MANISH SONI,JORHAT vs. INCOME TAX OFFICER, WARD-4, JORHAT

ORDER

Per Shri A.T.Varkey, JM

3. The AO notes that the assessee is engaged in the manufacturing of Soya Chunks in its industrial undertaking situated at kothkotia Gaon, P.O Dhuklangia, Dist; Jorhat in the name and style of M/s. Soni Industries (Prop: Manish Soni) and having its office at Chamber Road, Jorhat-785 001. The AO notes that the assessee has started its manufacturing activities from 25-11-2012 and claimed deduction u/s. 80IE in the AY 2013- 14. Thus, the AO acknowledges that this is the third year of assessee’s total ten years eligibility claim u/s. 80IE of the Income-tax Act, 1961 ( in short, referred to ‘the Act’). The Manish Soni AO notes that he has verified and examined the audit report in Form No. 10CCB. He notes that the assessee has shown net income from the business at Rs. 18,44,453/- and the entire amount was claimed as deduction u/s. 80IE of the Act. The AO acknowledges that the assessee had produced its books of account/documents, which were test checked and examined by him with reference to the details furnished during course of assessment proceedings. However, the AO notes that the assessee had filed e-return of income for the AY 2015-16 belatedly on 25-01-2016, which is after the due date of filing of return of income u/s. 139(1) of the Act (i.e. 30.10.2015). According to the AO, he issued notice to assessee show causing as to why the claim for deduction under Chapter VIA should not be allowed for not filing of return of income within due date as per section 139(1) of the Act. Pursuant to the notice, the assessee replied that he was under serious domestic problems and, therefore, was disturbed mentally and could not file the return on time and prayed before him to consider his case sympathetically. However, the AO disallowed the claim and added an amount of Rs. 18,44,653/- to the total income of assessee. Aggrieved, the assessee preferred an appeal before the ld. CIT(A), who was pleased to confirm the order of the AO. According to the ld. CIT(A), it was incumbent upon an assessee to furnish its return of income before due date specified in section 139(1) of the Act, if he is claiming deduction u/s. 80IE of the Act. Therefore, he confirmed the order of the AO. Aggrieved, the assessee is before us.

4. We note that the AO has accepted that the assessee is manufacturing soya chunks from 25-11-2012 and has claimed deduction u/s. 80IE of the Act in the AY 2013-14 and this year (AY 2015-16) is the third year of assessee’s claim u/s. 80IE of the Act. The AO has acknowledged that he has verified and examined the claim and perused the audit report in Form No. 10CCB and also gone through the books of account and documents as called for by him to examine the details furnished by the assessee during the assessment proceedings. In this case the AO has not found any facts, which could have dis-entitled the assessee’s eligibility claim for section 80IE deduction under Chapter VI of the Act. The AO has disallowed the deduction only because the assessee did not file the return of income on or Manish Soni before 31-10-2015 and has filed only on 25-01-2016 (after 2 ½ months). According to us, from the facts narrated above, if the return of income was filed by the assessee before 31- 10-2015 the assessee could have claimed the deduction and it could have been allowed by the AO. However, since there was delay of 2 ½ months, the AO has disallowed the claim. It is pertinent to note that the AO has accepted the claim of deduction u/s. 80IE for the AY 2013-14 u/s. 143(1) of the Act and for the second year for the AY 2014-15 u/s. 143(3) of the Act. Since the deduction u/s. 80IE was otherwise allowable on merits, the assessee should not be denied the deduction merely because the assessee had filed its return of income belatedly. For this proposition, we rely on the decision of the Hon’ble Delhi High Court in the case of Fiberfill Engineers Vs. DCIT reported in (2017) 299 CTR (Del) 173/(2017) 157 DTR (Del) 330. We note that the Hon’ble High Court has held as under:- “32. In the present case, since the entitlement of the petitioner to the deduction under s. 80-IC of the Act even for asst. yr. 2010-11has not been questioned by the Department on merits, there is no justification for not viewing the delay of 46 days in filing the return to be bona fide. It is not one of those cases where the delay is so extraordinary so as to not be condoned.”

5. We note that in the aforesaid case the Tribunal had answered this question by holding as under:- 25. In its order dt. 25th Feb., 2016, the Tribunal answered the questions (a) and (b) above in favour of the assessee after discussing the evidence. The Tribunal then turned to question (c) regarding the delay in filing the return in the context of ss. 80AC and s. 139(4) of the Act. In para 57 of the order the Tribunal concluded: "57. A bare perusal of this section makes it clear that the legislature itself has allowed the assessee to file return belatedly subject to fulfillment of conditions written in the said section. Therefore, once those conditions are met, then return filed by the assessee would for all technical purposes be considered being filed under s. 139(1). Thus, keeping in view the various decisions noted earlier, we do not find any reason to deny the claim of assessee on the ground of filing the return belatedly." 26. Thus, the Tribunal allowed the appeal of the assessee for asst. yr. 2010-11 both on merits as well as on the ground of the delay in filing the return.

6. We note that both the AO & ld. CIT(A) could not point out any facts which could have dis-entitled the assessee’s eligibility for deduction u/s. 80IE of the Act and merely on delay of 2 ½ months it cannot be denied to it. A bare perusal of section 139 of the Act makes it clear that the Parliament in its wisdom has allowed the assessee to file return of Manish Soni income belatedly subject to fulfillment of conditions as prescribed in the said section 139 of the Act. Therefore, once those conditions are met/fulfilled by the assessee, then return filed by the assessee should be considered being filed u/s. 139(1) of the Act. It is noted that the AO has accepted the claim of deduction u/s. 80IE for the AY 2013-14 u/s 143(1) of the Act and for the second year for the AY 2014-15 u/s 143(3) of the Act. Since the deduction u/s. 80IE of the Act was otherwise allowable on merits, the assessee should not be denied the deduction merely because the assessee had filed its return of income belatedly. Keeping in mind the ratio laid down by the Hon’ble Delhi High Court in the case of Fiberfil Engineers (supra), we do not find any reason to deny the claim of assessee on the ground of filing return of income belatedly. In the light of above facts, we are of the opinion that the assessee’s claim for deduction u/s. 80IE of the Act should be allowed and we direct the AO to do so.