2021 (12) TMI 55 - HC - Income Tax

Court quashes assessment, directs revised tax return processing for AY 2018-19. Emphasizes efficiency in electronic processing.

The Court ruled in favor of the petitioner, quashing the finalized assessment and directing the respondent to process the revised income tax return for AY ... Non filling revised return online - Time limit to file the revised return u/s 139(5) had expired - delay occurred on account of the time taken to obtain the sanction of the Schemes of Arrangement and Amalgamation from the NCLT - HELD THAT:- The petitioner’s revised return was not considered obviously because that is impermissible as the same was not filed electronically - This was in complete disregard to the fact that the order of the NCLT had come on 17.03.2020 and therefore, it was not possible for the petitioner to so do it within time framed as set u/s 139(5) of the Act as the appointed date as per the order of the NCLT is fixed on 01.04.2017, the petitioner would be entitled to file the revised return and in wake of the decision of this Court in case of Babubhai Ramanbhai Patel [2017 (7) TMI 744 - GUJARAT HIGH COURT] the original return u/s 139(1) will pay insignificance and would not survive. The respondent authority therefore not considered the revised return and needs indulgence at the ends of the Court. Resultantly, the assessment which has been finalized shall need to be quashed permitting the respondent to process considering the revised return which has been filed by the petitioner. If it is not filed in an electronic manner as has been reflected in the affidavit-in-reply, he should be permitted to do that by a specific order and granting him reasonable time of minimum one week to so do it. Otherwise, his physical copy which he has dispatched shall be taken into consideration. As a parting note the Court needs to make a mention that the matter has travelled to this Court only because the revised return was not permitted beyond the prescribed time limit as set u/s 139 (5) - Thus, Apex Court in case of DALMIA POWER LIMITED [2019 (12) TMI 991 - SUPREME COURT] has categorically held and observed that Section 119 of the IT Act in such matters also would not be applicable and therefore, when the respondents are desirous of operating in the regimes of electronic mode and faceless assessment, it shall need to improvise the software and allow the revised return more particularly, when the law has been made quite clear by virtue of the direction of the Apex Court. Let the care be taken in improvising the software wherever necessary since its limitations have tendency to swell the Court litigation. The petitioner could have been saved from this ordeal, had such a care taken to permit the revised return in an electronic mode once the direction of the NCLT was communicated along with the decision of the Apex Court. Issues:1. Petitioner seeking acceptance of revised income tax return for AY 2018-19.2. Time limit for filing revised return post demerger scheme sanctioned by NCLT.3. Respondent's refusal to process revised return filed manually.4. Validity of protective assessment by respondent.5. Interpretation of Section 139(5) of the Income Tax Act.6. Compliance with statutory requirements during assessment proceedings.7. Judicial precedents cited by both parties.8. Court's decision on quashing the finalized assessment and allowing revised return.Analysis:1. The petitioner approached the Court seeking acceptance of the revised return of income for AY 2018-19 post a demerger scheme sanctioned by NCLT. The petitioner filed the original return before the scheme's approval and later sought to revise it due to the demerger's impact on their financials.2. The petitioner faced challenges as the time limit for filing the revised return had lapsed post the NCLT's order, making electronic filing impossible. Despite raising grievances through official channels, the respondent did not process the manually filed revised return, leading to a protective assessment adding a significant amount to the petitioner's income.3. The respondent defended their stance, citing the invalidity of manually filed revised returns beyond the statutory limitation period. The respondent's position was based on the lack of provisions in the Act allowing acceptance of belated revised returns.4. The Court considered the events' chronology and the impact of the NCLT's order on the petitioner's ability to file the revised return within the prescribed time frame. The Court highlighted the necessity to consider the revised return in light of the demerger's effects and previous judicial decisions supporting the acceptance of timely revised returns.5. Relying on legal precedents, the petitioner argued for the acceptance of the revised return, emphasizing the non-applicability of Section 139(5) in cases where delays result from external factors like obtaining scheme approvals.6. After thorough consideration and deliberation, the Court ruled in favor of the petitioner, quashing the finalized assessment and directing the respondent to process the revised return. The Court emphasized the importance of adapting electronic systems to accommodate revised returns promptly, as mandated by legal directives and to avoid unnecessary litigation.7. The Court's decision highlighted the need for efficient electronic processing of returns to prevent similar issues in the future and ensure timely resolution of tax matters, ultimately allowing the petitioner relief from the procedural hurdles faced in this case.Conclusion:The Court's decision favored the petitioner, emphasizing the importance of adapting electronic systems to accommodate revised returns promptly and following legal directives to avoid unnecessary litigation.