ITAT dismisses appeal, upholds assessment based on original return filing.

The Income Tax Appellate Tribunal (ITAT) dismissed the appellant's appeal, upholding the assessment based on the original return filed belatedly under section 139(4) for the assessment year 2012-13. The ITAT held that the right to file a revised return under section 139(5) was not available to the appellant who initially filed the return under section 139(4). The ITAT considered the revised return as non-est in the eyes of the law and rejected the appellant's claim regarding capital loss, affirming the assessment based on actual income earned by the appellant.

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Issues:
Validity of revised return filed under section 139(5) of the Income Tax Act, 1961 when the original return was filed belatedly under section 139(4) for assessment year 2012-13.

Detailed Analysis:

1. The primary issue in this case revolves around the validity of the revised return filed by the appellant under section 139(5) of the Income Tax Act, 1961, considering the original return was filed belatedly under section 139(4) for the assessment year 2012-13. The appellant contended that the revised return should be considered as the original return as the latter was filed beyond the prescribed time limit. The appellant also argued for the consideration of Short Term Capital Loss instead of the unrealized Short Term Capital Gain reported in the original return.

2. The facts of the case reveal that the appellant initially filed the Income Tax Return (ITR) under section 139(4) on 28/02/2014, declaring a total taxable income. Subsequently, on 18/03/2014, the appellant revised the return due to a change in capital gain computation. During the scrutiny assessment proceedings, the Assessing Officer (AO) considered the original return as the basis for assessment, disregarding the revised return. The AO added a differential amount of interest earned by the appellant to the assessment.

3. In the first appellate proceeding, the appellant challenged the taxability of unreal income, arguing that the correct position of capital loss should be considered. Despite the appellant's submissions and detailed reasoning, the Commissioner of Income Tax (Appeals) upheld the assessment without any variation.

4. During the physical hearing, the appellant reiterated the reasons for filing both returns and strongly opposed the taxation of unreal income. The Departmental Representative relied on legal precedents and argued that the AO had duly considered the circumstances leading to the filing of both returns, thus justifying the assessment based on the original return.

5. The Income Tax Appellate Tribunal (ITAT) analyzed the case in light of the legal provisions and precedents cited by both parties. The ITAT addressed two key questions for the assessment year: (a) Whether the income reported in the belated return can be varied by filing a revised return under section 139(5) of the Act, and (b) Whether the reported income can be varied based on unrealization or unearned income for valid reasons.

6. The ITAT concluded that the right to furnish a revised return under section 139(5) is not available to an assessee who filed the original return under section 139(4). Citing the Supreme Court's decision in "Kumar Jagdish Chandra Sinha Vs CIT," the ITAT held that the revised return filed by the appellant was non-est in the eyes of the law. Additionally, the ITAT found no merit in the appellant's claim regarding the capital loss, as the assessment was based on the income actually earned by the appellant, as verified from the records.

7. Consequently, the ITAT dismissed the appeal of the appellant, upholding the assessment based on the original return filed belatedly under section 139(4) for the assessment year 2012-13.

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