4(2), MUMBAI

ITA 1402/MUM/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7581 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Appeal Filed On: 08-08-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Search and seizure; Cost of acquisition; Revised return; Rule 8D
• Section: 263; 143(3); 153A; 14A; 139(5); 139(1); 44AB; 113; 72; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C” MUMBAI BEFORE SHRI KULDIP SINGH (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 1402/MUM/2021 Assessment Year: 2016-17 Chalet Hotels Limited, Raheja Tower, Plot No. C-30, Opp. SIDBI, Bandra Kurla Complex, Bandra (East), Mumbai-400051. Vs. Dy. Commissioner of Income Tax, Central Circle-4(2), Room No. 1918, Air India Building, Nariman Point, Mumbai-400021. PAN No. AAACK 0411 E Appellant Respondent Assessee by : Mr. Madhur Agrawal, AR Revenue by : Mr. Jasdeep Singh, CIT-DR Date of Hearing : 05/04/2022 Date of pronouncement : 14/06/2022 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 17/06/2021 passed by the Ld. Commissioner of Income-Tax (Appeals)-52, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2016-17, raising the sole ground as under: “On the facts and circumstances of the case, the Ld. CIT(A) erred in law by upholding the action of the AO and thereby not allowing carry forward of Short Term Capital Loss amounting to humbly prays before your forward of the short term capital loss. 2. Briefly stated facts of the case are that the assessee company filed its regular return of income in terms of section 139(1) of the Income-Tax Act, 1961 (in short loss of ₹ (-)1,89,90,32,020/ was carried out at the premises of the assessee on 30/11/2017 and as a consequence of search action Act was issued on 04/07/2018. In response, the assessee filed return of income on 14/07/2018, declaring loss of ₹1,54,21,64,359/-. This return was further revised to ₹1,49,75,40,455/-. 2.1 During the scrutiny proceedings before the the assessee explained mistake in computing the loss under the head Chalet Hotels Limited ITA No. On the facts and circumstances of the case, the Ld. CIT(A) erred in law by upholding the action of the AO and thereby not allowing carry forward of Short Term Capital Loss amounting to ₹57,22,815/-. The Appellant humbly prays before your Honor that the appellant be granted the carry forward of the short term capital loss.” stated facts of the case are that the assessee company filed its regular return of income in terms of section 139(1) of the , 1961 (in short ‘the Act’) on 17/10/2016 declaring a )1,89,90,32,020/-. Thereafter, a search and seizure action was carried out at the premises of the assessee on 30/11/2017 and a consequence of search action, notice under section 153A of the on 04/07/2018. In response, the assessee filed return of income on 14/07/2018, declaring loss of . This return was further revised to During the scrutiny proceedings before the Assessing Officer the assessee explained the cause of reduction of loss mistake in computing the loss under the head “income from capital Chalet Hotels Limited ITA No. 1402/Mum/2021 2 On the facts and circumstances of the case, the Ld. CIT(A) erred in law by upholding the action of the AO and thereby not allowing carry forward of . The Appellant Honor that the appellant be granted the carry stated facts of the case are that the assessee company filed its regular return of income in terms of section 139(1) of the ) on 17/10/2016 declaring a Thereafter, a search and seizure action was carried out at the premises of the assessee on 30/11/2017 and notice under section 153A of the on 04/07/2018. In response, the assessee filed return of income on 14/07/2018, declaring loss of (-) . This return was further revised to (-) Assessing Officer, the cause of reduction of loss as inadvertent income from capital gain”. The assessee submitted that it had purchased shares of “Intime Properties Private Limited ₹54,90,47,767/- and were sold on 31/03/2016 for a sum of ₹54,32,72,901/-, thus, the shares are held for a period of 35 months and therefore loss of shares should have been reported as whereas by mistake the assessee treated the loss as capital loss’ and therefore after reducing indexed cost of acquisition of ₹63,20,77,335/-out of the sale consideration ₹8,88,04,454/-and same was claimed in the return of income filed under section 139(1) of the 3. The Assessing Officer the ‘short-term capital loss claimed in the return of incom Act. The relevant part of the assessment order is reproduced as under: Chalet Hotels Limited ITA No. . The assessee submitted that it had purchased shares of time Properties Private Limited” on 30/04/2013 for a s and were sold on 31/03/2016 for a sum of , thus, the shares are held for a period of 35 months and therefore loss of ₹57,74,866/- arising from the sale should have been reported as ‘short-term capital lo whereas by mistake the assessee treated the loss as and therefore after reducing indexed cost of acquisition out of the sale consideration, resulted in and same was claimed in the return of income filed under section 139(1) of the Act. Assessing Officer disallowed the claim of carry term capital loss’ of on the ground that same has not been claimed in the return of income filed under section 139(1) of the relevant part of the assessment order is reproduced as Chalet Hotels Limited ITA No. 1402/Mum/2021 3 . The assessee submitted that it had purchased shares of on 30/04/2013 for a sum of and were sold on 31/03/2016 for a sum of , thus, the shares are held for a period of 35 months rising from the sale of those term capital loss’, whereas by mistake the assessee treated the loss as ‘long-term and therefore after reducing indexed cost of acquisition resulted in loss of and same was claimed in the return of income filed disallowed the claim of carry forward of on the ground that same has not been e filed under section 139(1) of the relevant part of the assessment order is reproduced as “6.1 The submission of the assessee is considered but the same is not acceptable because as far as disallowance u/s 14A of the IT Act is concerned, it has to be done as per Rule 8D which is discussed at length in ensuing para 13 of this order. Further, the inadvertent claim of STCG as LTCG is also not acceptable because such claim should be changed by the assessee in its return of income filed u/s 139 only. Thus, It is evident from the above that the assessee has enhanced its income in the return of income filed in response to notice u/s 153A by an amount of Rs. 4,46,23,904. In this regard, it is pertinent to mention here that the asse notice u/s 153A of the Act is not de novo assessment. The issuance of notice under s. 153A for all the six assessment years also does not entail altogether a fresh exercise of making fresh assessment. In fact, the apparent and logical purpose of calling for returns for all the six assessment years immediately preceding the year in which search is initiated is to dispense with the requirement of recording reasons for reopening the assessment and also to avoid any contr correct year of assessibility of such income falling within such six assessment years. Therefore, new claim of deduction or allowance cannot be made. In this regard, reliance is placed on the following judgments:- (i) In the judgment of IT (P.) Ltd. v. Assistant Commissioner of Income (Jodhpur) wherein it has been categorically held that assessment or reassessment made pursuant to notice under section 153A is not de novo assessment; therefore, there is no merit in ground to make a new claim of deduction or allowance during assessment/reassessment under section 153A as such where admittedly regular assessments are Chalet Hotels Limited ITA No. 6.1 The submission of the assessee is considered but the same is not acceptable because as far as disallowance u/s 14A of the IT Act is it has to be done as per Rule 8D which is discussed at length in ensuing para 13 of this order. Further, the inadvertent claim of STCG as LTCG is also not acceptable because such claim should be changed by the assessee in its return of income filed u/s 139(5) of the IT Act only. Thus, It is evident from the above that the assessee has enhanced its income in the return of income filed in response to notice u/s 153A by an amount of Rs. 4,46,23,904. In this regard, it is pertinent to mention here that the assessment or reassessment made pursuant to notice u/s 153A of the Act is not de novo assessment. The issuance of notice under s. 153A for all the six assessment years also does not entail altogether a fresh exercise of making fresh assessment. In fact, parent and logical purpose of calling for returns for all the six assessment years immediately preceding the year in which search is initiated is to dispense with the requirement of recording reasons for reopening the assessment and also to avoid any controversy as to the correct year of assessibility of such income falling within such six assessment years. Therefore, new claim of deduction or allowance cannot be made. In this regard, reliance is placed on the following In the judgment of ITAT, Jodhpur in the case of Suncity Alloys (P.) Ltd. v. Assistant Commissioner of Income-tax 2009] 124 TTJ 674 (Jodhpur) wherein it has been categorically held that assessment or reassessment made pursuant to notice under section 153A is not de ent; therefore, there is no merit in ground to make a new claim of deduction or allowance during assessment/reassessment under section 153A as such where admittedly regular assessments are Chalet Hotels Limited ITA No. 1402/Mum/2021 4 6.1 The submission of the assessee is considered but the same is not acceptable because as far as disallowance u/s 14A of the IT Act is it has to be done as per Rule 8D which is discussed at length in ensuing para 13 of this order. Further, the inadvertent claim of STCG as LTCG is also not acceptable because such claim should be changed (5) of the IT Act only. Thus, It is evident from the above that the assessee has enhanced its income in the return of income filed in response to notice u/s 153A by an amount of Rs. 4,46,23,904. In this regard, it is pertinent to ssment or reassessment made pursuant to notice u/s 153A of the Act is not de novo assessment. The issuance of notice under s. 153A for all the six assessment years also does not entail altogether a fresh exercise of making fresh assessment. In fact, parent and logical purpose of calling for returns for all the six assessment years immediately preceding the year in which search is initiated is to dispense with the requirement of recording reasons for oversy as to the correct year of assessibility of such income falling within such six assessment years. Therefore, new claim of deduction or allowance cannot be made. In this regard, reliance is placed on the following AT, Jodhpur in the case of Suncity Alloys tax 2009] 124 TTJ 674 (Jodhpur) wherein it has been categorically held that assessment or reassessment made pursuant to notice under section 153A is not de ent; therefore, there is no merit in ground to make a new claim of deduction or allowance during assessment/reassessment under section 153A as such where admittedly regular assessments are shown as completed assessment on date of initiation of action under section 132. (ii) In the case of Jai Steel (India), Jodhpur Assistant Commissioner of Income-tax2013] 36 taxmann.com 523 (Rajasthan), the Hon"ble High Court of Rajasthan has held that it is not open for the assessee to seek deduction or claim expenditure original assessment, which assessment already stands completed, only because a assessment under Section 153A of the Act in pursuance of search or requisition is required to be made. 4. On further appeal, the Ld. CIT(A) allowance of the carry as under: “5.3 The submission made by the assessee has been examined. The case of the assessee is that of an abated assessment. As such, the assessment was open nature of addition and extent of the AO to correct an error of a bodafide mistake. Hence, the action of return to correct certain errors relating to change income noted after filing of return in response to section 153A of Act is found tenable. 5.4 However, on the issue of claim of the assessee for allowing carry forward of short term allowed to be carried Chalet Hotels Limited ITA No. shown as completed assessment on date of initiation of action under In the case of Jai Steel (India), Jodhpur Assistant Commissioner tax2013] 36 taxmann.com 523 (Rajasthan), the Hon"ble High Court of Rajasthan has held that it is not open for the assessee to seek deduction or claim expenditure which has not been claimed in the original assessment, which assessment already stands completed, only because a assessment under Section 153A of the Act in pursuance of search or requisition is required to be made.” further appeal, the Ld. CIT(A) also upheld the non allowance of the carry forward of ‘short-term capital loss The submission made by the assessee has been examined. The assessee is that of an abated assessment. As such, the assessment was open both for the assessee as well as the AO as far as nature of addition and extent of claim was concerned. It was the duty of the AO to correct an error of computation if the appellant had made a bodafide mistake. Hence, the action of the assessee in filing a revi return to correct certain errors relating to change in the head of income noted after filing of return in response to section 153A of Act is found tenable. However, on the issue of claim of the assessee for allowing carry short term capital loss, it is noted that such loss can be allowed to be carried forward if the assessee has computed such loss Chalet Hotels Limited ITA No. 1402/Mum/2021 5 shown as completed assessment on date of initiation of action under In the case of Jai Steel (India), Jodhpur Assistant Commissioner tax2013] 36 taxmann.com 523 (Rajasthan), the Hon"ble High Court of Rajasthan has held that it is not open for the assessee to which has not been claimed in the original assessment, which assessment already stands completed, only because a assessment under Section 153A of the Act in pursuance of also upheld the non- term capital loss’ observing The submission made by the assessee has been examined. The assessee is that of an abated assessment. As such, the for the assessee as well as the AO as far as of claim was concerned. It was the duty computation if the appellant had made the assessee in filing a revised in the head of income noted after filing of return in response to section 153A of the However, on the issue of claim of the assessee for allowing carry capital loss, it is noted that such loss can be forward if the assessee has computed such loss and claimed the same in the Act. The reliance placed by the case of Eversmile Constructions (supra) perused. However, the issue here is not the before the AO through a return /s 153A of the Act. assessee represents an abated assessment and suc been considered if allowable. However, it is noted that section 153A only overrides certain sections of the Act and not the computational sections provided in the Act. Section 80 which is reproduced below, clearly prohibits any through a return under section 80. Notwithstanding anything contained in this Chapter, no loss which has return filed in accordance with the section (3) of section 139, shall be carried forward and off under sub of section section (1) or sub (3) of section 74A 5.5 In light of the clear provisions of the Act, the assessee cannot be allowed to carry forward the short term capital loss as the same has not been claimed Act. The claim of carry raised by the assessee stands 5. Before us, the Ld. counsel containing pages 1 to 225 and relied on the decision of the Chalet Hotels Limited ITA No. and claimed the same in the return of income filed u/s 139(3) of the IT Act. The reliance placed by the assessee on the ITAT decision in th case of Eversmile Constructions (supra) and other cases has been perused. However, the issue here is not the allowability of a fresh claim before the AO through a return /s 153A of the Act. The case of the assessee represents an abated assessment and such claim been considered if allowable. However, it is noted that section 153A only overrides certain sections of the Act and not the computational provided in the Act. Section 80 which is reproduced below, clearly prohibits any carry forward of a loss unless it has been claimed through a return under section 139(3) of the Act: 80. Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of section (3) of section 139, shall be carried forward and off under sub-section (1) of section 72 or sub-section (2) of section 73or sub-section (2) of section 73A or sub section (1) or sub-section (3) of section 740r sub- (3) of section 74A. In light of the clear provisions of the Act, the assessee cannot be carry forward the short term capital loss as the same has not been claimed through a return filed under section 139(3) of the Act. The claim of carry forward is denied to the assessee. The ground raised by the assessee stands dismissed.” Ld. counsel of the assessee filed a paperbook containing pages 1 to 225 and relied on the decision of the Chalet Hotels Limited ITA No. 1402/Mum/2021 6 return of income filed u/s 139(3) of the IT assessee on the ITAT decision in the and other cases has been allowability of a fresh claim The case of the h claim could have been considered if allowable. However, it is noted that section 153A only overrides certain sections of the Act and not the computational provided in the Act. Section 80 which is reproduced below, forward of a loss unless it has been claimed 80. Notwithstanding anything contained in this Chapter, not been determined in pursuance of a provisions of sub- section (3) of section 139, shall be carried forward and set section (2) section (2) of section 73A or sub- -section In light of the clear provisions of the Act, the assessee cannot be carry forward the short term capital loss as the same has through a return filed under section 139(3) of the the assessee. The ground of the assessee filed a paperbook containing pages 1 to 225 and relied on the decision of the Tribunal in the case of BE Billimoria taxman.com 444 (Mumbai relied on the order of the law authorities. 6. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. provision of section 139(3) of the Act, for carry forward of loss under the head “profit and gains of business or profession” or under the head “capital gain” the assessee is required to file return of income on or before the due date as prescribed Act. In the case, the short term capital loss, which the assessee is seeking to carry forward was not included in the return of income filed in terms of section 139(1) of the Act and has been claimed in the return of income filed u/s 153A before us is whether the return of income filed in response to notice issued under sect 153A of the Act can be allowed to carry forward to the assessee for Chalet Hotels Limited ITA No. BE Billimoria & Co. Ltd reported in (2020 taxman.com 444 (Mumbai- Trib). The Ld. DR on the other hand relied on the order of the law authorities. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. provision of section 139(3) of the Act, for carry forward of loss under the head “profit and gains of business or profession” or under the head “capital gain” the assessee is required to file return of income on or before the due date as prescribed u/s 139(1) of the Act. In the case, the short term capital loss, which the assessee is seeking to carry forward was not included in the return of income filed in terms of section 139(1) of the Act and has been claimed in the return of income filed u/s 153A of the Act. The issue in dispute before us is whether the ‘short-term capital loss’ return of income filed in response to notice issued under sect can be allowed to carry forward to the assessee for Chalet Hotels Limited ITA No. 1402/Mum/2021 7 & Co. Ltd reported in (2020) 113 DR on the other hand We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. As per provision of section 139(3) of the Act, for carry forward of loss under the head “profit and gains of business or profession” or under the head “capital gain” the assessee is required to file return of u/s 139(1) of the Act. In the case, the short term capital loss, which the assessee is seeking to carry forward was not included in the return of income filed in terms of section 139(1) of the Act and has been claimed in The issue in dispute claimed in the return of income filed in response to notice issued under section can be allowed to carry forward to the assessee for subsequent years. The section 80 of the Act been determined in pursuance to a return of income filed under the provision of section 139(1)/139(3) of the forward for subsequent years under the provisions of the Ld. Assessing Officer Rajasthan High Court in the case of (supra) wherein it is held that no fresh clai section 153A proceedings. The referred to the decision of the & Co Ltd (supra), wherein the assessee filed regular return of income on 27/09/2013 i.e. within the due date prescribed under section 139(1) of the audit report as required under section 44 Subsequently the assessee filed revised return of income on 31/03/2014, where the assessee filed the audit report. The Chalet Hotels Limited ITA No. subsequent years. The Ld. CIT(A) has reproduced the relevant Act, according to which any loss which has not been determined in pursuance to a return of income filed under the provision of section 139(1)/139(3) of the Act, shall not be carried. sequent years under the provisions of the Assessing Officer has relied on the decision of the Hon’ble High Court in the case of Jai Steel (India wherein it is held that no fresh claim is eligible under roceedings. The Ld. counsel of the assessee has referred to the decision of the Tribunal in the case of BE Billimotrai & Co Ltd (supra), wherein the assessee filed regular return of income on 27/09/2013 i.e. within the due date prescribed under (1) of the Act, but same was not accompanied by the rt as required under section 44AB of the Subsequently the assessee filed revised return of income on 31/03/2014, where the assessee filed the audit report. The Chalet Hotels Limited ITA No. 1402/Mum/2021 8 Ld. CIT(A) has reproduced the relevant , according to which any loss which has not been determined in pursuance to a return of income filed under the , shall not be carried. sequent years under the provisions of the Act. The has relied on the decision of the Hon’ble India) Jodhpur m is eligible under of the assessee has in the case of BE Billimotrai & Co Ltd (supra), wherein the assessee filed regular return of income on 27/09/2013 i.e. within the due date prescribed under , but same was not accompanied by the AB of the Act. Subsequently the assessee filed revised return of income on 31/03/2014, where the assessee filed the audit report. The Assessing Officer completed the assessment under section 143(3) of the Act, allowing carry return of income. The Ld. CIT invoked proceeding under section 263 of the Act on the ground that the allowed carry forward of the business loss. The the Assessing Officer section 139(9) of the of income stood removed by way of filing voluntarily re by the assessee. In the circumstances, the original return of income filed by the assessee holding the assessee eligible The relevant finding of the “5. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. Insofar as the factual aspect of the issue is concerned, there is no dispute that the September 2013, within the due date prescribed under 139(1) of the Act. However, the original return of income filed by the Chalet Hotels Limited ITA No. completed the assessment under section 143(3) of , allowing carry forward of the loss as shown in the revised return of income. The Ld. CIT invoked proceeding under section 263 on the ground that the Assessing Officer has erroneously forward of the business loss. The Tribunal Assessing Officer had not issued any defective memo in terms of section 139(9) of the Act and therefore defect in the of income stood removed by way of filing voluntarily re by the assessee. In the circumstances, the Tribunal (supra) of income filed by the assessee was valid holding the assessee eligible for carry forward of the business loss. The relevant finding of the Tribunal (supra) is reproduced as under: 5. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. Insofar as the factual aspect of the issue is concerned, there is no dispute that the assessee had filed its return of income on 27 th September 2013, within the due date prescribed under of the Act. However, the original return of income filed by the Chalet Hotels Limited ITA No. 1402/Mum/2021 9 completed the assessment under section 143(3) of forward of the loss as shown in the revised return of income. The Ld. CIT invoked proceeding under section 263 has erroneously Tribunal held that had not issued any defective memo in terms of and therefore defect in the original return of income stood removed by way of filing voluntarily revised return (supra) held the valid return and forward of the business loss. is reproduced as under: 5. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. Insofar as the factual aspect of the issue is concerned, there is no assessee had filed its return of income on 27 th September 2013, within the due date prescribed under section of the Act. However, the original return of income filed by the assessee was not under section 44AB return of income filed on 31st March 2014, the assessee had filed the audit report. On the b assessee, the Assessing Officer has ultimately completed the assessment under section 143(3) forward of loss as shown before us is, whether the return of income filed originally is to be treated as defective return of income so as to deny the benefit of carry forward of loss to the assessee in terms of 139(3) and 80 well as section 80 carry forward of the same, the assessee has to file the return of income within the due date prescribe fact, in the original return of income filed within the due date prescribed under loss at a higher figure. get his accounts audited and furnish the audit report within the due date prescribed under facts of the present case the assessee did not furnish the audit report within the date prescribed under reading of section 139(9) audit report along with return of income within the due date under section 139(1) return of income has to be considered as defective. Further, as per section 139(9) treated as inva time provided by the Assessing Officer. However, on a reading Chalet Hotels Limited ITA No. assessee was not accompanied by the audit report as required section 44AB of the Act. Subsequently, along with the revised return of income filed on 31st March 2014, the assessee had filed the audit report. On the basis of revised return of income filed by the assessee, the Assessing Officer has ultimately completed the assessment section 143(3) of the Act determining and allowing carry forward of loss as shown in the revised return of income. Now, the issue before us is, whether the return of income filed originally is to be treated as defective return of income so as to deny the benefit of carry forward of loss to the assessee in terms of section 139(1) 80 of the Act. On a reading of section 139(3) section 80 of the Act, it becomes clear that for claiming loss and carry forward of the same, the assessee has to file the return of income within the due date prescribed under section 139(1) of the Act. It is a fact, in the original return of income filed within the due date prescribed under section 139(1) of the Act, the assessee had claimed loss at a higher figure. Section 44AB of the act requires the assessee to get his accounts audited and furnish the audit report within the due date prescribed under section 139(1) of the Act. Admittedly, in the facts of the present case the assessee did not furnish the audit within the date prescribed under section 139(1) section 139(9) of the Act makes it clear that non filing of audit report along with return of income within the due date n 139(1) of the Act is one of the causes for which the return of income has to be considered as defective. Further, as section 139(9) of the Act, the defective return of income is to be treated as invalid, unless, the assessee removes the defect within the time provided by the Assessing Officer. However, on a reading Chalet Hotels Limited ITA No. 1402/Mum/2021 10 accompanied by the audit report as required of the Act. Subsequently, along with the revised return of income filed on 31st March 2014, the assessee had filed the asis of revised return of income filed by the assessee, the Assessing Officer has ultimately completed the assessment of the Act determining and allowing carry in the revised return of income. Now, the issue before us is, whether the return of income filed originally is to be treated as defective return of income so as to deny the benefit of carry section 139(1) r/w sections of the Act as of the Act, it becomes clear that for claiming loss and carry forward of the same, the assessee has to file the return of income of the Act. It is a fact, in the original return of income filed within the due date e assessee had claimed of the act requires the assessee to get his accounts audited and furnish the audit report within the due of the Act. Admittedly, in the facts of the present case the assessee did not furnish the audit of the Act. A of the Act makes it clear that non filing of audit report along with return of income within the due date of the Act is one of the causes for which the return of income has to be considered as defective. Further, as of the Act, the defective return of income is to be lid, unless, the assessee removes the defect within the time provided by the Assessing Officer. However, on a reading of section 139(9) unilaterally cannot declare a defective return of income invalid without providing opportunity to the assessee to remove the defect within specified time limit. appears that the Assessing Officer has not considered the original return of income defective as no intimation under 139(9) of the Act was issued to the assessee. The assessee had voluntarily filed a revised return of income claiming loss at a lesser figure and along w furnished the audit report. Therefore, the defect in the original return of income stood removed. That being the case, the original return of income has to be treated as a valid return and the assessee was eligible to clai evident, the Assessing Officer has completed the assessment after taking note of both the original return of income as well as the revised return of income. Therefore, it cannot be said that the Assessing Officer has allowed carry forward of loss without proper examination. In the facts of the present case, the assessee itself has removed the defect without being intimated by the Assessing Officer. Therefore, the original return of income cannot be treated as invalid failure on the part of the assessee to remove the defect within the time limit permitted by the Assessing Officer. In fact, the provisions of section 139(9) instant case. Moreover, since the assessee has already filed the audit report, there is no question of Assessing Officer issuing a defect notice now in terms of Therefore, exercise of power under assessment order simply for the purpose of going through the process Chalet Hotels Limited ITA No. section 139(9) of the Act it becomes clear that the Assessing Officer annot declare a defective return of income invalid without providing opportunity to the assessee to remove the defect within specified time limit. In the facts of the present case, it appears that the Assessing Officer has not considered the original n of income defective as no intimation under of the Act was issued to the assessee. The assessee had voluntarily filed a revised return of income claiming loss at a lesser figure and along with the said return of income has furnished the audit report. Therefore, the defect in the original return of income stood removed. That being the case, the original return of income has to be treated as a valid return and the assessee was eligible to claim carry forward of business loss. evident, the Assessing Officer has completed the assessment after taking note of both the original return of income as well as the revised return of income. Therefore, it cannot be said that the Assessing Officer allowed carry forward of loss without proper examination. In the facts of the present case, the assessee itself has removed the defect without being intimated by the Assessing Officer. Therefore, the original return of income cannot be treated as invalid as there is no failure on the part of the assessee to remove the defect within the time limit permitted by the Assessing Officer. In fact, the provisions section 139(9) of the Act have never been pressed into action in the instant case. Moreover, since the assessee has already filed the audit report, there is no question of Assessing Officer issuing a defect notice now in terms of section 139(9) of the Act for non filing of audit report. Therefore, exercise of power under section 263 of the Act to revise the assessment order simply for the purpose of going through the process Chalet Hotels Limited ITA No. 1402/Mum/2021 11 of the Act it becomes clear that the Assessing Officer annot declare a defective return of income invalid without providing opportunity to the assessee to remove the defect In the facts of the present case, it appears that the Assessing Officer has not considered the original n of income defective as no intimation under section of the Act was issued to the assessee. The assessee had voluntarily filed a revised return of income claiming loss at a ith the said return of income has furnished the audit report. Therefore, the defect in the original return of income stood removed. That being the case, the original return of income has to be treated as a valid return and the m carry forward of business loss. It is evident, the Assessing Officer has completed the assessment after taking note of both the original return of income as well as the revised return of income. Therefore, it cannot be said that the Assessing Officer allowed carry forward of loss without proper examination. In the facts of the present case, the assessee itself has removed the defect without being intimated by the Assessing Officer. Therefore, the as there is no failure on the part of the assessee to remove the defect within the time limit permitted by the Assessing Officer. In fact, the provisions d into action in the instant case. Moreover, since the assessee has already filed the audit report, there is no question of Assessing Officer issuing a defect notice ct for non filing of audit report. of the Act to revise the assessment order simply for the purpose of going through the process of complying with the view, is a futile exercise. In any case of the matter, non audit report along with the original return of income is a technical error which is Act. Since, the defect has already been rectified, there is no purpose of again restoring the issue to the Assessing Officer for fresh adjudicatio considering the fact that the only issue on which the learned Commissioner held the assessment order to be erroneous and prejudicial to the interests of Revenue is inadmissibility of claim of carry forward of loss due to non filing of audit report, which made the return of income of income filed under the Act defective. Therefore, in our view, the exercise of power under section 263 hence, invalid. Accordingly, we quash the order passed under 263 of the Act and restore the assessment order. Ground raised is allowed.” 6.1 Thus, in our opinion the ratio of the above decision of the Tribunal is not applicable of the facts of the instant case case there was no issue of any defect in the filed under section 139( been filed in response to notice under section 153A of the wherein the assessee Chalet Hotels Limited ITA No. of complying with the provisions of section 139(9) of the Act, in our view, is a futile exercise. In any case of the matter, non audit report along with the original return of income is a technical error which is subject to rectification in terms of section 139(9) Act. Since, the defect has already been rectified, there is no purpose of again restoring the issue to the Assessing Officer for fresh adjudicatio considering the fact that the only issue on which the learned Commissioner held the assessment order to be erroneous and prejudicial to the interests of Revenue is inadmissibility of claim of carry forward of loss due to non filing of audit report, which made the return of income of income filed under section 139(1) Act defective. Therefore, in our view, the exercise of power ion 263 of the Act in the present case is without justification, hence, invalid. Accordingly, we quash the order passed under of the Act and restore the assessment order. Ground raised is (emphasized supplied externally) in our opinion the ratio of the above decision of the is not applicable of the facts of the instant case case there was no issue of any defect in the original return of income filed under section 139(1) and the revised return of income has only been filed in response to notice under section 153A of the wherein the assessee has claimed the short-term capital loss. Chalet Hotels Limited ITA No. 1402/Mum/2021 12 of the Act, in our view, is a futile exercise. In any case of the matter, non-filing of the audit report along with the original return of income is a technical section 139(9) of the Act. Since, the defect has already been rectified, there is no purpose of again restoring the issue to the Assessing Officer for fresh adjudication considering the fact that the only issue on which the learned Commissioner held the assessment order to be erroneous and prejudicial to the interests of Revenue is inadmissibility of claim of carry forward of loss due to non filing of audit report, which allegedly, section 139(1) of Act defective. Therefore, in our view, the exercise of power of the Act in the present case is without justification, hence, invalid. Accordingly, we quash the order passed under section of the Act and restore the assessment order. Ground raised is (emphasized supplied externally) in our opinion the ratio of the above decision of the is not applicable of the facts of the instant case, as in this return of income ) and the revised return of income has only been filed in response to notice under section 153A of the Act, term capital loss. 6.2 In view of above facts and circumstanc error in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold assessee is accordingly dismissed. 7. In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on Sd/- (KULDIP SINGH JUDICIAL MEMBER Mumbai; Dated: 14/06/2022 Dragon Legal/Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// Chalet Hotels Limited ITA No. In view of above facts and circumstances, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and uphold the same. The sole ground raised by the assessee is accordingly dismissed. In the result, the appeal of the assessee is dismissed. ounced in the open Court on 14/06/2022. Sd/- KULDIP SINGH) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary ITAT, Mumbai Chalet Hotels Limited ITA No. 1402/Mum/2021 13 es, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and ground raised by the In the result, the appeal of the assessee is dismissed. /06/2022. OM PRAKASH KANT) MEMBER Sr. Private Secretary) ITAT, Mumbai