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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”, HYDERABAD
Before: SHRI RAMA KANTA PANDA & SHRI K.NARASIMHA CHARY
PER K. NARASIMHA CHARY, JM: Aggrieved by the order passed by the learned Commissioner of Income Tax(Appeals)-1, Hyderabad (“Ld.CIT(A)”) in the case of M/s. Biological E Limited (“the assessee”) for the assessment year 2013-14, assessee preferred this appeal. 2. Briefly stated relevant facts are that the assessee is engaged in manufacturing sale of bulk drugs and pharmaceutical formulation products. During the course of assessment for the assessment year 2013-
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14, learned Assessing Officer found that the assessee made an investment to the tune of Rs. 24,51,92,004/- in the equity shares and derived dividend income of Rs. 69,03,080/- which the assessee claims exempt under section 10(34) of the Income Tax Act, 1961 (‘the Act’). Assessee did not declare any corresponding expenditure. Learned Assessing Officer, therefore, determined the cost incurred by the assessee to make and hold such investment, by applying section 14A of the Act read with rule 8D of the Income Tax Rules, 1962 (‘the Rules’), at Rs. 18,18,479/-. Apart from this, learned Assessing Officer levied interest under section 234A of the Act and According to the learned Assessing Officer, the return was filed on 01/12/2013 whereas the due date to file the return was 30/11/2013. 3. Assessee preferred appeal before the learned CIT(A) stating that there was no expenditure incurred for earning the dividend income and the learned Assessing Officer failed to notice that during the assessment year 2013-14, investments of the assessee went up only by Rs. 4.30 lakhs due to re-investment of maturity proceeds of LIC liquid fund into units of SBI Dynamic Fund and no borrowed funds were used for making fresh investment. Assessee further stated that all the other investments were made in the earlier years out of assessee’s own funds. 4. In respect of the levy of interest under section 234A of the Act, the case of the assessee was that the income tax return was uploaded on 30/11/2013 being the due date for filing of return of income but may be due to the technical reasons, the acknowledgment was taken as 01/12/2013 and, therefore, the assessee is not responsible for the delay occurred at the end of the server and no interest under section 234A of the Act is leviable.
Learned CIT(A) noted that as revealed by the audited balance sheet the assessee had long term borrowing of Rs. 83,20,32,928/-, deferred tax liability (net) of Rs. 34,44,04,505/- and long term provision of Rs. 2,14,53,135/- apart from its current liabilities of Rs. 2,47,58,32,458/-.
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While referring to both circular No. 5/2014 dated 11/02/2014, learned CIT(A) recorded a finding that there will be a cost for any investment return and it is pertinent to note that the assessee took huge borrowings; long term and short term; already existing and, therefore, though the assessee possessed the availability of their own funds, the assessee did not clarify the diverting/investment of borrowed funds for investment. With this view of the matter, learned CIT(A) upheld the addition under section 14A of the Act read with rule 8D of the Rules. 6. Insofar as the issue relation to the addition under section 14A of the Act read with rule 8D of the Rules is concerned, by order dated 15/06/2021, a Co-ordinate Bench of this Tribunal restored the issue to the file of the learned Assessing Officer to consider the proper figures for computing the disallowance. However, by way of same order, the Co-ordinate Bench of this Tribunal observed the interest under section 234A of the Act is consequential in nature and directed the learned Assessing Officer to levy the same accordingly.
At the request of the assessee by way of M.A. No. 10/Hyd/2022, the said order insofar as this issue is concerned was recalled for adjudication in the light of the facts pleaded by the assessee. We now, therefore, proceed to adjudicate the issue relating to the levy of interest under section 234A of the Act. 8. On this aspect, assessee submits that the due date for furnishing the return was 30/11/2013. There is no dispute of this. Assessee’s further contention is that the assessee furnished the return of income on 30/11/2013 but due to the technical reasons on the server side, the server of the department generated the acknowledgement bearing the date 01/12/2013. According to the assessee, the act of submission of return of income by way of uploading the same to the server of the department was complete the moment the assessee presses the submit button and subsequent server side steps are not in the control of the assessee and,
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therefore, for all practical purposes, the date of furnishing the return shall be the date of uploading the return of income but not the date of generation of the acknowledgement which is not in the control of the assessee.
Learned DR submits that we do not know the time at which the return of income was submitted but, for all legal purposes, the date of acknowledgement is relevant. He submits that the acknowledgement at page No. 26 of the paper book shows the date of acknowledgement as 01/12/2013 and, therefore, it shall be construed that the assessee furnished the return with delay of one day.
We have gone through the record in the light of the submissions made on either side. This particular acknowledgement generated by the server to be found at page No. 26 of the paper book clearly shows the date of acknowledgement as 01/12/2013, but, at the same time, it also establishes that the return was digitally signed by the assessee on 30/11/2013 itself. Assessee is expected to upload the return of income to the server of the department and no physical furnishing is permissible now. In these circumstances, what best the assessee can do in the process of furnishing the return of income is to upload it to the server and nothing more. The hands of the assessee do not reach any further more to have any control in the process of receiving such return by the server or the generation of the acknowledgement. The moment the assessee completes the process of uploading of the return to the departmental server, the assessee can do nothing further and insofar as the assessee is concerned, the act of furnishing is complete. It is so for the simple reason that the subsequent processes are not in the control of the assessee and no alternative is also available to the assessee. When once the return escapes the hands of the assessee in the process of uploading the same to the departmental server, assessee loses control over the further processes. Assessee cannot be held responsible for any technical errors or delays that
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occurred subsequently or for the time of generation of acknowledgement. For example, if the assessee uploads the return of income on 20/11/2013 itself, but due to the technical reasons, if the acknowledgement is generated subsequent to 30/11/2013, the assessee cannot be fastened with the liability to pay interest under section 234A of the Act. Otherwise, it would amount to penalizing a person for no fault of him. Law does not permit such a course.
For this reason, we are of the considered opinion that the act of furnishing the return is complete for the purposes of Section 234A and Section 139 of the Act, the moment it is put in the course of transmission by way of uploading it to the website of the department so as to be out of the power of the assessee, and any subsequent delay in generation of the acknowledgement at the server end of the department cannot be attributed to the assessee.
Having said so, we hold that the learned Assessing Officer needs to be directed to verify the date of uploading of return of income with the information available with the Directorate Of Systems with reference to the electronic trail of the e-return filed, and in case it is found that the return was indeed uploaded with the electronic signature on 31/11/2013, the stipulated date of filing of the return, then it shall be treated that the return was irrevocably set into transmission, the act as per law, on the part of the assessee being complete, in which case the delay in the acknowledgement generated and being dated 01/12/2013 shall not have any consequences. It, therefore, follows that the act of furnishing the return of income is complete by 30/11/2013 it shall be held that the return was filed on time. The learned Assessing Officer is accordingly directed to obtain the electronic trail of filing of the return from DIT(Systems) to verify whether the return was duly uploaded and set into transmission by 30/11/2013, and if it so set in transmission to delete the levy of interest
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under section 234A of the Act. This ground is accordingly treated as allowed for statistical purposes.
In the result, appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on this the 9th day of February, 2023.
Sd/- Sd/- (RAMA KANTA PANDA) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, Dated: 09/02/2023
TNMM
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