The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that the gross business receipts was less than the threshold limit of Rs.1.00 crore prescribed under Section 44AB of the Income Tax Act,1961 for getting the accounts audited, thus quashed the said defect notice and the return of income filed by the assessee should be considered as valid return.
The assessee V.K. Patel Securities Pvt. Ltd is a stock broker, filed its return of income for the year under consideration declaring a total income of Rs.3,82,74,330. The Central Processing Cell (CPC) issued a defect notice under Section 139(9) of the Income Tax Act.
The CPC did not process the return of income filed by the assessee.
Aggrieved by the defect notice issued by CPC, the assessee filed “e-Nivaran Grievance”, against which response communication was issued invalidating the return filed by the assessee.
The assessee challenged the defect notice, by filing appeal before Commissioner of Income Tax (Appeals) [CIT (A)]. The first appellate authority dismissed the appeal of the assessee holding that there is no provision to file appeal against the defect notice issued under Section 139(9) of the Income Tax Act.
The Authorised Representative (AR) of the assessee Hiten Vasant, submitted that the assessee is not liable to get its accounts audited. Referring to the Profit and Loss account, the AR submitted that the gross business receipts of the assessee was Rs.92,95,722/- and the same is below the threshold limit of Rs.1.00 crore and further submitted that the return of income filed by the assessee cannot be considered as defective return.
Vranda U. Matkari appeared as Departmental Representative
The Bench comprising of B.R. Baskaran, Accountant Member and Rahul Chaudhary, Judicial Member relied on the decision of Deere & Company vs. DCIT (2022) and held that the defect notice issued under Section 139(9) of the Income Tax Act is appealable one.
Accordingly, set aside the order passed by CIT (A) and held that the assessee could file appeal in the instant case.
Further, the Tribunal observed that the gross business receipts was Rs.92,95,722/-, which is less than the threshold limit of Rs.1.00 crore prescribed under Section 44AB of the Income Tax Act for getting the accounts audited.
Therefore, there was merit in the submission of the assessee that it is not required to get its accounts audited under Section 44AB of the Income Tax Act.
Hence, it was held that the defect notice issued by CPC under Section 139(9)of the Income Tax Act is not in accordance with law thus quashed the defect notice, and directed the AO/CPC to treat the return of income filed by the assessee as valid return and process the same in accordance with law.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
