The assessee is an individual being engaged in the business of giving flats constructed by him on rent. He discloses the rental income earned as income under head “business income”. As these flats are business assets the assessee also claims depreciation on these flats.
During the subject assessment year, the assessee incurred a ‘business loss’ of Rs. 57 crores and ‘short term capital gain’ of Rs. 77 crores. The assessee also has carry forward loss under head of business amounting to Rs. 166 crores.
While filing the return of income electronically the assessee was not able to set off current year profit with carry forward losses as prescribed under section 72 of the Act, because the columns of the return of income were auto populating and the assessee was not able to manually type the amount for which he is eligible to set off from current year profit. Due to this technical glitch in tax utility form, unnecessary tax liability was arising on the assessee.
As the assessee was not able to set off current year profit with carry forwarded losses, he wanted that he should be provided right to file return of income in the paper form.
According to Revenue Department, the return has to be filed in terms of section 139D of the Act read with Rule 12 of the Rules, which provides that return of income can only be filled electronically as prescribed by the Central Board of Direct Taxes (CBDT).
Further, there is no provision for filing return of income in hard copy (paper copy), therefore the Assessing Officer cannot accept the return of income in paper form.
After hearing both the respondents it is held that, if the assessee is compelled to file the return in prescribed electronic form, it could be declared defective (if all entries are not filled) by the assessing officer or assessing officer can further raise a demand for tax on the basis of the declared income under section 143(1) or if the assessment is taken to scrutiny under section 143(3), then the assessee will not be allowed to raise a claim of set off under section 72 during the assessment proceedings.
Also, if the assessee opts to file revised return of income it will create same issue for the assessee as the revised return also have to be filed in prescribed electronic form. Therefore, the assessee is directed to file a return of income electronically so that there will be no prejudice to prescribed rules and section of the Act. Also, the assessee is directed to file return of income in the paper form with the assessing officer before the due date. The assessing officer further directed to accept this return without prejudice to prescribed sections of the Act.
Hon’ble High Court directed the assessee to file return of income in paper form so that he can claim benefit of set off under section 72 of the Act.
Source: [2020] 115 taxmann.com 70 (Bombay)
Samir Narain Bhojwani v. Deputy Commissioner of Income Tax
