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Income Tax Appellate Tribunal, Hyderabad ‘ SMC ‘ Bench, Hyderabad
Before: Smt. P. Madhavi Devi
This is assessee’s appeal for the A.Y 2015-16 against the order of the CIT (A)-1, Hyderabad, dated 15.01.2018.
Brief facts of the case are that the assessee individual running two business units i.e. (1) Vishnu Polymers in Uttarakhand and (2) M/s Padma Industries in Hyderabad, filed her return of income for the A.Y 2015-16 on 15.8.2015 admitting an income of Rs.4,85,450/-. The assessee admitted gross total income at Rs.15,37,416/- and after claiming Chapter VI A deduction in respect of Vishnu Polymers to the tune of Rs.9,59,971/- u/s 80IC and Rs.92,000/- of LIC Premium u/s 80C of the Act i.e. a total of Rs.10,51,971/-, the assessee admitted net taxable income at Rs.4,85,450/-.
During the assessment proceedings u/s 143(3) of the Act, pursuant to the selection of the return of income for limited Page 1 of 4 scrutiny under CASS, the AO observed that the assessee had claimed deduction u/s 80IC of the Act in respect of one of her unit i.e. Vishnu Polymers is situated in Rudrapur, Uttarakhand which is situated in the areas mentioned in section 80IC of the Act. The AO observed that, one of the conditions which is required to be fulfilled for claiming deduction u/s 80IC is that the books of account should be audited and the audit report in Form 10CCB should be submitted along with the return of income. He observed that the assessee had not filed form 10CCB along with the return of income but has uploaded the same electronically subsequently. He also observed that the assessee has failed to submit P&L A/c and balance sheet for the relevant A.Y in respect of the eligible undertaking. Therefore, he held that the assessee has not fulfilled the conditions for allowing the deduction u/s 80IC of the Act. He accordingly disallowed the same and brought it to tax.
Aggrieved, the assessee preferred an appeal before the CIT (A) which was dismissed for non-appearance of the assessee before the CIT (A). The assessee is in second appeal before the Tribunal by raising the following grounds of appeal: “1.) The appeal dismissed by the learned Commissioner of Income Tax (Appeals)-1 is not justified in law or in facts or in both, for the additions made by the by the learned ITO of ward
11. (4) to the extent of Rs.1 0,51,971/- be deleted. 2.) Without prejudice to the above contention your humble petitioner further submits that the Commissioner of Income Tax (Appeals)-1 has erred in dismissing the appeal. He did not observe the principles of the natural justice. He has not observed our contentions against the disallowance made by the learned ITO of ward
11. (4) while completing assessment of income of the petitioner under 143(3) of Income tax act. 3.) We have clearly explained the reasons for non filing of report in form No.10CCB which is to be filed as mentioned in section 80lC of the Act and the same was produced before the learned office at the assessment of the income for the assessment year 2015-16. The deduction u/s 80lC was disallowed for an amount of Rs.9,59,971/- Without considering our explanation information furnished before the learned ITO and even after producing before the requisite report before him during the assessment proceedings disallowed. During the appeals proceedings we have opted e-proceedings and submitted all the information and explanation via online before the leaned commissioner. Even then the CIT Appeals upheld the additions made by the Assessing officer on stating that even there is merit also simply because of non appearance before him. The action of CIT appeals is unlawful. 4.) Your petitioner submits to add or to alter or to amend or to delete any of the above said grounds facts at or before the date of hearing”.
The learned Counsel for the assessee submitted that though Form 10CCB could not be filed along with the return of income, the assessee had filed the same during the assessment proceedings and therefore, it cannot be stated that the assessee has not fulfilled the conditiosn u/s 80IC of the Act. He also submitted that the assessee has filed the separate P&L A/c and Balance Sheet for the eligible unit, but the AO has erroneously recorded that the assessee has not filed the same. In support of this contention that the relevant details which were to be filed along with the return of income can also be filed during the course of hearing and that the same should be considered if they are so filed, the learned Counsel for the assessee relied upon the decision of the Hon'ble Supreme Court of India in the case of CIT vs G.M. Knitting Industries Pvt. Ltd reported in 376 ITR 456 (S.C).
The learned DR, on the other hand, supported the orders of the authorities below and submitted that the assessee ought to have filed the audited accounts in Form 10CCB along with the return of income and since they have not been so filed, the claim of deduction u/s 80IC could not be entertained. She Page 3 of 4 further submitted that the assessee is required to maintain separate books of account for the eligible unit and since the assessee has not filed such separate books before the AO, the AO was constrained to disallow the claim u/s 80IC of the Act.
Having regard to the rival contentions and the material on record and the decision of the Hon'ble Supreme Court in the case of CIT vs G.M. Knitting Industries Pvt. Ltd (Supra), I find that the assessee has filed Form 10CCB and the books of account during the course of assessment proceedings. Therefore, the AO ought to have considered the same before disallowing the claim of deduction u/s 80IC of the Act. The order of the CIT (A) is ex-parte, and the assessee’s appeal was not considered on merits. In view of the same, I deem it fit and proper to remand the issue to the file of the AO for verification and reconsideration of the issue.
In the result, assessee’s appeal is treated as allowed for statistical purposes. Order pronounced in the Open Court on 22nd February, 2021.