Chapter 5 Case Laws and Amendments

Recent amendments in filing of returns as per Finance Bill:

The Finance Bill, 2024 introduced several amendments in the filing of tax returns. Here are
some key changes:
1. Extended Deadlines for Filing Returns: The deadlines for filing various tax returns
have been extended to provide taxpayers with more time to comply. This includes
extensions for both individual and corporate taxpayers.
2. Simplified Return Forms: The government has introduced simplified return forms for
small taxpayers and individuals with uncomplicated income sources. These forms are
shorter and require less detailed information, making the filing process easier.
3. Increased Penalties for Late Filing: The penalties for late filing of returns have been
increased to encourage timely compliance. This includes higher fines for both late filing
and non-filing of returns.
4. Pre-filled Returns: The scope of pre-filled returns has been expanded. Taxpayers will
now find more information pre-filled in their returns, such as income from salary,
interest, and dividends. This is aimed at reducing the burden on taxpayers and
minimizing errors.
5. E-verification: The process of e-verification of returns has been further simplified.
Taxpayers can now e-verify their returns through various methods, including Aadhaar
OTP, net banking, and EVC through the bank account.
6. Enhanced Data Sharing: The tax authorities will now have access to more data from
various sources, such as banks, financial institutions, and other government agencies.
This data will be used to cross-verify the information provided by taxpayers in their
returns.
7. Tax Audit Threshold Increased: The threshold for mandatory tax audit has been
increased, providing relief to smaller businesses and professionals. This means that
fewer taxpayers will be required to get their accounts audited.
8. Introduction of Faceless Assessments: The faceless assessment scheme has been
expanded to cover more types of assessments. This is aimed at reducing the physical
interface between taxpayers and tax authorities, thereby minimizing opportunities for
corruption and harassment.
9. Revised Provisions for Capital Gains: The provisions related to the taxation of capital
gains have been revised, with changes in the computation of cost of acquisition and the
holding period for certain types of assets.
10. Clarifications on Deductions and Exemptions: The Finance Bill has provided
clarifications on various deductions and exemptions available under the Income Tax
Act. This includes clarifications on deductions for housing loans, medical insurance
premiums, and contributions to retirement savings.
Important Case Laws:

1. Principal Commissioner of Income Tax vs. Neeraj Jindal (2021): This is a notable
decision by the Delhi High Court concerning the filing of tax returns and the entitlement to
deductions under the Income Tax Act. Here are the detailed aspects of the case:
Case Background:
• Parties Involved: Principal Commissioner of Income Tax (Appellant) vs. Neeraj Jindal
(Respondent)
• Court: Delhi High Court
• Judgment Date: April 22, 2021
• Bench: Justice Manmohan and Justice Sanjeev Narula
Key Issues:
1. Late Filing of Return and Deduction Entitlement: Whether a taxpayer is entitled to claim
deductions under Section 80-IA of the Income Tax Act if the return of income is filed after
the due date prescribed under Section 139(1) but before the completion of the assessment.
2. Interpretation of "Due Date": Understanding the implications of filing returns after the
prescribed due date but within the time allowed under Section 139(4) of the Income Tax
Act.
Facts:
• Neeraj Jindal, the respondent, filed his income tax return for the assessment year 2010-11
beyond the due date under Section 139(1) but within the extended time frame under Section
139(4).
• The return included a claim for deductions under Section 80-IA of the Income Tax Act.
• The Assessing Officer (AO) disallowed the deduction on the grounds that the return was
not filed within the due date prescribed under Section 139(1).
• The case went through various levels of appeals, ultimately reaching the Delhi High Court.
Delhi High Court's Ruling:
1. Entitlement to Deductions: The court held that the taxpayer is entitled to claim deductions
under Section 80-IA, provided the return is filed before the completion of the assessment,
even if it is beyond the due date prescribed under Section 139(1).
2. Reasonable Cause for Delay: The court emphasized that the Income Tax Act allows
returns to be filed under Section 139(4), which provides an extended period for filing
returns. If the return is filed within this extended period, the taxpayer should not be denied
the benefit of deductions for genuine reasons.
3. Legislative Intent: The court noted that the legislative intent behind Section 80-IA is to
promote industrial growth and investment in infrastructure. Denying deductions solely
based on the timing of the return would defeat the purpose of the incentives provided by
the legislation.

2.Principal Commissioner of Income Tax (Pr. CIT) vs. Veena Devi (2020): It is a notable
decision by the Patna High Court concerning the filing of tax returns and the entitlement to
deductions under Section 54 of the Income Tax Act. Here are the detailed aspects of the case:
Case Background:
• Parties Involved: Principal Commissioner of Income Tax (Appellant) vs. Veena Devi
(Respondent)
• Court: Patna High Court
• Judgment Date: February 6, 2020
• Bench: Justice Ramesh Kumar Datta and Justice Madhuresh Prasad

Key Issues:
1. Entitlement to Deduction under Section 54: Whether the assessee is entitled to claim
deductions under Section 54 of the Income Tax Act if the return of income is filed after the
due date prescribed under Section 139(1) but before the completion of the assessment.
2. Interpretation of "Due Date": Understanding the implications of filing returns after the
prescribed due date but within the time allowed under Section 139(4) of the Income Tax
Act.
Facts:
• Veena Devi, the respondent, sold a residential property and purchased a new one within the
stipulated time, thus becoming eligible for a deduction under Section 54 of the Income Tax
Act.
• The return for the assessment year 2013-14 was filed beyond the due date under Section
139(1) but within the extended period allowed under Section 139(4).
• The Assessing Officer (AO) disallowed the deduction on the grounds that the return was
not filed within the due date prescribed under Section 139(1).
• The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal
(ITAT) both ruled in favor of Veena Devi.
• The Revenue appealed to the Patna High Court.

Patna High Court's Ruling:

1. Entitlement to Deductions: The court held that the taxpayer is entitled to claim deductions
under Section 54, provided the return is filed before the completion of the assessment, even
if it is beyond the due date prescribed under Section 139(1).
2. Reasonable Cause for Delay: The court emphasized that the Income Tax Act allows
returns to be filed under Section 139(4), which provides an extended period for filing
returns. The filing within this extended period is considered valid, and the taxpayer should
not be denied the benefit of deductions.
3. Legislative Intent: The court noted that the legislative intent behind Section 54 is to
encourage the reinvestment of capital gains into residential property. Denying deductions
solely based on the timing of the return would defeat the purpose of the incentives provided
by the legislation.

3. Gujarat Fluoro Chemicals Ltd. vs. Commissioner of Income Tax (2020): The case deals
with issues related to the filing of tax returns, processing of refunds, and the calculation of
interest on delayed refunds. Here are the detailed aspects of the case:
Case Background:
• Parties Involved: Gujarat Fluoro Chemicals Ltd. (Appellant) vs. Commissioner of Income
Tax (Respondent)
• Court: Supreme Court of India
• Judgment Date: October 23, 2020
• Bench: Justice Uday Umesh Lalit, Justice Indu Malhotra, and Justice Hemant Gupta
Key Issues:
1. Interest on Delayed Refunds: Whether the assessee is entitled to interest on delayed
refunds from the date of the assessment order to the date of granting the refund, particularly
when the delay is attributable to the tax department.
2. Calculation of Interest: Determining the correct period for which interest on the refund
amount should be calculated under Section 244A of the Income Tax Act.
Facts:
• Gujarat Fluoro Chemicals Ltd. filed its income tax return and claimed certain refunds for
various assessment years.
• The refunds were delayed due to prolonged proceedings and the tax department's failure to
process the refunds promptly.
• The assessee argued that it was entitled to interest on the delayed refunds from the date of
the original assessment order until the actual date of refund.
• The tax department contended that the interest should be calculated only for the period after
the assessee filed a valid claim for the refund.
Supreme Court's Ruling:
1. Entitlement to Interest: The Supreme Court held that the assessee is entitled to interest
on the delayed refund from the date of the original assessment order until the date the refund
is actually granted, if the delay is attributable to the tax department.
2. Calculation of Interest: The Court clarified that Section 244A of the Income Tax Act
provides for the payment of interest on refunds if the delay is not attributable to the
assessee. Interest is to be calculated for the entire period of delay caused by the tax
department.
3. Legislative Intent: The Court emphasized that the legislative intent behind Section 244A
is to compensate the taxpayer for the delay in receiving refunds due to the department's
inaction or inefficiency.

4.CIT vs. Excel Industries Ltd. (2013) :This is indeed a significant decision by the Supreme
Court of India concerning the filing of revised tax returns and its implications under the Income
Tax Act. Here are the details of the case:
Case Background:
• Parties Involved: Commissioner of Income Tax (Appellant) vs. Excel Industries Ltd.
(Respondent)
• Court: Supreme Court of India
• Judgment Date: September 12, 2013
• Bench: Justice S.H. Kapadia, Justice A.K. Patnaik, and Justice Swatanter Kumar
Key Issue:
• Scope of Revised Return: The main issue in this case was to determine whether the filing
of a revised return under Section 139(5) of the Income Tax Act extends the period for
completing the assessment beyond the original due date.
Facts:
• Excel Industries Ltd. filed its original return of income within the prescribed due date under
Section 139(1) of the Income Tax Act.
• Subsequently, the company discovered certain errors or omissions in the original return and
filed a revised return under Section 139(5) to rectify these errors.
• The tax authorities sought to extend the assessment period based on the filing of the revised
return, arguing that the assessment timeline should be computed from the date of filing the
revised return rather than the original return.
Supreme Court's Ruling:
• The Supreme Court held that the filing of a revised return under Section 139(5) does not
extend the period for completing the assessment beyond the original due date prescribed
under Section 139(1).
• The Court emphasized that the assessment proceedings must be completed within the time
limits prescribed under the Income Tax Act, starting from the date of the original return
filing.
• The purpose of allowing revised returns is to rectify genuine mistakes or omissions, but it
does not alter the statutory timeline for assessment purposes.
• Therefore, the assessment proceedings should proceed based on the original return filed
within the due date, and the revised return does not reset or extend the statutory assessment
timeline.