Once an LLP opts for audit under Rule 24(8), the due date of filing the income tax return is 30^th September: ITAT Agra

 

The Hon’ble Tribunal has adopted a liberal interpretation of Rule 24 (8) of the LLP Rules, granting relief to the taxpayer. This judgment could serve as a valuable reference for many LLPs facing similar issues

A summary of the case “Paramsukh Infradevelopers LLP v. Income-tax Officer, Agra” (ITA No. 56/Agr/2023, AY 2019-20)

1.  Dispute Origin: Paramsukh Infradevelopers LLP filed its return on 17.09.2019, declaring a business loss of ₹16,96,486. The CPC disallowed carry forward of this loss, treating the return as belated (due date considered: 31.08.2019).

2.  Core Issue: Whether the LLP’s return was filed within the prescribed due date under Section 139(1) of the Income-tax Act and whether it was entitled to carry forward the business loss under Section 139(3).

3.  Assessee’s Stand: Claimed its books were audited under Rule 24(8) of the LLP Rules, 2009, and hence, the due date should be considered as 30.09.2019. The return was therefore filed on time.

4.  CIT(A)’s Decision: Dismissed the appeal, holding that the LLP was not mandatorily required to get audited as turnover was ₹0 and contribution (disputed calculation) was below ₹25 lakh. Therefore, the due date was 31.08.2019, and the return was late.

5.  Revenue’s Argument: Supported CIT(A), asserting no audit was mandatory under the LLP Rules or Section 44AB, due to nil turnover and contribution calculation not exceeding the audit threshold.

6.  Tribunal’s Analysis: Noted that partners had voluntarily opted for audit under the second proviso to Rule 24(8) of the LLP Rules, which legally mandated an audit once chosen.

7.  Legal Interpretation: The Tribunal held that once an LLP opts for audit under Rule 24(8), it becomes mandatory under law and qualifies for the extended filing due date (30th September) as per Explanation 2 to Section 139(1).

8.  Audit Evidence: The LLP was audited by a Chartered Accountant, and relevant documents (audit report, LLP Form 8) confirmed a contribution of ₹1 crore and formal audit compliance.

9.  Tribunal’s Ruling: The return filed on 17.09.2019 was within the applicable due date (30.09.2019), hence the business loss was allowed to be carried forward under Section 139(3).

10.  Outcome: The Tribunal allowed the appeal in favor of the assessee, overturning the CIT(A)’s order and granting carry forward of the declared business loss.

The copy of the order is as under:

1735728395-dmZWSq-1-TO