BHAGWAN PRECISION,ROHTAK vs. ASSTT. COMMISSIONER OF INCOME TAX, ROHTAK

The ld. Commissioner of Income Tax (Appeals) failed to appreciate that since the original return of income and Audit Report u/s 44AB were filed within the due date prescribed u/s 139 (1), the revised return of income filed u/s 139(5) of the Act was a valid return.

The ld. CIT (Appeals) failed to appreciate that the deduction u/s 80IC cannot be denied vide intimation u/s 143(1), without calling the appellant.

The assessing officer has erred in levying interest u/s 234B and 234C amounting to Rs.7,73,070/- and Rs.1,47,452/- respectively. 4. At the time of hearing, ld. AR submitted that through the Audit Report on Form No.10CCB dated 02.08.2017 regarding claim of deduction was filed along with the revised return of Income, he submitted that the figure of original returned Income & Revised Returned Income are same. He submitted that revised return is filed due to non filing of Audit Report on Form 10CCB along with original return of Income. He submitted that it is not the case of the assessee that it had claimed the deduction u/s 80IC in revised return of Income and the assessee had made claim of deduction in original return of income filed on 21.10.2017 itself. He further submitted that Audit Report u/s 44AB was also filed before the due date of filing of return of income i.e. 07.11.2017. He submitted that the return was processed by CPC on 15.04.2019 and rejected the claim of deduction u/s 80IC holding that Form No.10CCB was not e-filed within the due date. He further submitted that original return filed on 21-10-2017 was not processed. The ld. AR again submitted that the initial assessment year for claiming deduction u/s 80IC was 2010-11 and the Chartered Accountant has clearly shown that the claim of the assessee u/s 80IC is of Rs.84,36,767/- and the assessee has also claimed in the original return of income u/s 139(1) of the Act for the same amount of Rs.84,76,767/-. The ld. AR further submitted that as the revised return has been processed and the original return was on time, therefore the assessee is eligible for deduction u/s 80IC in view of various judicial rulings with regard to provisions of Section 80IC, which places the restricted clauses for denial of deduction, if the returns are not filed within the due date. He submitted that now there are two issues, the first issue is regarding eligibility of deduction u/s 80IC based on return which has been filed after the filing of original return and the filing of Form 10CCB. He further brought to our notice the provisions of section 80A(5) and 80AC as under :- “Section 80A(5) Where the assessee fails to make a claim ill his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading "C. - Deductions in respect of certain incomes", no deduction shall be allowed to him there under.]" Section 80AC Deduction not to be allowed unless return furnished.- Where in computing the total income of an assessee of the previous year relevant to the assessment year commencing on the 1st day of April, 2006 or any subsequent assessment year, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or Section 80-IC, no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (I) of section 139." He submitted that a reading of the both sections 80A(5) and 80AC, it emerges that to make a claim u/s 80IA, the assessee is simply required to file the return of income u/s 139(1) and the claim can be made in the revised return of income also i.e. there is no bar for making the claim even in the return of income filed u/s 139 (5) of the IT Act. In this regard, he relied on the following judgments in support of its submissions:- (i) Jitendra Kumar Nuhata vs. JCIT (ITAT Bangalore); (ii) DCIT, Hyderabad vs. Delhi MSW Solutions Ltd. (Hyderabad ITAT); (iii) Dunichand Khitri Raja vs. ACIT (Bangalore ITAT).

Considered the rival submissions and material placed on record. We observe that the assessee has claimed the deduction u/s 80IC in original return of income filed u/s 139(1), however assessee subsequently filed revised return of income and also submitted audit report in Form 10CCB along with revised return of income. The lower authorities rejected the same. We observe that similar issue was considered by various Courts and it was held that it is mandatory for the assessee to claim the deduction u/s 80IC in its return of income. Once assessee claimed the same in the return of income, assessee is eligible to claim the same. In the present appeal, assessee has claimed the deduction u/s 80IC in original return u/s 139(1) itself, however revised the ROI and claimed deduction u/s 80IC and filed the audit report. What is relevant is, assessee has to claim deduction in its return of income as per section 80AC of the Act. In this regard, we observe that assessee has already claimed the deduction u/s 139(1) of the Act. Mere revision u/s 139(5) will not bar the assessee to claim the deduction u/s 80IC.

With regard to delay in submission of audit report, we observe that several courts have held that the assessee to file the audit report along with return were only directory in nature and not mandatory. We observe that Hon’ble Delhi High Court in the case of CIT vs.. Contimeters Electricals Pvt. Ltd. (supra) have held as under :- “After issuance of the notice the Commissioner of Income Tax passed the order dated 29.03.2007 whereby he held that that he was fully satisfied that the assessment which had been completed by the Assessing Officer was prejudicial to the interest of the revenue and that it was erroneous in as much as the assessee had not satisfied the conditions laid down under Section 80-IA and consequently the deduction under that section for the sum of Rs 14,27,351/- had been wrongly allowed. The CIT(A), therefore, cancelled the assessment which had been earlier framed and directed the Assessing Officer to complete the assessment as per law, in terms of the directions given in the said order. Being aggrieved by the said order, the assessee preferred an appeal before the Tribunal which was allowed by the Tribunal by virtue of the impugned order. The Tribunal took the view that the provisions of section 80- IA(7) with regard to filing of the audit report along with the return were not mandatory and were merely directory. In coming to such conclusion, the Tribunal referred to the decision of the Gujarat High Court in CIT v. Gujarat Oil & Allied Industries, 201 ITR 325 (Guj). In that decision the provisions of Section 80J(6A) were considered. The wording of Section 80J(6A) is similar to that of section 80-IA(7) which is in issue in the present appeal. The Gujarat High Court took the view that the word “shall” which occurs in section 80J(6A) be read as “may” and that the requirement “of filing of an audit report along with the return was only to be taken as directory in nature. The Gujarat High Court took the view that in case the audit report is submitted at any time before the framing of the assessment, there would be substantial compliance with the provisions of Section 80J(6A). The Tribunal also relied on the decision of the Madras High Court in CIT v. A.N. Arunachalam, 208 ITR 481 (Mad), which, again, while considering the provisions of Section 80J(6A), took the same view as that of the Gujarat High Court.

Respectfully following the above decision and other similar decisions, we are inclined to hold that the assessee is eligible to claim deduction u/s 80IC who had claimed the deductions u/s 80IC in filing return of income u/s 139(1) and 139(5) and duly submitted the audit report before completion of the assessment. Therefore, we are inclined to allow the grounds raised