Income Tax Appeal: Supreme Court Dismisses Case on Barred Revised Return image for SC Judgment dated 04-10-2024 in the case of M/s. Shriram Investments vs The Commissioner of Income Tax
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Income Tax Appeal: Supreme Court Dismisses Case on Barred Revised Return

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The case of M/s. Shriram Investments vs. The Commissioner of Income Tax III, Chennai revolves around a dispute regarding the acceptance of a revised return filed beyond the statutory time limit under the Income Tax Act, 1961. The Supreme Court had to decide whether an assessing officer could consider claims made in a revised return that was filed after the deadline. Ultimately, the Court ruled against the appellant, affirming that a revised return barred by limitation could not be entertained.

Background of the Case

The appellant, M/s. Shriram Investments, filed its original return of income for the assessment year 1989-90 on November 19, 1989. The key events in the case are as follows:

  • A revised return was filed on October 31, 1990.
  • The tax was paid as per the intimation under Section 143(1)(a) of the Income Tax Act on August 27, 1991.
  • A second revised return was filed on October 29, 1991.
  • The assessing officer refused to consider the second revised return, stating that it was barred by limitation under Section 139(5) of the Income Tax Act.
  • The assessee challenged this decision before the Commissioner of Income Tax (Appeals) (CIT-A), which upheld the assessing officer’s ruling.
  • On appeal, the Income Tax Appellate Tribunal (ITAT) ruled in favor of the assessee and remanded the case back to the assessing officer.
  • The Income Tax Department challenged the ITAT order in the Madras High Court, which set aside the Tribunal’s ruling, stating that the revised return was barred by time.
  • Aggrieved by this decision, the appellant approached the Supreme Court.

Legal Issues Considered

  • Whether the revised return filed after the deadline could be considered by the assessing officer.
  • Whether the assessing officer had the discretion to allow claims made in an invalid revised return.
  • Whether the decision of the ITAT directing the assessing officer to consider the claims was legally valid.

Petitioner’s Arguments

The counsel for M/s. Shriram Investments argued:

  • The Income Tax Appellate Tribunal had not directed the assessing officer to consider the revised return, but only the claim regarding deferred revenue expenditure.
  • The revised return should have been considered in line with the principles laid down in Wipro Finance Ltd. vs. Commissioner of Income Tax.
  • The assessee should have been allowed to raise new claims during the course of assessment proceedings, even if they were not part of the original return.
  • The ruling of the Madras High Court ignored the fact that claims omitted from the original return could be raised at later stages of the assessment process.

Respondent’s Arguments

The Additional Solicitor General, appearing for the Income Tax Department, countered with the following points:

  • The second revised return was filed after the expiration of the statutory time limit prescribed under Section 139(5) of the Income Tax Act.
  • The law does not allow the assessing officer to entertain claims made in a revised return filed after the deadline.
  • The Supreme Court’s ruling in Goetze (India) Ltd. vs. Commissioner of Income Tax confirmed that claims cannot be entertained outside of a valid return.
  • The ITAT’s order allowing consideration of the revised return violated the statutory provisions governing the assessment process.

Supreme Court’s Observations

1. Revised Return Barred by Time

The Court reaffirmed that under Section 139(5) of the Income Tax Act:

“If any person, having furnished a return under sub-section (1), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.”

The Court found that the appellant had missed the deadline for filing a revised return, making it invalid.

2. Assessing Officer’s Lack of Discretion

The Court noted that once a revised return is filed beyond the prescribed time limit:

“The assessing officer had no jurisdiction to consider the claim made by the assessee in the revised return filed after the time prescribed by Section 139(5).”

Thus, the ITAT’s direction to the assessing officer was not legally sustainable.

3. No Scope for Raising Claims Beyond Return Filing

The Court cited Wipro Limited vs. Principal Commissioner of Income Tax to emphasize that claims must be made within the timeframe allowed for return filing. The Court held:

“The revised return of income under Section 139(5) cannot be filed to withdraw a claim and subsequently claim a deduction.”

Final Judgment

The Supreme Court ruled:

  • The appeal was dismissed, upholding the Madras High Court’s decision.
  • The revised return filed on October 29, 1991 was barred by limitation and could not be entertained.
  • The ITAT’s order directing the assessing officer to consider the claim was erroneous.
  • The Income Tax Act does not provide discretion to the assessing officer to consider claims outside of a validly filed return.

Conclusion

The Supreme Court’s ruling in M/s. Shriram Investments vs. The Commissioner of Income Tax III, Chennai reinforces key legal principles in tax law:

  • A revised return filed after the statutory deadline cannot be considered.
  • An assessing officer cannot entertain claims beyond what is filed in a valid return.
  • ITAT cannot direct an assessing officer to consider claims from an invalid return.
  • The provisions of the Income Tax Act must be strictly followed when dealing with return filings and claim submissions.

This judgment underscores the importance of adhering to statutory deadlines in tax filings and ensures that the integrity of tax assessments is maintained.


Petitioner Name: M/s. Shriram Investments.
Respondent Name: The Commissioner of Income Tax III, Chennai.
Judgment By: Justice Abhay S. Oka, Justice Augustine George Masih.
Place Of Incident: Chennai, Tamil Nadu.
Judgment Date: 04-10-2024.

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