Ajit Vasant Pai, Bangalore V. Deputy Commissioner Of Income Tax, CPC, Bangalore

MA 143/BANG/2022

AI Insights

The case involves a Miscellaneous Petition filed by Shri Ajit Vasant Pal against the Deputy Commissioner of Income Tax, CPC, Bengaluru, concerning the carry forward of a long-term capital loss. The original dispute arose from the processing of the assessee's return under section 143(1)(a) of the Income Tax Act, 1961, where the Centralized Processing Center (CPC) did not allow the carry forward of the loss. The Tribunal had previously remanded the case to the Assessing Officer (AO) for fresh consideration based on the decision of the Mumbai Bench of the ITAT, which supported the assessee's claim. In the MP, the assessee sought further modifications to the Tribunal's order, specifically correcting the due date for the return processing and allowing the carry forward of the loss, which the Tribunal found beyond the scope of rectification under section 254(2).

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124954 (ITAT-BANGALORE)
• Duration Of Justice: 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-12-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 04-12-2022
• Other Referred Cases: Ramesh R Shah Vs. ACIT (2011) 12 taxmann.com 505 (Mumbai)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 139; 139(5); 139(1); 254(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER MP No.143/Bang/2022 (in ITA No.741/Bang/2022) Assessment Year : 2017-18 Shri. Ajit Vasant Pal, A-704, RNS Shanthi Nivas, Tumkur Road, Bengaluru – 560 022. PAN : ABUPP 5764 H Vs. DCIT, CPC, Bengaluru. APPELLANT RESPONDENT Assessee by :Shri.H. Anil Kumar, CA Revenue by:Shri. Anand, Addl. CIT(DR)(ITAT), Bengaluru Date of hearing:30.12.2022 Date of Pronouncement:03.01.2023 O R D E R Per N. V. Vasudevan, Vice President: This is an Miscellaneous Petition (MP) filed by the assessee under section 254(2) of the Income Tax Act, 1961 (hereinafter called ‘the Act’), praying for alleged apparent error in the order of the Tribunal dated 28.10.2022 passed by this Tribunal. 2. By the aforesaid order, the Tribunal held that the CPC while processing the return under section 143(1)(a) of the Act did not have powers to deny carry forward of loss in para-11 and 12 of its’ order dated 28.10.2022. The Tribunal thereafter in MP No.143/Bang/2022 (in ITA No.741/Bang/2022) Page 2 of 7 paragraph 13 of the following the decision of the Mumbai Bench of the ITAT in the case of Ramesh R Shah Vs. ACIT (2011) 12 taxmann.com 505 (Mumbai) remanded the case to the AO for fresh consideration observing as follows: “12. Apart from the above, we find that the Mumbai Bench of the ITAT after considering the decision of the Vishakapatnam Bench in the case of M.Narendranath Indl (supra) held as follows:- “9. In the background of these facts, we have to examine whether the assessee is entitled to claim of the carry forward of the long-term capital loss as per the revised return filed on 28-3-2006. We have already stated that the original return was filed by the assessee is well within the time and there is no controversy on this aspect. Subsequently, the assessee filed the revised return and claimed that same is filed under sub-section (5) to section139. As per the provisions of section 139(5) if the assessee has furnished the return under section 139(1) and subsequently discloses any wrong statement therein or which in his opinion is wrong then he can revise the return at any time before the expiry of the one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. So far as the time limit prescribed under sub-section (5) to section 139 is concerned, the Assessing Officer is not disputing the same. Only issue is in respect of interpretation of sub-section (3) of section 80. As per provisions of sub-section (3) of section 139, if the assessee incurred loss in any previous year under the head 'Profit and gains of business or profession' or 'Capital gain' and claims that the said loss or part thereof should be carried forward under section 72, 73 or 74 etc. then he should file the said return within a time stipulated under section 139(1) of the Act. As per section 80, to claim the carry forward of the loss, there are two conditions:- ( 1 )t h e r e t u r n o f i n c o m e c l a i m i n g t h e l o s s m u s t b e f i l e d w i t h i n t h e t i m e l i m i t p r e s c r i b e d u n d e r s e c t i o n 1 3 9 ( 3 ) r e a d w i t h s e c t i o n 1 3 9 ( 1 ) a n d ; ( 2 )t h e s a i d l o s s m u s t h a v e b e e n d e t e r m i n e d . 10. In the present case, the Assessing Officer has serious reservation for allowing the assessee to carry forward long-term capital loss by interpreting the provisions of section 80 read with section 139(3). In this background, can it MP No.143/Bang/2022 (in ITA No.741/Bang/2022) Page 3 of 7 be said that the assessee has not fulfilled conditions laid down in section 80 and hence, it is not permissible to allow to carry forward of the capital loss. In the present case, the assessee filed original return under section 139(1) in which the positive income was declared. Even as per the assessment order positive income is determined as the assessee could not set off the loss on the sale of the shares of Phiolx Pharma Ltd. in the year itself. He claimed the same to be carry forward. In our humble opinion correct interpretation of section 80, as per the language used by the Legislature, condition for filing revised return of loss under section 139(3) is confined to the cases where there is only a loss in the original return filed by the assessee and no positive income and assessee desires to take benefit of carry forward of said loss. Once, assessee declares positive income in original return filed under section 139(1) but subsequently finds some mistake or wrong statement and files revised return declaring loss then can he be deprived of the benefit of carry forward of such loss? In our humble opinion, if we accept interpretation given by the authorities below, it would frustrate the object of section 80. Section 80 is a cap on the right of the assessee, when the assessee claims that he has no taxable income but only a loss but does not file the return of income declaring the said loss as provided in sub-section (3) of section 139. It is pertinent to note here that Legislature has dealt with two specific situations (i ) under section 139(1), if the assessee has a taxable income chargeable to tax then it is a statutory obligation to file the return of income within the time allowed under section 139(1). So far as section 139(3) is concerned, it only provides for filing the return of loss if the assessee desires that the same should be carried forward and set off in future. As per the language used in sub-section (3) to section 139, it is contemplated that when the assessee files the original return, at that time, there should be loss and the assessee desires to claim said loss to be carried forward and set off in future assessment years. Sub-section (1) of section 139 cast statutory obligation on the assessee when there is positive income. In the present case, admittedly, the assessee filed the return of income declaring the positive income and even in the revised return, the assessee has declared the positive income as the loss in respect of the sale of shares, which could not be set off, inter-source or inter-head under section 70 or 71 of the Act. 11. We have to interpret the provisions of any statute to make the same workable to the logical ends. As per the provisions of subsection (5) to section 139, in both the situations where the assessee has filed the return of positive income as well as return of loss at the first instance as per the time limit MP No.143/Bang/2022 (in ITA No.741/Bang/2022) Page 4 of 7 prescribed and subsequently, files the revised return then the revised return is treated as valid return. In the present case, as the assessee filed its original return declaring the positive income and hence, in our opinion, subsequent revised return is valid return also and the assessee is entitled to carry forward of 'long-term capital loss'. Sub-sections (1) and (3) of section 139 provides for the different situations and in our opinion, there is no conflict in applicability of both the provisions as both the provisions are applicable in the different situations. We are, therefore, of the opinion that there is no justification to deny the assessee to carry forward the loss. We, accordingly, direct the Assessinq Officer to allow the assessee to carry forward the loss.” 3. Thereafter in Paragraph 14 of the order, the Tribunal summed up the conclusions holding that Sec.139(3) is applicable only when the assessee files a return of income declaring a loss and not to a case where an assessee declares positive income but claims carry forward of “long term capital loss” which he is unable to set off in a particular AY. In such an event Sec.139(5) will apply and the revised return has to be treated as valid return and the assessee is entitled to carry forward “long term capital loss”. The matter was remanded to the AO to pass orders in the light of the observations made by the tribunal. 4. In this MP, it has been contended by the assessee as follows: “5. While this Honourable Court has allowed the appeal in the order pronounced on 28.10.2022 which would go a long way to help clear the issue of claiming of loss in a revised return filed u/s. 139(5) when original return filed under Section 139(1), it is the humble request of the applicant that following directions be given to the Respondent as the order require appropriate modification: " In light of the aforesaid decision of the Mumbai Bench of the Tribunal, we are of the view that the issue with regard to carry forward of Short Term Capital loss claimed by the MP No.143/Bang/2022 (in ITA No.741/Bang/2022) Page 5 of 7 assessee should be directed to be examined by the A 0 afresh in light of the observations made above", It does not address the principal grievance of the applicant that the return should have been processed/reprocessed taking the due date correctly as 07.11.2017. Further though the Respondent's digital signature is found affixed on the intimations and the order, the way the return was processed, I do not think he has ever examined the issue in the first place. Had a visual examination of the ITR and the intimations been done in the first place by a representative of the Department there would have been no need to approach the appellate forums. A letter in this regard had been written to CPC seeking clarification as to how the return was processed and why the AO was unable to pass a speaking order disposing of the petition u/s 154. The said letter is enclosed with the Memo dated 26-9-2022 filed before the Honourable Bench No action has been taken on this letter by the Respondents to suo moto rectify the assessment in spite of the mistakes brought out in the processing of the return. It has also been submitted that under the Scheme notified under Section 143(1A) there is no role for an Assessing Officer. The return is to be processed at CPC which is headed by the Pr CIT. As this order of the Honourable ITAT has to be given effect at the CPC largely manned by an outsourced service provider, it is prayed that the order be modified to contain a simple direction to reprocess the return, correct the due date to 07.11.2017 and allow the carry forward of loss.” 5. Learned Counsel for the assessee reiterated the stand of the assessee as contained in the MP. We are of the view that the contentions put forth in the MP cannot be considered as an error apparent on the face of the record which can be rectified in proceedings under section 254(2) of the Act. In the MP, the assessee MP No.143/Bang/2022 (in ITA No.741/Bang/2022) Page 6 of 7 cannot seek directions which are beyond the scope of the main appeal. The Tribunal has adjudicated the issue and the reasons have been given in the order. The fact that such directions cannot be given effect to due to other procedural reasons cannot be a reason to seek directions from the Tribunal. The matter was remanded as it involved verification of facts as to whether the case of the Assessee falls within Sec.139(3) or Sec.139(1) of the Act, which has not been looked into by the revenue authorities. The assessee cannot seek to plead that the order should have given a particular direction instead of the directions that the tribunal had given. The law is well settled that the powers of the Tribunal under section 254(2) of the Act are limited to rectifying mistakes apparent on the face of the order of the Tribunal. The Tribunal does not have power to review its own order. This being the legal position, we are of the view that the prayer sought for by the Assessee in the MP cannot be accepted and it cannot be said that there was a mistake apparent in the order of the Tribunal warranting rectification under section 254(2) of the Act. Accordingly, this MP filed by the assessee is dismissed. 6. In the result, MP stands dismissed. Pronounced in the open court on the date mentioned on the caption page. Sd/- (CHANDRA POOJARI) Sd/- (N.V. VASUDEVAN) Accountant MemberVice President Bangalore, Dated: 03.01.2023. /NS/* MP No.143/Bang/2022 (in ITA No.741/Bang/2022) Page 7 of 7 Copy to: 1.Appellants2.Respondent 3.CIT4.CIT(A) 5.DR 6. Guard file By order Assistant Registrar, ITAT, Bangalore.