ACIT, CIRCLE-1(2), SURAT V. VEEKAY RAYONS, SURAT

ITA 490/SRT/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2062 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 23-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPEND RA KUMAR
• Keywords: Set aside
• Section: 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 490/SRT/2019 (AY: 2015-16) (Hearing in Physical Court) A.C.I.T. Circle-1(2), Surat. Vs. M/s Veekay Rayons, 4007, World Trade Centre, Ring Road, Rustampura, Surat-395002. PAN : AAFFV 4128 H APPELLANT RESPONDEDNT Department by Shri Deependra Kumar, Sr. DR Assessee by Shri Ramesh Malpani, A.R. Date of hearing 28/04/2022 Date of pronouncement 17/05/2022 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-2, Surat [in short ‘ld.CIT(A)] dated 07/08/2019 for the Assessment Year (A.Y.) 2015-16.The Revenue in its appeal has raised following grounds of appeal: “1. On the facts and circumstances of the facts and in law, whether the Ld. CIT(A) was justified in deleting the disallowance of Rs. 1,50,40,579/- made on account of loss claimed by the assessee, as the firm has failed to file its return of income according to the provisions of Section 139(1) of the Act within due date and even before the extended due date so that the loss can be carried forward as per the provisions of Section 80 of the IT Act. 2. On the facts and circumstances of the facts and in law, whether the Ld. CIT(A) was justified in deleting the disallowance made on account of loss claimed by the assessee, ignoring that assessee failed to file any documentary evidence to prove that the delay in filing the return of income was due to technical snag, which was closely examined by the ITA 490/SRT/2019 ACIT Vs M/s Veekay Rayons 2 A.O. after converting the limited scrutiny into complete scrutiny with the approval of Pr.CIT. 3. It is, therefore, prayed that the order of the ld. CIT(A) may be set aside and that of assessing office may be restored to the above extent.” 2. Brief facts of the present case are that the assessee is engaged in the business of trading in yarn and also having carrying commission income. The assessee filed its return of income on 01/11/2015 declaring total income at Rs. NIL. The assessee in its computation of income claimed carried forward loss of Rs. 1,50,40,579/-. The case was selected for limited scrutiny. During the assessment proceedings, it was noticed by the Assessing Officer that the assessee had declared loss of Rs. 1,50,40,579/- for the year under consideration. The assessing officer noted that the extended due date for filing return of income for AY 2015-16 was 31/10/2015 and the assessee filed its return on 01/11/2015 which was beyond the date thus the assessee is not eligible to carry forward loss. The assessing officer issued show cause notice as to why carry forward loss be not disallowed. The assessee filed reply and submitted that the assessee tried to file return of income on 31.10.2015 at about 11.45 PM, but on several attempt but it could not be file due to heavy rush on the site. However, immediately after 12.00, the assessee was able to file at about 00.07 AM. The reply of the assessee was not accepted by assessing officer by taking view that to carry forward business loss the return should be file within due date as prescribed under section 139(1). ITA 490/SRT/2019 ACIT Vs M/s Veekay Rayons 3 3. On appeal, the ld. CIT(A), the assessee retreated the similar submissions as made before assessing officer. The assessee also relied on the decision of Tribunal in ACIT Vs Noel Pharma Hyderabad (ITA No. 1664/HYD/2012 dated 29.11.2013) wherein on similar circumstances one day delay was condoned. The assessee submitted that the delay was due the reason beyond their control though the assessee filed its return in time. It was due to technical snag in the system due to last minutes. The assessee submitted signatory Manish K Gupta could upload his proprietory return of income of Maatra Overseas within prescribed due date of 31/10/2015 (before 00:00 hrs of 01/11/2015) but the same digital signatory could not upload the return of income of the assessee within the prescribed deadline due to system congestions/session expired message. The ld. CIT(A) after considering the submissions of the assessee allowed the appeal of the assessee. The ld CIT(A) has further held that the contention of the assessee is bonafide and allowed to carry forward loss of Rs. 1,50,40,579/- . Aggrieved by the order of the ld. CIT(A), the Revenue has filed the present appeal before this Tribunal. 4. We have heard the submissions of the parties and have gone through the orders of the lower authorities carefully. The learned senior departmental representative (ld. Sr. DR) for the Revenue submits that the assessee has not filed return of income within due date, thus, was not eligible for carried forward loss. The facts in the case law relied by the assessee in Noel ITA 490/SRT/2019 ACIT Vs M/s Veekay Rayons 4 Pharma (supra) is different. The ld SR DR for the revenue prayed to reverse the order of ld CIT(A) and to restore the order of assessing officer. 5. On the other hand, the ld. Authorised Representative (AR) for the assessee submits that the assessee filed return of income on the last date of filing, however, due to technical snag in the website of the partner on the date of filing return, the acknowledgement was received eleven minutes past 12:00 and the date of acknowledgement of return was reflected as 01/1/2015 instead of 30.10.2015. The ld. CIT(A) after appreciated the facts and given relief to the assessee by deleting the disallowance made by the A.O. To support his submission, the ld. AR has relied upon the following decisions:  ITA No. 1664/Hyd/2012, ACIT Vs M/s Noel Pharma, Hyderabad order dated 29/11/2013.  Regen Infrastructure & Services (P) Ltd. Vs CBDT, New Delhi (2016) 68 taxmann.com 93 (Mad). 6. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities carefully. We find that during the assessment proceedings, it was noticed by the Assessing Officer that the assessee had declared loss of Rs. 1,50,40,579/- for the year under appeal. In this case, the due date for filing return of income extended was 31/10/2015 and the assessee filed its return on 01/11/2015 which was beyond the date. The Assessing officer disallowed the carried forward loss of Rs. 1,50,40,579/- by taking a view that where the assessee has some capital loss or business loss from business or profession to be carried ITA 490/SRT/2019 ACIT Vs M/s Veekay Rayons 5 forward, the assessee should file its return of income within due date as prescribed under Section 139(1). The ld. CIT(A) has held that assessee’s claim of loss was disallowed for the reasons that the return was not file with in due date prescribed under section 139(1). The ld CIT(A) held that the delay of 11 minutes is bonafide. The ld. CIT(A) also recorded that the digital signatory Manish K Gupta could upload his proprietary return of income of Maatra Overseas within prescribed due date of 31/10/2015 (before 00:00 hrs of 01/11/2015) but the same digital signatory could not upload the return of income of the assessee within the prescribed deadline due to system congestions/session expired message. 7. We find that the Hon'ble Madras High Court in the case of Regen Infrastructure & Services (P) Ltd. Vs CBDT (supra) has held that when the delay in filing of the return was due to technical snags in the website of department, and return could not be uploaded and due to which the carry forward loss could not be denied to the assessee. The Coordinate Bench of Hyderabad Tribunal in the case of ACIT Vs M/s Noel Pharma (supra) has also held that when delay was not because of any lapse on the part of assessee but due to technical reasons in uploading the return electronically and due to delay of few hours in getting connectivity and the date was changed from 30 th September to 01 st October. Thus, considering the totality of facts and circumstances and legal position, we affirm the order ITA 490/SRT/2019 ACIT Vs M/s Veekay Rayons 6 of the ld. CIT(A). In the result, the ground of appeal raised by the revenue are dismissed. 8. In the result, the appeal of the Revenue is dismissed. Order pronounced on 17/05/2022, in open court and result was also placed on notice board. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 17/05/2022 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By Order Sr. Private Secretary, ITAT Surat