ITAT Bengaluru on Defective Returns and Scrutiny Limitation: Uber Health Tech Private Limited Vs ACIT

1. Overview of the Decision

The Bengaluru Bench of the Income Tax Appellate Tribunal in Uber Health Tech Private Limited Vs ACIT, ITA No. 2021/Bang/2025, delivered on 21/09/2026, examined whether curing a defective return under section 139(9) extends the statutory time limit for issuing a scrutiny notice under section 143(2) for assessment year 2017-18.

The Tribunal concluded that:

  • Rectification of defects under section 139(9) does not amount to filing a fresh return, where the original return remains operative; and
  • The time limit for issuing notice under section 143(2) continues to run from the financial year in which the original return was furnished.

Consequently, the notice dated 22/09/2019 under section 143(2) for AY 2017-18 was held to be time-barred, and the assessment order dated 12/12/2019 was quashed on the ground of limitation, without adjudicating the additions on merits.

2. Factual Matrix

2.1 Business Activity and Return Filing

  • Uber Health Tech Private Limited is engaged in developing software platforms for health and allied products.
  • For AY 2017-18, the assessee filed its original return of income on 29/09/2017, declaring a loss of ₹17,354,790.
  • Subsequently, the return was flagged as defective and proceedings under section 139(9) were initiated.

2.2 Defect Proceedings Under Section 139(9)

As recorded and argued before the Tribunal:

  • An intimation treating the return as defective was issued on 01/06/2018 (communicated on 03/06/2018).
  • A first reminder to remove the defect was issued on 19/06/2018.
  • The assessee removed the defect on 20/06/2018.
  • Thereafter, a second intimation was issued on 26/09/2018, again linked to removal of defect.

The assessee took the position that these steps represented curing defects in the original return, not filing a fresh return.

2.3 Scrutiny Selection and Assessment

  • A notice under section 143(2) for AY 2017-18 was issued on 22/09/2019.
  • On non-compliance, a notice under section 142(1) dated 13/11/2019 was issued, followed by a section 144 show-cause notice, which also went unanswered.
  • In the assessment order dated 12/12/2019, passed under section 143(3) read with section 144C (described in the body as completed under section 144):
    • The Assessing Officer (AO) noted that the assessee had debited expenses of ₹21,400,625, and disallowed 30% of these, i.e. ₹6,420,188, for lack of supporting evidence.
    • An amount of ₹63,951,505 reflected as “securities premium reserve” in the balance sheet was treated as unexplained and added under section 68.

On this basis, the AO assessed total income by making an addition of ₹63,951,505 to the loss of ₹17,354,790 declared in the return filed on 29/09/2017.

3. First Appeal Before CIT(A)

3.1 Grounds Raised

Before the National Faceless Appeal Centre, Delhi (CIT(A)), the assessee challenged, among other things:

  • The addition of ₹63,951,505 under section 68 in respect of share premium;
  • The disallowance of ₹6,420,188 being 30% of business expenditure; and
  • Alleged denial of adequate opportunity and non-consideration of additional evidence under Rule 46A.

3.2 Assessee’s Submissions on Merits

  1. Share Premium Addition (Section 68)

    • The assessee submitted that the amount of ₹63,951,505 represented premium on preference shares actually received and recorded in financial year 2015-16, not in the financial year relevant to AY 2017-18.
    • It produced a copy of the prescribed form for allotment of shares filed with the Registrar of Companies on 09/09/2015, to show that no fresh credit arose in the books during the relevant year.
    • On this basis, it was argued that section 68 could not be invoked for AY 2017-18 as there was no new credit entry of share premium in that year.

  2. Expense Disallowance

    • The assessee pointed out that it had undergone amalgamation with Around the Glass Being Private Limited pursuant to the order of the National Company Law Tribunal dated 07/07/2023.
    • Due to this amalgamation and the process of collating financial records, the assessee submitted that there were practical challenges in promptly producing all vouchers and bank statements.
    • It nevertheless furnished details of various heads of expenditure in the course of appellate proceedings and contended that ad hoc disallowance without rejecting the books was not sustainable.

3.3 Findings of CIT(A)

  • The CIT(A) held that the AO had provided sufficient opportunities to the assessee to submit records, which it allegedly failed to utilise.
  • On the expenditure disallowance, the CIT(A) accepted the AO’s action and did not interfere.
  • On the share premium, the CIT(A) did not accept the assessee’s contention that the sums pertained to an earlier year and sustained the section 68 addition of ₹63,951,505.
  • The request to admit additional evidence under Rule 46A was rejected, and the appeal was dismissed in entirety.

4.