Defect Rectification in ITR Relates Back to Original Filing Date for Section 143(2) Limitation: Bombay High Court

Case Overview

Case Name: Atul Projects India Private Limited Vs Union of India and anr. (Bombay High Court)
Assessment Year: 2016-17
Court: Bombay High Court

Background of the Dispute

The Bombay High Court was presented with a writ petition filed by Atul Projects India Private Limited, raising a fundamental question on the computation of the limitation period applicable to scrutiny assessment proceedings under the Income Tax Act, 1961. The core issue revolved around the starting point of limitation for issuance of a notice under Section 143(2) — specifically, whether such limitation should be counted from the date of filing of the original income tax return, or from the date on which defects pointed out in that return were subsequently rectified by the assessee.

The dispute arose in the context of the assessee's return filed for Assessment Year 2016-17. After the return was submitted, the Income Tax Department identified certain defects in it. The assessee claims to have rectified those defects within the time period allowed by the Department for such purposes. Following the removal of defects, the Assessing Officer proceeded to issue a notice for scrutiny assessment. The assessee challenged this notice, contending that it had been issued beyond the prescribed limitation period, when such period is measured from the date on which the original return was filed.

Petitioner's Contention

The assessee's counsel advanced the position that the act of removing defects from a return already on record does not constitute the filing of a fresh return. Instead, the rectification of defects should be treated as relating back to the date on which the original return was filed. Consequently, for the purpose of computing the limitation period governing the issuance of a scrutiny notice, the relevant starting date must be the date of original filing — not the date of defect removal.

To buttress this position, the petitioner's counsel placed reliance on the following judicial precedents:

**Commissioner of Income Tax Vs. Sohan Lal Chhajan Mal (Punjab & Haryana High Court)😗* This decision supported the proposition that once defects in a return are cured, the rectification relates back to the original date of filing of the return. This judgment also made reference to the Calcutta High Court's decision in CIT Vs. Bharat Refineries Ltd.

**Prime Securities Limited Vs. Varinder Mehta, Assistant Commissioner of Income-Tax (Bombay High Court)😗* This coordinate bench decision of the Bombay High Court itself was cited in support of the assessee's challenge to the limitation period for scrutiny proceedings.