Audit of LLP

[satbir singhwahi]

Audit of LLP was done voluntary as stipulated by partners and audit report and ITR was filed during extended date for filing audited itrs. That is for assessment year 2019-20 the ITR was filed on 09.10.2019, and due extended date was 31.10.2019. There was loss c/f in ITR filed. The CPC disallowed the loss . On filing Appeal with CIT (A). the relief was allowed. But in appeal effect order the ITO has again not given relief and says that audit of LLP cannot be done voluntary and extended date is not applicable for LLP . Pls guide what we can do further for relief.

[Padmanathan KV]

If you see section 139 Explanation 2:

Explanation 2.-In this sub-section, "due date" means,-

(a) where the assessee other than an assessee referred to in clause (aa) is-

(i) a company ; or

(ii) a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force; or

(iii) a partner of a firm whose accounts are required to be audited under this Act or under any other law for the time being in force or the spouse of such partner if the provisions of section 5A applies to such spouse,

the 31st day of October of the assessment year;

Thus to my understanding 31-10-2019 applies for those firms whose accounts are required to be audited under this Act.

So unless audit is required to be done under IT Act or LLP Act, it will be belated return as per Section 139.

[Padmanathan KV]

Kindly read last but one para:

"Thus to my understanding 31-10-2019 applies for those firms whose accounts are required to be audited under this Act."

as

"Thus to my understanding 31-10-2019 applies for those firms whose accounts are required to be audited under this Act or under any other law for time being in force".

Sorry for inconvenience.

[Amit Agrawal]

Disclaimer: I do not deal in income tax matters. Kindly take this post more for carrying further research at your end.

If there is any issue is raised (i.e. to deny carrying forward losses), decided by CPC against you and then CIT (A) ruled in your favour and assuming that appeal-order of CIT (A) is accepted by Dept. (i.e. Dept. chose not to file appeal) then, whether Dept. can start another proceedings for same issue (i.e. to deny carrying forward losses) by raising different ground?

This seems strange to me that Dept. can start multiple proceedings for same dispute (i.e. eligibility of carrying forward losses, in this case) using different reasons for each such proceedings. Does IT Act allows this?

P.S. I think similar point needs further research even for GST considering how law is getting implemented where same ITC is tried to be denied via different proceedings for different reasons.

Just some food of thought for further study! Nothing more .... as of now ......

[satbir singhwahi]

As per LLP Rules

(8) The accounts of every limited liability partnership shall be audited in accordance with these rules:

Provided that a limited liability partnership whose turnover does not exceed, in any financial year, forty lakh rupees, or whose contribution does not exceed twenty-five lakh rupees shall not be required to get its accounts audited:

Provided further that if partners of such limited liability partnership decide to get the accounts of such LLP audited, the accounts shall be audited in accordance with these rules:

So the accounts were audited as llp decided to get the accounts audited.

PLs guide .

[Padmanathan KV]

Ld friend Amir JI,

While I was on the legal aspect, you have rightly pointed out the technical issue involved in this case- i.e., when CIT(A) has passed an order in favour of assessee, can the ITO pass an 'order giving effect to appeal' against the assessee?

No. Actually, the passing of giving effect order is merely a formality and it cannot go beyond the order which is given effect. The actual remedy available for Department would be to file an appeal against the Order of CIT(A) before the ITAT. So in this case, the Order giving appeal itself have to be challenged.

[satbir singhwahi]

Thanks Ji

Kindly guide now where do we file appeal with CIT (A) .

[Amit Agrawal]

Dear Quriest,

As explained by Shri Padmanathan Ji, AO cannot override CIT (A)'s order. Further, Dept. cannot appeal against such CIT (A)'s order by taking altogether new ground to deny carry forward of losses.

It seems to me that AO has started fresh proceedings or shown his intention to start fresh proceedings. Kindly check the factual aspects involved.

Disclaimer: I do not deal in income tax matters. Kindly take these posts of mine more from point of carrying further research at your end and NOT as a professional advice / suggestion etc.

AI Summary

Voluntary LLP audit: election to audit may justify extended filing date; assessing officers cannot override appellate orders.
The issue is whether an LLP that obtained a voluntary audit under LLP Rules qualifies for the extended return-filing date applicable to assessees whose accounts are required to be audited, thereby avoiding belated-return treatment, and whether an assessing officer can issue an order giving effect that contradicts a CIT(A) order; an order giving effect is a formality and cannot override the appellate order, and the department's proper remedy is an appeal to the tribunal.