ACIT, CHENNAI V. M/s. Tamilnadu Generation and Distribution Corpn. Ltd., CHENNAI

ITA 2323/CHNY/2016

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 8350 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 09-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Revised return; Set aside
• Section: 260A; 139(1); 44AB

Judgement Text

आयकर अपील य अ धकरण, ‘ए’ यायपीठ, चे नई IN THE INCOME TAX APPELLATE TRIBUNAL , ‘A’ BENCH, CHENNAI ी वी . द ु गा राव, या यक सद य एवं ी जी.मंज ु नाथ, लेखा सद य के सम$ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER आयकरअपीलसं./I . T. A. No. 2 3 2 3/ Chn y/ 2 0 1 6 ( नधा रणवष / A ss e ss m en t Yea r : 2 00 5 - 06 ) Assistant Commissioner of Income Tax, Corporate Circle-3(1) Chennai-600 034. V s M/s.Tamil Nadu Generation and Distribution Corporation Ltd. 800, NPKRR Maligai, Electricity Avenue, Anna Salai, Chennai-600 002. PA N: A A C CT 1 24 5 M (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओरसे/ Appellant by : Mrs.Jothilakshmi Nayak, CIT यथ क ओरसे/Respondent by : Mr. R.Vijayaraghavan, Advocate स ु नवाईक तार ख/D a t e o f h e a r i n g : 15.02.2022 घोषणाक तार ख /D a t e o f P r o n o u n c e m e n t : 23.02.2022 आदेश / O R D E R PER G.MANJUNATHA, AM: This appeal filed by the Revenue is directed against order passed by the learned Commissioner of Income Tax (Appeals)-11, Chennai, dated 22.04.2016 and pertains to assessment year 2005-06. 2. The Revenue has raised following grounds of appeal:- “1. The order of the learned CIT(A) is contrary to law and facts and circumstances of the case. 2.1 The learned CIT(A) erred in directed the Assessing Officer to allow the benefit of carry forward of loss to the assessee as 2 ITA No. 2323/Chny/2016 per the revised return, treating the first return filed without Tax Audit Report as valid return of income. 2.2 It is submitted that the decision of the Hon’ble ITAT in the assessee’s own case for AY 2003-04 has not been accepted by the Department and appeal u/s 260A was filed before the Hon’ble High Court. The appeal was dismissed by the Hon’ble High Court with the direction to obtain the Committee of Dispute and to file the appeal afresh to decide the issue on merit and hence the issue has not reached finality. 2.3 It is also submitted that as per Board’s letter in F.No.279/M-30A12011-TJ, dated 12.12.2011 in pursuant to the order of the Hon’ble Apex Court in the case of M/s. Electronics Corporation of India, there is no requirement for permission from Committee of Disputes for filing appeal against the Government owned Companies.” 3. At the outset, the learned DR submitted that there is a delay of 3 days in filing appeal filed by the Revenue for which necessary petition for condonation of delay along with affidavit explaining reasons for the delay in filing appeal has been filed. The learned DR further submitted that the delay in filing appeal was due to delay in getting approval from the concerned CIT and during this process, due to inadvertent mistake files got mixed up with other files. As soon as records pertaining to this appellant was traced, appeal papers were prepared for submission and appeal was filed, which caused delay of three days. Therefore, considering reasons given by the Department, 3 ITA No. 2323/Chny/2016 3 days delay in filing appeal may be condoned. The learned AR, on the other hand, did not oppose for condonation petition filed by the revenue. 4. Having heard both the sides and considered petition filed by the Revenue for condoning delay in filing appeal, we find that reasons given by the Department for 3 days delay in filing appeal appears to be bonafide and further, comes under reasonable cause as provided under the Act, for condoning of delay in filing appeal. Therefore, 3 days delay in filing appeal by the Revenue is condoned and appeal is admitted for adjudication. 5. Brief facts of the case are that the assessee is a statutory body came into existence through an enactment by legislative assembly by Government of Tamil Nadu and is engaged in the business of generation, transmission and distribution of electricity in the State of Tamil Nadu. The appellant prepares its financial statement in compliance with the provisions of Electricity Supply Act, 1948. The appellant company comprises of 67 accounting units, for generation, transmission and 4 ITA No. 2323/Chny/2016 distribution spread all over the State of Tamil Nadu. The annual accounts are prepared after compiling information from all locations and once this compilation is over, same is submitted to tax auditors for audit report. The company accounts are audited by C&AG and invariably, audit process is not within control of the Appellant company and this results in delay for finalization of accounts. The assessee company has filed its original return on 28.10.2005 within due date of filing return u/s.139(1) of the Act on the basis of provisional financial statements as there was no audit completed at the time of filing return of income. The assessee had subsequently filed revised return of income ion 30.10.2006 and such return was within the prescribed date u/s.139(4) of the Income Tax Act, 1961. The Assessing Officer has disallowed set off of brought forward loss of the assessee against income of the current year on the ground that original return filed by the assessee u/s.139(1) is defective and thus, revised return filed by the assessee u/s.139(5) of the Act, after due date for filing of return of income u/s.139(1) cannot be considered as valid return and thus, disallowed set off of brought forward business loss against current year income. The assessee carried the matter in 5 ITA No. 2323/Chny/2016 appeal before learned CIT(A). Before the learned CIT(A), the assessee contended that this issue is covered in favour of the assessee by the decision of the ITAT., Chennai in assessee’s own case for the assessment year 2003-04 in ITA No.1639/Chny/2006, where the Tribunal after considering necessary facts has directed the Assessing Officer to allow set off of business loss. 6. The learned CIT(A), after considering relevant facts and also by relied upon the decision of ITAT., Chennai in ITA No.1474/Mds/2007 for the assessment year 2003-04 and his predecessor CIT(A)’s decision in assessee’s own case for assessment year 2003-04 in ITA No.233/07-18 dated 11.12.2008 held that when the assessee has filed original return of income within due date as prescribed u/s.139(1) and also revised return was filed within due date as per section 139(5) of the Act, then claim of the assessee towards set off of brought forward loss cannot be denied. The relevant findings of the learned CIT(A) are as under:- 9.3.1 The AO has rejected the appellant’s claim for carry forward and set off of business loss on the ground that the 6 ITA No. 2323/Chny/2016 appellant’s original return of income was only provisional and therefore, the appellant’s claim for set off and carry forward of business loss filed in the revised return is not allowable. The appellant has objected to the AO’s denial of appellant’s claim of carry forward of business loss by clarifying the facts related to the disallowance as mentioned above under para. 9.2. The appellant has submitted that the original return was filed within the due date as per Sec. 139(1) and the revised return was filed within the due date as per Sec. 139(5). In order to treat the original return filed u/s. 139(1), the AO must have invoked Sec. 139(9) by giving an opportunity to the appellant which the AO has failed to do so. The appellant has objected by stating that without issuing a notice u/s. 139(9) of the IT Act, the AO has unilaterally decided that the original return of income filed by the appellant was defective and has denied the appellant’s claim of carry forward of loss u/s 80 of IT Act. The appellant has further relied on the decisions of Hon’ble ITAT, Chennai and the CIT(A) in its own case on this issue decided in favour of the appellant. I have perused the aforesaid decisions which have been reproduced above under para 9.2.3 and 9.2.4 respectively. 9.3.2 Respectively following the decision of Hon’ble ITAT, Chennai in the appellant’s own case in the assessment year 2003-04 and in line with my predecessor’s decision in ITA No.233/07-08 dated 11/12/2008, the AO is directed to allow the appellant’s claim of carry forward and set off of business loss.” 7. The learned DR submitted that although issue involved in the present case is covered in favour of the assessee by the decision of ITAT., Chennai in assessee’s own case for the 7 ITA No. 2323/Chny/2016 assessment year 2003-04, but fact remains that the assessee is in the habit of filing return of income on the basis of provisional accounts and subsequently filing revised returns once audit is completed. Therefore, when the assessee has filed invalid return, though it was filed within due date u/s.139(1) of the Act, then even if the assessee files revised return within due date prescribed u/s.139(5) of the Act, the brought forward loss cannot be allowed to be set off. The learned CIT(A) without appreciating facts has simply directed the Assessing Officer to allow set off of brought forward loss against income of current year. 8. The learned AR, on the other hand, submitted that the issue is squarely covered in favour of the assessee by the decision of the ITAT., Chennai in assessee’s own case for assessment year 2003-04 in ITA No. 1474/Mds/2007, where the Tribunal after considering relevant facts has rightly held that when the assessee has filed revised return within due date prescribed u/s.139(5) of the Act, then revised return filed, would be valid return and on that basis the Assessing Officer 8 ITA No. 2323/Chny/2016 should allow set off of carry forward losses of earlier year. The relevant findings of the Tribunal are as under:- “4.5 In the assessee’s own case in I.T.A.No.1639/Mds/06 the Tribunal has held in paragraph 11 as under: “In view of the discussions in the foregoing paragraphs and in the light of the judgments of the High Courts discussed above, we direct the Assessing Officer to allow carry forward of loss mentioned in the revised return.” 4.6 In view of the facts and circumstances of the case as well as the legal proposition profounded in the judgements supra. we are of the view that the defect of non—filing of audit report under section 44AB as well as audited accounts, profit and loss account and balance—sheet was due to the fact that the assessee’s account could not be audited first by the Auditor General as required by the Electricity Supply Act whereby the Board is required to get its accounts audited by Accountant General at the first instance and thereafter the accounts are to be audited under section 44AB. Thus it is clear that the defect in the original return should have been allowed to be removed before making the assessment. Since in the course of removing the defect the assessee has filed the revised return after getting the accounts audited as per the statutory requirement then the revised return filed by the assessee should be allowed after condoning the delay giving due regard to the facts and circumstances of the case . since the delay in removing defect is not deliberate or due to negligence on the part of the assessee but due to various formalities to be complied with and as the assessee is a State Govt. undertaking and lots of administration hurdles are to be cleared, we are of the view that the rejection of the original return being held as defective ab initio is not justified. The Commissioner (A) has also not taken a correct view in this regard. Accordingly we set aside the orders of the lower authorities and direct the Assessing Officer to accept the revised return as the same is filed before the completion of the assessment and allow the carry forward losses as per law.” 9 ITA No. 2323/Chny/2016 9. In this view of the matter, and consistent with the view taken by the co-ordinate Bench in the assessee’s own case for earlier assessment year, we are of the considered view that there is no error in the reasons given by the learned CIT(A) and direct the Assessing Officer to accept revised return filed by the assessee u/s.139(5) of the Act, and allow set off of brought forward losses of earlier years against current year income. Hence, we are inclined to uphold findings of the learned CIT(A) and dismiss appeal filed by the Revenue. 10. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open court on 23 rd February, 2022 Sd/- Sd/- (वी. द ु गा राव) (जी. मंज ु नाथ) (V.Durga Rao) (G.Manjunatha) $या यक सद'य /Judicial Member लेखा सद'य / Accountant Member चे$नई/Chennai, *दनांक/Dated 23 rd February, 2022 DS आदेश क त,ल-प अ.े-षत/Copy to: 1. Appellant 2. Respondent 3. आयकर आय ु /त (अपील)/CIT(A) 4. आयकर आय ु /त/CIT 5. -वभागीय त न3ध/DR 6. गाड फाईल/GF.