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Facts
The assessee, a footwear manufacturer, claimed deduction under section 80IB of the Income Tax Act, 1961. The AO-CPC disallowed the claim because Form 10CCB was not filed along with the ITR. The AO-CPC also disallowed PF deduction under section 36(1)(va). The assessee's rectification application and subsequent appeal were dismissed.
Held
The Tribunal held that the disallowance of deduction under section 80IB was not justified due to a clerical omission in filing Form 10CCB, especially since the deduction was allowed in previous years and the issue is covered by a precedent. However, the disallowance of PF contribution was upheld.
Key Issues
Whether the disallowance of deduction under section 80IB is justified due to the non-filing of Form 10CCB with the original return, despite it being a clerical error and allowed in prior years? Whether the disallowance of PF contribution paid after the due date is justified?
Sections Cited
80IB, 36(1)(va), 143(1), 154, 139, 260A, 80HHC, 80HHE, 80OGG
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Income Tax Appellate Tribunal, DELHI BENCH ‘A’: NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRI AVDHESH KUMAR MISHRA
A.Y. 2021-22 Baldev Singh & Sons Vs. Deputy Commissioner of 14-A, Najafgarh Road, Income Tax, Circle-43(1), New Delhi Civic Centre, J.L. Nehru Road PAN: AAAHB4937M New Delhi (Appellant) (Respondent) Appellant by Sh. G. S. Kohli, CA Respondent by Sh. Ashish Tripathi, SR. DR Date of Hearing 06/03/2025 Date of Pronouncement 30/05/2025 ORDER
PER AVDHESH KUMAR MISHRA, AM
This appeal of the assessee for the Assessment Year (AY) 2021-22 is directed against the order dated 03.10.2023 of the Additional/Joint Commissioner of Income Tax (Appeals)-12, Mumbai [Addl. CIT(A)].
2. Following grounds have been raised in this appeal:
1. That the learned CIT(Appeal) had failed to appreciate the written submission and the documents filed before him and thus the justice had not been given to the humble appellant.
2. The contents given in appellate order either contrary to the facts placed before him or has not been considered in an appropriate manner.
Baldev Singh & Sons 3. In view of the circumstances and facts of the case the learned CIT(Appeal) was not justified in confirming the disallowance of deduction claimed U/s 80-IB of Income Tax Act, 1961.
4 (i) The learned CIT (Appeal) was not justified in confirming the disallowance in respect of belated payment of Rs.2,749/- and Rs.4,059/- related to Provident Fund.
(ii) There was sufficient cause of lockdown which prevented the humble appellant the deposits of required amount in time.
(iii) That in the light of Supreme Court's circular any delay for any filing or to comply with the statutory obligation in between the period April, 2020 to Sept. 2021 deserves to be condoned.
5. That the appellant craves his right to amend, delete or add any grounds of appeal at or before the time of hearing.”
3. The relevant facts giving rise to this appeal are that the assessee, a footwear manufacturer, filed its Income Tax Return (ITR) for the relevant year on 11.01.2022 declaring income of Rs.97,58,290/- after claiming deduction under section 80IB of the Income Tax Act, 1961 (Act). The said ITR was processed under section 143(1) of the Act by the Assessing Officer (CPC) (AO-CPC), which did not allow the claim of deduction under section 80IB of the Act on the reasoning that the assessee had not filed/annexed Form No. 10CCB of the Income Tax Rules along with its ITR filed under section 139 of the Act. Further, the AO-CPC also disallowed the claim of deduction of Rs. 6,808/- of PF under section 36(1)(va) of the Act. Aggrieved, the assessee filed rectification application under section 154 of the Act which was not acceded to on the reasoning that there was no prima-facie mistake in the order sought for rectification as Form No. 2 Baldev Singh & Sons 10CCB had not been filed along with the ITR within the specified date. Aggrieved, the assessee filed appeal before the Commissioner of Income Tax (Appeals), who dismissed various grounds relating to claim of deduction under section 80IB of the Act as under: - “4. Ground No. 2 to 4, the sole ground of the contention of the appellant is that it has been denied the claim of deduction u/s. 80IB. The appellant has further said that he has been derived from the lawful claim nearly on clerical omission on the part of the computer operator. The appellant has stated that he is in possession of the certification of the CA on the prescribed from 10CCB and therefore he deserves to be allowed the claim.
4.1. In his submission the appellant has contended that 80IB was regularly claimed by the appellant and therefore it should be allowed in the relevant A.Y. too.
4.2. In his submission dated 17.10.2022 the appellant has mentioned the following at page 2 “It is humbly submitted that the non-filling of Form 10CCB is merely clerical omission on the part of the computer operator who failed to form the part of feeding the return of income and keeping in view the filing of above documents and the regular claim of the assessee, this clerical omission deserves to be overruled.”
4.3. In this context the appellant has quoted that circular No. r No.14(XL-35) dated 11/0411955, case laws No. 435 ITR 566 Madras High Court L-Cube Innovative Solutions P. Ltd. vs Commissioner of Income Tax and Another and 435 ITR 558 In Madras High Court Craftsman Automation P. Ltd. vs Commissioner of Income tax and Another.
4.4. The circular and the case laws have been perused carefully.
4.5. The matter has been settled by the apex court, whereby in the case of Checkmate Services Private Limited, the Hon'ble Supreme Court of India had held that- One of the rules of interpretation of a tax statute is that if a deduction or exemption is available on compliance with certain conditions, the conditions are to be strictly complied with. This rule is in line with the general principle that taxing statutes are to be construed strictly, and that there is no room for equitable considerations.
That deductions are to be granted only when the conditions which govern them are strictly complied with.
4.6. Therefore, since the appellant had by self-admission, not complied with statutory requirement of filing form 10CCB alongwith his return. The CPC had rightly denied him the exemption.
4.7. The appellant has claimed this error was on the part of his computer operator which is not acceptable as the appellant was at liberty to revise his return and submit form 10CCB along with the Revised return.
4.8. Besides, he could have filed revise TAR as per prescribed Form 3CD.
4.9. The appellant did not take any of the remedial steps.
4.10. In any other case, if the mistake was detected at a later stage i.e. beyond due date, the appellant could have sought condonation of delay from the appropriate authority.
4.11. Further, the appellant signs and verifies the return before filing which he has done on 11.01.2022. Therefore, the appellant cannot be allowed to take advantage of his own mistakes and also be aggrieved of his own actions.
4.12. The appellant has further contended that he should be allowed the claim of 801B since the same was allowed to him in previous years.
4.13. In this context it is mentioned that various courts have opined that every Assessment year is a separate unit governed by its own peculiar facts. In the instant case the peculiar fact was that the Baldev Singh & Sons appellant did not filed form 10CCB and also did not take any remedial steps thereafter. Since each A.Y. is distinct from other years therefore, this contention of appellant does not hold.
4.14. In view of the above, the Ground nos. 2 to 4 are hereby dismissed.”
3.1 Further, the Ld. Addl. CIT(A), following the ratio laid down by the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. 448 ITR 518, also upheld the disallowance made in respect of employee contributions to provident fund deposited after the specified date.
3.2 The disallowance of deduction under section 80IB of the Act and the disallowance under section 36(1)(va) of the Act as mentioned above are in dispute before us.
4. The Ld. AR Submitted that the core issue involved in this appeal was denial of deduction under section 80IB of the Act for the reason that the audit report in Form-10CCB was not filed along with the ITR and was only filed after the receipt of intimation under section 143(1) of the Act. The Ld. AR submitted that auditor of the assessee who was also dealing with tax matters omitted to upload the audit report in Form-10CCB and therefore, the AO-CPC rejected its claim of deduction under section 80IB of the Act and the assessee, on receipt of intimation under section 143(1) of the Act, filed an application under section 154 of the Act after uploading the copy of audit report in Form-10CCB, which was rejected by the AO- CPC. Further, the appeal filed before the Ld. CIT(A) against the order 4.1 The Ld. AR in this respect submitted that the CBDT, vide Circular Nos. 669 dated 25-10-1993 and Circular No. 689, dated 24.8.1994, had allowed rectification to be carried out under section 154 of the Act in case the evidence of the claim of deduction under section 80HHC of the Act was filed subsequent to the date of furnishing of the ITR for claim. The Ld. AR prayed that the intent of the above-mentioned CBDT Circulars should be followed in the letter and spirit in this case also. The Ld. AR also placed reliance on the decisions of the Hon’ble Madras High Court in the cases of Craftsman Automation P. Ltd. 435 ITR 558 and L-Cube Innovative Solutions P. Ltd. 435 ITR 566 and the decision of the Hon'ble Karnatka High Court in the case of Mandira D Vakharia 250 ITR 432; wherein similar issue in respect of deduction under section 80HHC had been decided in favour of assessees. Further, the Ld. AR, placing reliance on the decision of Tribunal (SMC Bench, Lucknow) in the case of Satish Cold Storage in & 77/Lkw/2021 (date of order: 25.05.2022), submitted that the present case was squarely covered by this decision. Accordingly, in view of these facts, circumstances and judicial pronouncements, he prayed for relief by allowing the claim under section 80IB of the Act particularly when the said deduction had been allowed in preceding years in past by the AO only.
5. On the other hand, the Ld. Sr. DR supported orders of authorities below. He contended that the appeal before the Addl. CIT was against the order passed under section 154 of the Act. Since there was no mistake in the said order as the audit report in Form 10CCB was not available when the AO-CPC passed order under section 143(1) of the Act. Therefore, the Ld. Addl. CIT(A) had rightly dismissed the appeal of the assessee. He prayed for dismissal of this appeal accordingly.
We have heard both parties and have perused the material available on the records. There is no dispute in facts. Undisputedly, the AO-CPC and the Addl. CIT(A) disallowed the deduction under section 80IB of the Act for sole reason that the audit report in Form-10CCB was not filed along with the ITR and was only filed after the receipt of intimation under section 143(1) of the Act. There is no question on the eligibility of the claim of deduction under section 80IB of the Act. It is an undisputed fact that the said deduction under section 80IB of the Act has been allowed over the years in the past. Only a genuine failure of not uploading the audit report in Form-10CCB along with the ITR by the person uploading the ITR is the root cause of the dispute. The Tribunal (SMC Bench, Lucknow) in the case of Satish Cold Storage (supra) has allowed the appeal on the similar issue.
& The relevant part of the said decision in 77/Lkw/2021 (date of order: 25.05.2022) reads as under:
Baldev Singh & Sons “5. I further find that taking cognizance of this circular the Hon'ble High Court of Karnataka in the case of ITO vs. Smt. Mandira D Vakharia vide order dated 17.11.2000 has decided similar issue in favour of the assessee. The findings of Hon'ble Karnataka High Court are reproduced below: "Aggrieved against the order passed by the Tribunal Bangalore in IT Appeal No.173(Bang.) of 1993 dated 23.9.1999, relating to the assessment year 1992-93, the revenue has come up in appeal under section 260A of the Income-tax Act, 1961 ('the Act'). According to the revenue, the following substantial questions of law arise from the order of the Tribunal:
1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the disallowance made by the assessing authority in the assessee's case under section 143(l) of the Act was not proper? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessing authority was required to rectify the mistake under section 154 of the Income- tax Act, 1961 ?
Admit.
With the consent of the counsels for the parties, we proceed to answer the questions of law raised before us.
The respondent-assessee is a software consultant and is doing business of exporting the software out of India. The assessee filed her return for the assessment year 1992-93. Deduction under section 80HHE(4) and under section 8OGG of the Act was denied to the assessee on the ground that proof of certificate (report from the Chartered Accountant the prescribed form) had not been enclosed with the return of income. The assessee filed a rectification application under section 154 of the Act. With the rectification application, she attached the certificate in proof of the claim made by her under sections 80HHE and 8OGG. The assessing authority declined to rectify its earlier order on the ground that the assessee was required to file the proof or certificate in support of the deduction claimed under sections 80HHE and 80GG al the time of filing of the Baldev Singh & Sons return and the proof or certificate filed by her with a rectification application could not be taken into consideration.
The assessee, being aggrieved by the order of the assessing authority, filed an appeal before the Commissioner (Appeals), which was accepted and held that non-filing of the proof of certificate from the chartered accountant with the original return was not fatal to the claim made by the assessee. That the proof could be furnished later on with the rectification application. The assessing authority should have taken into consideration the proof furnished by the assessee with the rectification application while considering the claim of the assessee for deduction under sections 80HHE, and 80GG of the Act. The Commissioner (Appeals) allowed the claim of the assessee in full.
6. Aggrieved by the order of the Commissioner (Appeals), the revenue filed further appeal before the Tribunal which has been dismissed by the impugned order. The Tribunal has dismissed the appeal relying upon a circular of the Board holding that disallowance made by the Assessing Officer for not furnishing the particular form along with the return was not in accordance with the Board's circular. That the assessing authority had erred in not rectifying the order under section 154 after the assessee furnished the requisite proof/certificate in support of the claim made by her under sections 80H1IE and 80GG.
7. Operative portion of the Board's Circular reads: Scope of prima facie disallowance under section I43(1)(a) of the income-Tax Act, 1961 - Clarification regarding. Section 143(1)(a) authorises, with effect from assessment year 1989-90, inter alia, disallowance of any loss carried forward, deduction, allowance or relief claimed which, on the basis of information available in the return or the accompanying accounts or documents is prima facie inadmissible. The earlier instructions of the Board were to the effect that no disallowance should be made on items on which two opinions are possible. The matter has been further considered by the Board in the light of the recommendations of the Tax Reforms Committee headed by Prof. Raja J. Chellaiah and it has been decided that prima facie disallowances shall be made only in respect of the following types of claims: (a ) Not relevant for the purpose of this appeal.
Baldev Singh & Sons (b) Any claim in respect of which there is an omission of information which is required, under the specific provisions of the Act or (he Rules, to be furnished along with the return to substantiate such claim. Example : If the audit report specified under section 80HHC(4), which is required to be filed along with the return of income, is not so filed, the deduction claimed under that section can be disallowed as a prima facie adjustment. Some more examples in this regard are non-filing of audit reports or other evidence along with the return of income as required under sections 12A(ft), 33AB(2), 35E(6), 43B (first proviso), 80-1(7), 80-IA(8) and the like. But if Assessment year:2017-18 evidence is subsequently furnished, rectification under section 154 should be carried out to the extent permitted by Board's Circular No. 669. dated 25th October, 1993. No prima facie disallowance shall, however, be made if any evidence, required to be tiled along with the return of income only in pursuance of the non-statutory guidance notes for filing in the return of income, is not so filed." [Emphasis supplied] 8. By the Board's circular, it has been made clear that if audit report specified under section 80HHC(4) is not furnished with the return, then the deduction may be disallowed as a prima facie adjustment, But, if evidence is subsequently furnished, rectification under section 154 should be carried out to the extent permitted by ihe Board's Circular No. 669 dated 25-10- 1993. The circular then proceeds to mention some other provisions in regard to the non-filing of the audit report or other evidence along with the return of income as required under various sections such as 12A(fc), 33AB(2), 35E(2), 35E(6), 43B (First proviso), 80-1(7), SO-IA(R) and the like. The case of the revenue is that since sections 80I1HF, and SOGG are not specifically mentioned in the Board's circular, the assessee would not be entitled to the benefit of deductions under sections ROI1HE and SOGG on the furnishing of the audit report proof with the rectification application.
9. Submission is without any substance. The intention of the Board is clear. The illustrations and instances referred to in the Board's circular are qualified by the words '. . . and the like'. The illustrations and instances given by the Board are not exhaustive. The intention behind the Board's circular is that in case the audit report required to be filed was not furnished with the return of income, then the 10 Baldev Singh & Sons deduction claimed can be disallowed as a prima facie adjustment. But, if it is furnished subsequently, then rectification should be carried out to the extent permitted by the Board's Circular No. 669 dated 25- 10- 1993. The illustrations given in the Board's circular being not exhaustive, it would include the provisions like sections 80HHE and 80GG as well. The assessee has claimed the same relief as would have been admissible to an assessee who was claiming deduction under section 80HHC(4) and other sections mentioned in the Board's circular. The assessee claiming deduction under sections 80HHE and 80GG would be similarly situated as an assessee claiming deduction under section 80HHC(4) or other Assessment year:2017-18 provisions mentioned in the Board's circular. The use of the words '. . . and the like in the Board's circular would include the assessee who are claiming a similar relief although the provision of the Act is not specifically mentioned in the Board's circular.
The assessee would be entitled to the deductions in the rectification under section 154 to the extent permitted by the Board's Circular No. 669 dated 25-10-1993. The Assessing Officer was not right in law in disallowing the rectification application only on the ground that the assessee had failed to furnish the audit report along with the return of income.
The Tribunal was right in law in extending the benefit of Board's circular to the assessee's case as well. The Assessing Officer has rightly been directed to rectify his order and extend the benefit of deductions under sections 80HHE and 80GG to the assessee in terms of the Board's circular.
For the reasons stated above, the substantial questions of law on which the appeal is admitted are answered in the affirmative, i.e., in favour of the assessee and against the revenue.”
In view of the foregoing discussion, we are of the considered view that this case is squarely covered by the decision of Tribunal (SMC Bench, Lucknow) in the case of Satish Cold Storage (supra). We therefore, following the reasoning given by the SMC Bench of Lucknow Tribunal in 11
The next issue is the disallowance made in respect of employee contributions to provident fund deposited after the specified date. Since it has been deposited after due date. We therefore, following the ratio laid down by the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. (supra) uphold the said disallowance of Rs. 6,808/-.
In the result, the appeal of the assessee is partly allowed as above.
Order pronounced in open Court on 30th May, 2025