Facts
The taxpayer filed its return of income for assessment year 2009-10 electronically on 27th March 2010.
On 5th April 2010, taxpayer posted a copy of duly verified acknowledgement i.e. ITR-V to Central Processing Centre [“CPC”] of Income Tax Department at Bangalore by ordinary post.
On 16th May 2010, a communication from the CPC was received by the taxpayer intimating that acknowledgement had not been received and taxpayer was asked to furnish a copy of the same within 120 days of filing return.
The taxpayer again posted the acknowledgment to CPC on 18th May 2010.
Thereafter on 10th November 2010, a communication from the CPC was received that no acknowledgment has been received. In response, taxpayer once again posted the said acknowledgment on 18th November 2010 by ordinary post.
Ultimately an order dated 21st March 2011 was received by the taxpayer stating that no acknowledgment has been received in CPC and in view of provisions of section 139, the return of income would be considered as not verified and hence invalid
Taxpayer responded by stating that the acknowledgment had been sent thrice. Also it was stated that a representative of the taxpayer was deputed to Bangalore to deliver the form but she was denied meeting with Assistant Commissioner of Income Tax in CPC.
Issue before the Bombay High Court
Whether department was right in holding that return filed by the taxpayer was invalid merely because the acknowledgment of the return filed electronically was not received at the CPC Bangalore though the taxpayer thrice sent the acknowledgment to the CPC Bangalore by ordinary post?
Observations and Ruling of the Bombay High Court
Section 139(9) provides that if an Assessing Officer (AO) considers any return as defective, he may intimate that defect to the taxpayer for rectifying the mistake within 15 days or such extended period that he may allow.
If the return has not been rectified within the time period allowed, then the same may be treated as invalid and the provisions of the Act will prevail as if no return has been furnished.
The Explanation to section 139(9) states that return would be considered as invalid unless all the conditions prescribed therein are fulfilled and treating a return as invalid may have serious consequences.
Provisions have been inserted in the Act to ensure that defects may be rectified. Also if the taxpayer rectifies the mistake after the expiry of the time allowed but before the completion of the assessment, the AO has the power to condone that delay and treat the return as valid.
It was observed by the court that as per the instructions issued to the taxpayer, an acknowledgment of return filed was required to be remitted by ordinary post and not by speed post or registered post or courier.
The taxpayer had mailed the acknowledgment thrice.
The order dated 21st March 2011 issued by the revenue authorities was misconceived.
Hence the tax payer was required within a week to furnish the said verification in front of the Assessing Officer.
Accordingly the impugned order dated 21st March 2011 considering the return of income filed by the taxpayer as invalid was quashed.
Conclusion
Mere non-receipt of acknowledgment of return filed electronically at CPC Bangalore would not make the return invalid if the same is duly sent to CPC through ordinary post which is in accordance with the instructions issued by the revenue authorities.
Source: Crawford Bayley v. UOI [2011] 16 taxmann.com 323 (Bombay)
The taxpayer filed its return of income for assessment year 2009-10 electronically on 27th March 2010.
On 5th April 2010, taxpayer posted a copy of duly verified acknowledgement i.e. ITR-V to Central Processing Centre [“CPC”] of Income Tax Department at Bangalore by ordinary post.
On 16th May 2010, a communication from the CPC was received by the taxpayer intimating that acknowledgement had not been received and taxpayer was asked to furnish a copy of the same within 120 days of filing return.
The taxpayer again posted the acknowledgment to CPC on 18th May 2010.
Thereafter on 10th November 2010, a communication from the CPC was received that no acknowledgment has been received. In response, taxpayer once again posted the said acknowledgment on 18th November 2010 by ordinary post.
Ultimately an order dated 21st March 2011 was received by the taxpayer stating that no acknowledgment has been received in CPC and in view of provisions of section 139, the return of income would be considered as not verified and hence invalid
Taxpayer responded by stating that the acknowledgment had been sent thrice. Also it was stated that a representative of the taxpayer was deputed to Bangalore to deliver the form but she was denied meeting with Assistant Commissioner of Income Tax in CPC.
Issue before the Bombay High Court
Whether department was right in holding that return filed by the taxpayer was invalid merely because the acknowledgment of the return filed electronically was not received at the CPC Bangalore though the taxpayer thrice sent the acknowledgment to the CPC Bangalore by ordinary post?
Observations and Ruling of the Bombay High Court
Section 139(9) provides that if an Assessing Officer (AO) considers any return as defective, he may intimate that defect to the taxpayer for rectifying the mistake within 15 days or such extended period that he may allow.
If the return has not been rectified within the time period allowed, then the same may be treated as invalid and the provisions of the Act will prevail as if no return has been furnished.
The Explanation to section 139(9) states that return would be considered as invalid unless all the conditions prescribed therein are fulfilled and treating a return as invalid may have serious consequences.
Provisions have been inserted in the Act to ensure that defects may be rectified. Also if the taxpayer rectifies the mistake after the expiry of the time allowed but before the completion of the assessment, the AO has the power to condone that delay and treat the return as valid.
It was observed by the court that as per the instructions issued to the taxpayer, an acknowledgment of return filed was required to be remitted by ordinary post and not by speed post or registered post or courier.
The taxpayer had mailed the acknowledgment thrice.
The order dated 21st March 2011 issued by the revenue authorities was misconceived.
Hence the tax payer was required within a week to furnish the said verification in front of the Assessing Officer.
Accordingly the impugned order dated 21st March 2011 considering the return of income filed by the taxpayer as invalid was quashed.
Conclusion
Mere non-receipt of acknowledgment of return filed electronically at CPC Bangalore would not make the return invalid if the same is duly sent to CPC through ordinary post which is in accordance with the instructions issued by the revenue authorities.
Source: Crawford Bayley v. UOI [2011] 16 taxmann.com 323 (Bombay)
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