[Opinion] How Far a Revised Return Could Provide Relief to the Taxpayer?
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- Last Updated on 7 November, 2024
V K Subramani – [2024] 168 taxmann.com 55 (Article)
Filing return of income for every assessment year is a compliance requirement and if the income admitted is accepted and processed under section 143(1) it provides solace to the taxpayers, in general. However, a diligent taxpayer knows that processing of return under section 143(1) is a basic procedure /process of the tax administration and there could be a further continuation of the assessment process by issuing a notice under section 143(2) with limited timeline or notice under section 148A for reassessment of income with extended time period.
A taxpayer having filed his ITR may notice error(s) in the return so filed. The taxpayer hence can file a revised return which is provided in section 139(5). This also has a rigid timeline. Recently, updated return prescribed under section 139(8A) provides yet another option to the taxpayer to set right his tax records. However, it has its own limitations and the provision is more skewed in favour of the Revenue.
This refresher takes note of a recent Supreme Court decision in the case of Shriram Investments v. CIT [2024] 167 taxmann.com 139/468 ITR 372 (SC) which affirmed the Madras High Court decision reported in CIT v. Shriram Investments 468 ITR 368 (Mad).
1. Legal Provisions
Section 139(3) says that if any person has sustained loss in any previous year under the head ‘Profits and gains of business or profession’ or under the head ‘Capital gains’ and claims that the loss or any part thereof should be carried forward, he may furnish the return within the time allowed under section 139(1) being a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed. All the provisions of the Act would apply in respect of such return as if it were a return filed under section 139(1).
Section 139(4) says that any person who has not furnished a return within the time allowed under section 139(1), may furnish the same at any time before 3 months prior to the end of the relevant assessment year or before the completion of assessment, whichever is earlier.
Section 139(5) says that if any person, having furnished a return under section 139(1) or section 139(4), discovers any omission or any wrong statement therein, may furnish a revised return at any time before 3 months prior to the end of the relevant assessment year or before the completion of assessment, whichever is earlier. In other words, the time limit for filing a revised return is available up to 31st day of December of the assessment year so also the belated return contained in section 139(4).
Section 139(8A) says that, any person whether or not has furnished a return under section 139(1) or section 139(4) or section 139(5), for an assessment year, may furnish an updated return of his income or the income of any other person in respect of which he is assessable under the Act at any time within 24 months from the end of the relevant assessment year. Thus, a taxpayer cannot file an updated return reducing the loss as against the ITR filed earlier or admitting loss by filing an updated return.
2. Shriram Investment’s case
The assessee in this case filed a return of income for the assessment year 1989-90 on 19th November, 1989 declaring an income of Rs.6,42,100. Subsequently, the assessee filed a revised return on 31st October, 1990 declaring total income of Rs.7,62,620. An intimation under section 143(1) was issued on 27th August 1991 resulting in a tax liability. The case was selected for scrutiny and a notice under section 143(2) was issued subsequently. During the course of hearing, the assessee filed a second revised return on 29th October, 1991 admitting a total income of Rs.4,69,888. The second revised return as per the law prevalent at that point of time was beyond the time limit. (The time limit was, revised return could be filed within one year from the end of the relevant assessment year).
In the assessment, the Assessing Officer ignored the (second) revised return treating it as non est in the eye of law. Factually, the assessee had claimed in the second revised return a deduction in respect of the items which it termed as “Deferred Revenue Expenditure”. The assessment was completed without considering the new claim of the assessee in second revised return. In the appeal before CIT(Appeals) it was confirmed where it was held that the second revised return was filed beyond the time limit. When the matter went to tribunal it was held that going by the scheme of the Act, the assessee was entitled to make a claim, which otherwise was omitted to be claimed in the return during the course of the assessment proceedings. It was held that the second revised return filed though belated, the assessee was entitled to have the claim allowed. The Revenue hence took the matter to the High Court.
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