ITAT Allows Carry Forward of Loss, Deletes Late Fee as Partner Filed Return Within Extended Due Date u/s 92E [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) allowed the carry forward of long-term capital loss and deleted the late filing fee of Rs. 5,000, holding that the return was filed within the extended due date applicable to a partner of a firm required to file a report under section 92E of Income Tax Act,1961.

Dhiren Ramanlal Shah,appellant-assessee, filed his return for A.Y. 2022–23 on 26.11.2022, declaring taxable income of Rs. 21.84 lakh and long-term capital loss of Rs. 3.59 crore to be carried forward. The Centralised Processing Centre (CPC), Bangalore, disallowed the carry forward of loss under section 143(1)(a), stating the return was filed after the due date under section 139 of the Act.

Are You GST Compliant? Get the Clarity You Need on RCM - Click here 

The assessee explained that he was a partner in M/s. Ramson Exports, which was required to file a report under section 92E, and therefore, the due date for filing his return was 30.11.2022. Since the return was filed on 26.11.2022, it was within the time limit.

However, CPC rejected the explanation and issued an intimation disallowing the loss. A rectification application under section 154 was also rejected. On appeal, the Commissioner of Income Tax (Appeals)[CIT(A)] accepted the explanation and directed the AO to verify whether the report under section 92E was filed and, if so, to allow the claim after giving an opportunity of hearing.

The assessee then filed an appeal before the Tribunal against this order.

The only issue was that the CIT(A) had erroneously directed the AO to verify whether the assessee had filed the report under section 92E of the Act.

The assessee counsel explained that the report under section 92E was to be filed by the partnership firm, not the assessee. The firm, M/s. Ramson Exports, filed the report on 31.10.2022, and CPC had accepted 30.11.2022 as the due date for the firm’s return. Since the assessee was a partner, the same due date applied to him. He requested that the long-term capital loss of Rs. 3.59 crore be allowed to be carried forward and the late fee of Rs. 5,000 be removed.

The two member bench comprising Anikesh Banerjee (Judicial Member) and Renu Jauhri (Accountant Member) observed that the partnership firm, M/s. Ramson Exports, had filed the required audit report on 31.10.2022. Since the assessee was a partner in the firm, he was entitled to the benefit of Explanation 2(aa) to section 139(1), making the due date for filing his return 30.11.2022.

The tribunal directed the AO to allow the carry forward of loss and also delete the penalty of Rs. 5,000 levied under section 234F of the Act. Therefore,the appeal was allowed.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates