2025 (6) TMI 1053 - AT - Income Tax

Delay in filling Return - denial of claim of carry forward loss of business loss - DR submitted that the original return has been filed after the statutory period and is delayed by 02 seconds therefore the CPC is fully justified in denying the claim of carry forward loss of business loss. Treatment of return as filed within time or not due to delay in filing of the return by 02 seconds - HELD THAT - We find an identical issue decided in the case of M/s. Palava Dwellers Pvt. Ltd. and Lodha Developers Ltd 2020 (4) TMI 842 - ITAT MUMBAI where the delay in filing of the return was 2 minutes which was caused due to technical glitch and last hour rush in the website cannot be held against the assessee and accordingly the AO was directed to treat the return filed by the assessee for assessment year 2014-15 as filed in time and consequently to consider the revised return filed by the assessee for the purpose of computing the income of the assessee. We find in the case of The Khedbrahma Taluka Primary Teachers Co-op. Credit Society Ltd 2023 (2) TMI 749 - ITAT AHMEDABAD while considering the delay of 4 minutes 42 seconds in uploading the return of income held that the return was filed in time and the CPC is not correct in denying the claim of deduction u/s 80P of the Act to the assessee u/s 143(1)(a)(v) proceedings Since in the instant case admittedly the return was filed prior to midnight of 31.10.2019 but the acknowledgement was generated after the midnight with a delay of 02 seconds therefore we hold that there is no error in the order of the Ld. Addl/JCIT(A) directing the Assessing Officer to treat the original return filed with a delay of 02 seconds as filed in time u/s 139(1). Appeal filed by the Revenue is dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal were:

(a) Whether the original return of income filed by the assessee, which was uploaded on the income tax e-filing website on the due date but acknowledged with a delay of two seconds past midnight, should be treated as filed within time under section 139(1) of the Income Tax Act, or as a belated return under section 139(4).

(b) Whether the delay of two seconds caused due to technical glitches and last-hour rush at the income tax portal can be excused and the return treated as timely filed for the purpose of claiming carry forward of business loss.

(c) Whether the Assessing Officer and the CPC were justified in denying the claim of carry forward of business loss on the ground that the return was belatedly filed.

(d) Whether the claim of deduction under section 80IB(10) of the Act, quantified by the Assessing Officer but denied due to the alleged belated filing of the return, should be allowed once the return is held to be timely filed.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a) & (b): Timeliness of Return Filing with Minor Delay Due to Technical Glitches

Relevant legal framework and precedents: The statutory deadline for filing the return was 31.10.2019. Section 139(1) mandates filing on or before the due date, failing which the return is treated as belated under section 139(4). Section 119(2)(b) empowers the CBDT to condone delay in filing returns and claims beyond the prescribed period. The Tribunal relied on various judicial pronouncements including the Bombay High Court in Bombay Mercantile Co-op. Bank Ltd. v. CBDT, which held that a justice-oriented approach should be adopted rather than a pedantic one in condoning delay. The Madras High Court in CBDT v. Regen Infrastructure & Services (P.) Ltd. condoned delay caused by technical glitches and last-hour rush. The Delhi High Court in Lodhi Property Co. Ltd. v. Under Secretary recognized the Board's power to condone delay under section 119(2). The Tribunal also considered decisions of coordinate Benches of the Tribunal where delays of minutes were condoned due to technical glitches, such as DCIT vs. M/s. Palava Dwellers Pvt. Ltd. and The Khedbrahma Taluka Primary Teachers Co-op. Credit Society Ltd. vs. ADIT.

Court's interpretation and reasoning: The Tribunal noted that the return was uploaded on 31.10.2019 before midnight but the acknowledgment was generated at 00:00:02 hours on 01.11.2019 due to technical glitches and last-minute rush. The Tribunal held that such a negligible delay of two seconds should not be held against the assessee, especially when caused by factors beyond the assessee's control. The Tribunal emphasized that a highly pedantic approach should be eschewed in favor of a justice-oriented approach, ensuring that the assessee does not suffer due to technicalities.

Key evidence and findings: The assessee produced evidence showing the return was uploaded before midnight, and the delay was only in generation of acknowledgment. The Tribunal relied on the electronic trail and the fact that the delay was minimal and unintentional.

Application of law to facts: Applying the principles from the cited cases, the Tribunal held that the return should be deemed filed within time under section 139(1), not as a belated return under section 139(4). This allowed the assessee to claim carry forward of business losses.

Treatment of competing arguments: The Revenue argued that the return was filed after the due date and the CPC was justified in denying the claim of carry forward losses. The Tribunal rejected this, finding the delay was technical and minimal, and that the Revenue's strict approach would cause undue hardship.

Conclusions: The Tribunal dismissed the Revenue's grounds challenging the timeliness of filing and held that the return was filed within time.

Issue (c): Denial of Carry Forward of Business Loss Due to Alleged Belated Filing

Relevant legal framework and precedents: Section 139(3) of the Income Tax Act allows carry forward of losses if the return is filed within the prescribed time. Section 143(1)(a)(v) provides for disallowance of certain deductions if the return is belated, but this amendment was effective from 01.04.2021 and did not apply to assessment year 2019-20.

Court's interpretation and reasoning: The Tribunal noted that since the return was held to be timely filed, the assessee was entitled to claim carry forward of losses. The Tribunal referred to The Khedbrahma Taluka Primary Teachers Co-op. Credit Society Ltd. case where a delay of over four minutes was condoned and the claim for deduction was allowed. The Tribunal also clarified that the CPC's denial of carry forward losses on the ground of belated filing was incorrect.

Key evidence and findings: The Tribunal observed that the assessee had made a genuine effort to file the return on time and the delay was not deliberate or mala fide.

Application of law to facts: Since the return was deemed timely filed, the statutory conditions for carry forward of losses were met, entitling the assessee to the benefit.

Treatment of competing arguments: The Revenue's contention that the return was defective and the assessee should be treated as a non-filer was rejected as the Tribunal found no fault in the assessee's conduct.

Conclusions: The Tribunal upheld the claim for carry forward of business losses.

Issue (d): Allowance of Deduction under Section 80IB(10) of the Act

Relevant legal framework and precedents: Section 80IB(10) provides deduction in respect of profits from eligible housing projects. The Assessing Officer had quantified the allowable deduction but denied it on the ground that the return was belatedly filed. The Tribunal referred to the principle that if the return is held to be timely filed, the deduction should be allowed.

Court's interpretation and reasoning: The Tribunal observed that the Assessing Officer had allowed the deduction after adjusting for inadvertent excess claims and cancellation charges not eligible for deduction. Since the return was held to be timely filed, the Tribunal directed the Assessing Officer to allow the deduction as quantified.

Key evidence and findings: The Assessing Officer's computations and the assessee's explanations regarding the excess claim and cancellation charges were considered.

Application of law to facts: The deduction was allowable once the return was treated as timely filed, and the Tribunal ordered the Assessing Officer to give effect to the deduction accordingly.

Treatment of competing arguments: The Revenue's objection based on belated filing was rejected in light of the Tribunal's findings on timeliness.

Conclusions: The deduction under section 80IB(10) was allowed as quantified by the Assessing Officer.

3. SIGNIFICANT HOLDINGS

The Tribunal held:

"It is well settled that in matters of condonation of delay a highly pedantic approach should be eschewed and a justice oriented approach should be adopted and a party should not be made to suffer on account of technicalities."

"If the Assessee has encountered certain hardship or difficulty in uploading his return, as alleged by him due to a technical snags in the website of the Income Tax Department due to the last hour rush of filing of Returns, the delay deserves to be condoned."

"The return was uploaded on the income tax e-filing website on 31.10.2019 before 00:00 hours but the e-filing was processed and generated the acknowledgement at 00:00:02 hours i.e. by delay of two seconds beyond due date. Such a negligible delay caused due to technical glitches and rush hours cannot be held against the assessee."

Core principles established include:

- Technical glitches and minimal delays in e-filing returns should not result in denial of statutory benefits if the delay is not attributable to the assessee.

- The Income Tax Department and authorities should adopt a justice-oriented approach rather than a pedantic one in condoning minor delays.

- The power under section 119(2)(b) to condone delay should be exercised to prevent undue hardship.

- Returns uploaded before the due date but acknowledged with minor delay due to technical reasons should be treated as timely filed under section 139(1).

- The entitlement to carry forward business losses and claim deductions under sections such as 80IB(10) depends on timely filing of returns; hence, condonation of minor delays preserves these rights.

Final determinations on each issue were:

(a) The original return filed with a delay of two seconds due to technical glitches was to be treated as filed within time under section 139(1).

(b) The assessee was entitled to claim carry forward of business losses.

(c) The Assessing Officer was directed to allow the deduction under section 80IB(10) as quantified.

(d) The appeal filed by the Revenue was dismissed.