TaxTMI 
TaxTMI 
2013 (2) TMI 260
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....iginal loss return had been filed in time u/s. 139(1) before the AO having regard to the judgment of Hon'ble Madras High Court in CIT v. Periyar District Cooperative Milk Producers Union Ltd [2004] 266 ITR 705, which was not the real issue involved in the impugned assessment order. The AO has disallowed the total loss claimed for non-production of books of account and details asked for during the assessment proceedings. 2. Cross objection has been filed by the assessee objecting to the learned CIT(A) confirming the status of the assessee as Artificial Juridical Person vis-à-vis as returned by the assessee as a local authority. 3. As per the assessment order, the facts are that the genesis of the assessee is relegated from section 3(3) & (5) of Orissa Development Authorities Act,1982 (Orissa Act 14 of 1982). As such Cuttack Development Authority is assigned with the overall responsibilities of development of Cuttack township. The assessee was availing the benefit of exemption u/s 10(20A) of the Income-tax Act, 1961 up to AY 2002-03, but the said provision regarding exemption u/s 10(20A) was omitted w.e.f 01.04.2003 by the Finance Act, 2002. The assessee filed its origin....
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....Officer and even at appellate stage. Having considered the time available for filing the revised return u/s. 139(5) it was not the case of the Assessing Officer to bring the discrepancy in record insofar as the learned CIT(A) has allowed the brought forward losses not indicated in the original return but by way of a revised return only. Section 139(1) clearly indicates that a loss return has to be u/s.139(1) and 139(5) which as a matter of error has been allowed by the learned CIT(A). 6. The learned Counsel for the assessee first, on the learned CIT-DR's arguments, submitted that the assessee, Cuttack Development Authority, is a Government authority, which is formed u/s 3(3) & (5) of Orissa Development Authorities Act, 1982 (Orissa Act 14 of 1982). As such Cuttack Development Authority is assigned with the overall responsibility of development of Cuttack Township. The Books of Account were duly produced before the A.O. The A.O. might not have recorded the production of the books of account which is produced by us on 30.12.11. The same is explained before the ld. CIT(A) along with the books of account. Theld. CIT(A) nowhere mentioned in his appellate order that the assessee has n....
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....essee filed the return of Income u/s 139(3) of Income-tax Act 1961 within the time allowed u/s 139(1) i.e., within the due date of filing the return and subsequently we find that in the original return we have committed some mistake bona fidely then we revised the return of income u/s 139(5) of Income-tax Act. The return is revised within the time-limit u/s.139(5). In support thereof he relied upon the following case laws. 1. It is to be noted also that once a revised return is filed the original return stands withdrawn - Dhampur Sugar Mills Ltd. v. CIT [1973] 90 ITR 236 (All.) 2. A loss return filed within time can also be revised and in such case the loss as per the revised return can be carried forward as it was held in Periyar District Co-op. Milk Producers Union Ltd. 3. Principles of natural justice are applicable - The principles of natural justice are applicable to assessment proceedings. The elementary principle of natural justice is that the assessee should have knowledge of the material which is going to be used against him so that he may be able to meet it - Gargi Din Jwala Prasad v. CIT [1974] 96 ITR 97 (All.). 4.&nb....
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....ee as per sec. 127(1). Therefore, transfer of jurisdiction is illegal. Therefore, the learned CIT(A) is justified in directing the Assessing Officer to accept the loss as shown in the revised return. 8. Addressing to the cross objection filed by the assessee, the learned Counsel for the assessee submitted that the Assessing Officer has mentioned in the first para of Assessment Order that "the assessee was availing the benefit of exemption u/s 10(20A) of the Income-tax Act 1961". The assessee grossly disagreed with the above contention of the A.O. However the assessee has never availed such exemption. In Asstt. Year 2003-04 & onwards, the assessment were completed u/s 143(3). However in earlier assessment proceedings, A.O.s had not raised any issue regarding status of the assessee. The learned Counsel for the assessee contended that the following amendment has been made as per the Finance Act, 2002 "(I) in clause (20) of Sec. 10 the following Explanation has been inserted with effect from the 1st day of April, 2003, namely:- 'Explanation-For the purposes of this clause, the expression "local authority" means- (i) Panchayat as referred to in clause (c) of arti....
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....r Central or State legislation. Exemption under this clause would not be available to Port Trusts also. 12.4 This amendment will take effect from 1st April, 2003 and will, accordingly, apply in relation to the assessment year 2003-2004 and subsequent assessment years." The learned Counsel for the assessee submitted that from instruction 12.3 in the above Circular, it is crystal clear that exemption under sub-section (20) of section 10 would not be available to the assessee w.e.f. 1.4.2003. However, nothing is stated for the period preceding 1.4.2003 which clearly shows that there was no intention of the C.B.D.T. to make circular effective retrospectively rather it is prospective, therefore, assessee was entitled to the status of "Local Authority" before amendment which is effective from 1.4.2003. Further more the Hon'ble Supreme Court of India in the case of Agricultural Produce Market Committee v. CIT [2008] has considered its earlier judgment in the case of Union of India v. R.C. Jain [1981] 2 SCC 308. The said judgment has not been overruled. Therefore functional tests as laid down in the aforesaid case i.e. R.C. Jain (supra) are applicable for the years which falls prior ....
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....f the learned Counsel for the assessee on the issue of the learned CIT(A) upholding the status of the assessee by the Assessing Officer as Artificial Juridical Person and not a local authority has not been in accordance with the provisions of the I.T. Act insofar as inference of a local authority in a broader sense was held by him was no longer possible in view of the amendment by way of insertion of Explanation in Finance Act, 2002 w.e.f. 1.4.2003 would only lead to a finding that it is an Artificial Juridical Person. When the basic finding of the Assessing Officer with regard to the discrepancies in the original and audited return which led to culmination of claiming of brought forward losses as accumulated loss of a local authority were acceptable to him and were supported by the learned CIT(A) when the revised return u/s. 139(5) was to be given credence in accordance with law therefore rather leaned in favour of the assessee only insofar as it was never the case of the assessee to indicate the discrepancies leading to claim of brought forward losses along with the losses in the impugned Assessment Year when the Assessing Officer mainly jotted down the figures as per the origina....