AMIT BASU vs. THE D C I T JAIPUR

By way of this appeal, the assessee has assailed the judgment and order of the tribunal whereby tribunal has partly allowed the appeal of the assessee and modified the order of the CIT(A).

This court while admitting the appeal on 9.4.2012 framed only one question which reads as under:- “Whether under the facts and circumstances of the case and in law the learned ITAT was justified in confirming that the appellant is not entitled to deduction u/s 10BA of the Act only on the premises that on account of revised return filed by the appellant, it had not claimed exemption u/s 10BA of the Act?”

However subsequently when the matter was at final stage on an application, vide order dt. 9.10.2017 following questions were (2 of 27) [ITA-99/2012] added:- “ii. Whether without there being any error or omission in the Original Return filed under Section 139(1) of Act, a revised return filed under Section 139(5) of the Act, for withdrawing the deduction under Section 10BA of the Act, which otherwise legally Appellant is entitled for and such withdrawal was not permissible, such revised return ought not to have been considered by the ld. AO? iii. Whether claim made for deduction under Section 10BA of the Act in the original Return filed under Section 139(5) of the Act, without there being any error or omission in original return, and such revised return being not-est in law is hit by provisions of Section 80A (5) of the Act inserted from Finance Act 2009 with retrospective effect, restricts such claim?”

Counsel for the appellant Mr. Pathak contended that the first revised return for the relevant Assessment Year 2007-08, the assessee claimed exemption u/s 10BA as per form 55 which was attached with the return which is part of Annexure-A-1 to these proceedings. However, he contended that for the A.Y. 2005-06, the claim was rejected vide Annexure-2. Identically, the claim for the subsequent year namely 2006-07 was also rejected against which he preferred an appeal which was also came to be rejected by the CIT(A) (Annexure-4) and also Annexure-5.

1 For the A.Y. 2006-07 however he preferred an appeal before the tribunal and pending the appeal he has filed a revised return Annexure-C on 7.5.2008 and has withdrawn his claim u/s 10BA

2 However, to his fortune, the tribunal held in his favour vide judgment and order dt. 21.8.2009 Annexure-7 and immediately he has withdrawn his revised return which was filed on 7.5.2008. 5. He has emphasized the following claim made by the assessee in his letter dated 7.9.2009:-

Therefore in view of the decision of Hon'ble ITAT, I hereby request to your good self to please consider my claim of deduction u/s 10BA as made by me in my original return filed on 31.10.2007 for which necessary documents are already on record. Again copies of all necessary documents are enclosed hereby for your reference.

It may be pointed out that it is a settled law that there can be no estoppels against law. If a claim is legitimately allowable to me the same has to be allowed even if I make such a claim in assessment proceeding. In present case I have originally made the claim but for the reasons stated above I withdrew the said claim but now in view of the ITAT decision I be allowed the claim of deduction u/s 10BA as originally claimed by me.

1 He further contended that vide Annexure-9 for the A.Y. 2007-08, the Assessment order came to be passed ignoring the fact that the tribunal allowed his claim in his appeal and the AO has observed as under:- “Therefore, the assessee is not manufacturing or producing any article or thing as contemplated u/s 10BA but was simply engaged in the polishing and finishing of the fully manufactured items purchased by it. Moreover, goods sold by the assessee could not be put under the category of "artistic Value".

2 He further contended that CIT(A) has committed an error in observing as under:- “The A/R has submitted that Hon'ble ITAT, Jaipur Bench in appellant's own case for A.Y. 2004-05 & 2005-06 as well as in A.Y. 2006-07 has decided the issue in favour of the appellant and as the facts remain identical this year as were in earlier year, as a finding precedence the issue in the year under consideration may be decided in favour of the appellant. However as the facts in the year under consideration are different to the extent that in original return filed the claim of deduction was made but the claim was subsequently withdrew by filing revise return. Under Sec 139 (5) any person can revise the return if the person discovers any omission or any wrong statement therein. In the present case the appellant by revising the return has accepted that there was a wrong statement in the original return. Once a revised return is filed it becomes basis for the assessment and the original return gets vanishes. In the revised return there is no claim of deduction u/s 10BA. By Finance Act 2009 amendment has been made w.e.f. 01.04.2003 i.e. retrospectively and sub sec 5 of 80A was inserted. This subsection provides that where the assessee fails to make a claim in his return of income for any deduction u/s 10A or 10BA, no deduction shall be allowed to him thereunder. As in the present case return means only revised return and no claim was made in the evised return, claim of deduction

3 He further contended that the tribunal while considering the case observed as under:-

7 During the course of proceedings, decision of Honb'le Apex Court in the of Bajaj Tempo Ltd. 196 ITR 188 in which it has been held that a provision granting incentive should be construed liberally. Reliance has been placed on the decision of Hon'ble Allahabad High return correctly made. The Hon'ble Calcutta High Court held that revised return cannot wash away original return.

8 We have heard both the parties. It is useful to reproduce the provisions of Section 139(5), 80A(5) and 80AC ‘’ "Section 139 (5) If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub- section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier:

22 The Hon'ble Madras High Court in tax u/s 140A, in case the assessee files the revised return u/s 139(5) of the Act. The Hon'ble Madras High Court held that the assessee will not be default after filing of the revised return. The revised return filed u/s 139(5) of the Act becomes the return u/s 139(1) on the basis of the doctrine of substitution. The Hon'ble Allahabad held as under:-

4 Counsel for the appellant Mr. Pathak has relied upon the following decisions:- In Golden Insulation & Engg. Ltd. vs. Commissioner of Income Tax (DEL HC) (2008) 305 ITR 427 it has been held as under:-

A bare reading of the aforesaid Section makes it clear that the assessed may file a revised return if it discovers any omission or any wrong statement therein. Insofar as the present case is concerned, there is no omission or wrong statement which required the assessed to file a revised return. The reason for filing the revised return was only that the company had passed a resolution to change its method of valuation of the closing stock because it did not correctly show the profit or loss for each accounting year, and that the new method adequately reflected the position in regard to the previous year's operations. This meant that the assessed would show a loss of Rs. 4,01,290/- instead of Rs. 3,00,369/- declared with the return filed initially.

Insofar as the present case is concerned, we find that the provision of Section 139(5) of the Act clearly sets out the two conditions under which the revised return can be filed and none of these are (8 of 27) [ITA-99/2012] applicable to the facts of the assessed's case. It is for this reason that the revised return showing the changed calculation of the closing stock ought not to have been accepted by the Assessing Officer. The only reason for the change in the method of valuation of the closing stock was, as explained by the assessed, that is, the method adopted did not reflect the correct state of affairs. The result of change in the method of valuation was that the assessed showed a loss of Rs. 4,01,290/- which is an increase from the original loss shown as Rs. 3,00,369/-. This was clearly not a legally (1992) 196 ITR 188 Supreme Court held as under:-

The limited question is whether the assessee which has been found by tribunal to be a new company could be denied the benefit as visualised in Section 15C(1) because of operation of the Clause (i) of Sub-section (2). It is a restrictive clause. It denies benefit which is otherwise available in Sub-section (1). A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally! In Broach Distt. Co- Operative Cotton Sales Ginning and Pressing Society Ltd. v. Commissioner of Income

In the instant case, the assessment has been completed on a return filed by the assessee within the period prescribed under Section 153(1)(a) of the Act. It was not contended that in view of the subsequent return filed, the original return was invalid

According to learned counsel for the Revenue, even the statutory provisions relating to assessment require that the particulars of depreciation had to be given and the deduction of depreciation

Under s. 143(3), an assessment made under s. 143(1) is deemed to be incomplete or inadequate if proper depreciation is not allowed. These provisions also indicate, along with s. 28 which requires that the income from a business has to be computed in accordance with the provisions of ss. 29 - 44, and r/w s. 145, that depreciation is a proper deduction in arriving at the correct income from business. No doubt, s. 34 provides that the deduction shall be allowed only if the prescribed particulars are furnished. This only ensures that correct information is available to the ITO for allowing the proper deduction. But this cannot be construed to mean that where the assessee deliberately withholds the information, no deduction for depreciation could be given in computing the income. In the present case, the motivation for the assessee to withdraw the claim for (12 of 27) [ITA-99/2012] deduction of depreciation is only to get a set-off of the business loss of the earlier year. But the current depreciation is a first charge on the profit as held by the Supreme Court in Mother India Refrigeration Industries (P) Ltd.'s case (supra) and that charge cannot be ignored by withholding the particulars so as to avail of the setting off the earlier year's loss which lapses by the prescribed period of limitation. In our considered opinion, therefore, the assessee cannot withdraw the claim for depreciation allowance when particulars are available in accordance with s. 34 only for the purpose of setting off of the loss of the earlier years. Since the particulars were available as furnished along with the original return, the ITO is bound to allow the deduction of depreciation in computing the income from business. The assessment made by the ITO, in this case, is, therefore, correct and in accordance with law. The question referred to us is, therefore, answered in the negative, in favour of the Revenue and against the assessee. In Commissioner of Income Tax & Anr. vs. Venkatesh Dutt (2009) 319 ITR 331, Karnataka High Court held as under:-

The following questions of law was proposed by the State for consideration: (1) Whether the Tribunal had jurisdiction to entertain the cross-objections filed by the assessee to the appeal filed by the Revenue when the Revenue's appeal had been dismissed by upholding the order of remand passed by the Appellate Commissioner resulting in the entire assessment order being set aside for consideration afresh ? (2) Whether the Tribunal was correct in proceeding to examine the merits of the assessment proceedings as to whether the income should be assessed in the hands of the assessee or not when the assessment order itself had been set aside and the (13 of 27) [ITA-99/2012] entire matter was before the Assessing Officer for consideration afresh as the particulars available when passing the original assessments were not sufficient ? (3) Whether the Tribunal was correct in proceeding to entertain the cross- objections and permitting the assessee in the said proceedings for the first time to withdraw his earlier admission and concession that the income declared by him did not belong to him but to certain other entities without basing these conclusions on any cogent material and consequently recorded a perverse finding ? (4) Whether the Tribunal was correct in holding that the income which had been originally included in the assessment proceedings in the hands of the assessee and which had not been included in the hands of M/s. Intercorp Associates and other entities should be excluded from the total income of the assessee as assessments in the case of the firm had been reopened and in the case of one other entity reference application before this hon'ble court had been filed ? (5) Whether the Tribunal was correct in condoning the delay in presenting the cross-objections when no cogent reasons had been assigned by the assessee and especially when the main appeal filed by the Revenue had already been rejected and consequently the cross-objection itself could not be entertained ?

Re. Question No. 3 : It is a well-settled principle that when an assessee files any return or revised return, he/she is always (1961) 41 ITR 539, Supreme Court held as under:-

Under section 22, sub-section (3), an assessee may submit a revised return if after he has furnished the return under sub-section (2) he discovers any omission or wrong statement therein. But such a revised return can only be filed "at any time before the assessment is made" and not thereafter. The return dated February 26, 1957, was submitted after the assessment was made pursuant to the earlier return and it could not be entertained. Nor could the lodging of such return debar the Income Tax Officer from commencing

In the facts and circumstances of the case, we are of the view that the Assessing Officer has treated the Revised Return as "non est" wrongly for the reason that the Assessing Officer himself has passed the (15 of 27) [ITA-99/2012] order under Section 143(3) on the basis of the Original Return where the assessee was legally entitled for the exemption under Section 11,

In the instant case, the Assessing Officer has not asked any information before denying the exemption for which the assessee was legally entitled. On the other hand, he has rejected the Second Return which was enclosed with the necessary documents for claiming the exemption.

The ratio laid down in Kumar Jagdish Chandra Sinha's case (supra), is not applicable in the instant case as the facts were quite different. In the said case, the penalty

Admittedly, the respondent-assessee is a 100% export oriented unit and had been claiming exemption right from the assessment year 2004-05 u/s 10B. It may be that the claim is to be allowed on year to year basis but when facts and circumstances reveal that the assessee was eligible even this year for exemption u/s 10B and it has been found to be in order except that instead of mentioning exemption u/s 10B, while e-filing the return of the income tax, it was wrongly, on account of typographical error mentioned Sec.80IB, in our view, it cannot be said to be such a mistake by which the exemption could be disallowed outrightly. It was already stated by the assessee during the course of hearing before the AO himself that it complies with all the requirements for claim of exemption u/s 10B. The assessee company was under the bonafide belief that there was no mistake in the return, hence no revised return was filed but after knowing the clerical/computerized mistake that the claim was wrongly mentioned as u/s 80IB instead of Sec.10B, the assessee company filed a revised computation of income claiming deduction u/s 10B of the IT Act vide letter dt. 13/12/2010 before the AO. Not only this, the assessee also filed copy of ARE-1 duly sealed and signed by the custom authorities in respect of the exports having taken place. For evidencing realization of export bills, the statement of outstanding export bills from Andhra Bank as on 31/08/2008 showing the export bills outstanding for realization as on that date was also submitted. From the statement of outstanding export bills as confirmed by the Andhra Bank, it was clear that no bill prior to the date of March, 2008 had been shown as outstanding for realization. It is (17 of 27) [ITA-99/2012] an admitted fact that since assessment year 2004-05, the assessee did not have any taxable income after adjusting unabsorbed depreciation and therefore tax was being paid u/s 115J and therefore the deduction u/s 10B was being claimed in computation of income. In our view, the mentioning of Sec.80IB was only clerical mistake and with all fairness as per the facts & circumstances and as per the previous claims in tax calculation u/s 115J, the assessee was legally entitled for this benefit. It was also admitted that the assessee had neither changed/revised the financial statements nor tax audit report (Form 3CD) originally filed by it. The assessee had only submitted audit report in Form 56G which was not enclosed with the return in view of provision of Rule 12 of the IT Rules. The purpose of audit report in Form 56G is totally different than the purpose of audit report in Form 3CA annexed with Form 3CD. It is also an admitted fact that the financial statement also remained the same. In our view, the spirit behind this statement must be that the assessee should have claimed the exemption in his return and filed the same within due date and in the instant case, the assessee on the facts available on record clearly shows that the claim was duly made but section was inadvertently wrongly mentioned and this fact came to the notice of the assessee at a later point of time when pointed out by the AO. In our view, the purpose of assessment proceedings before the taxing authorities was to assess the income correctly and the tax liability of an assessee in accordance with law. If such clerical mistake occurred, then in our view, the AO was duty bound to inform the assessee that this claim is wrongly claimed and that one may claim exemption under the concerned section. It is also an admitted position that substantial manufacturing activities were being carried out by the assessee within the bonded premises in terms of CBEC circular No.65/2002-Cus dated 07/10/2002 and notification No.52/2003-Cus dt.31/03/2003. In our view, the allegation of the AO was totally unfounded as all the documents, which are issued by the Government authorities,

5 The main contention of the appellant was with regard to provisions of Sec. 139(5) which reads as under:- (5) If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub- section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier : Provided that where the return relates to the previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year.]

6 He contended that the return was filed with a view to avoid penalty since his claim u/s 10BA was rejected by the Assessing Officer and confirmed by the CIT(A) in two previous years. Therefore, to avoid any penalty he has withdrawn his claim. However, subsequently when the decision came in his favour, the tribunal has written letter withdrawing the revised return which was filed on 7.5.2008. The main contention was that the return which was filed u/s 139(5) was nonest inasmuch return under Sec.139(5) can be filed only in a case where sub sec.(1) it contains omission or any wrong statement therein.

7 Mr. Pathak relying on the above decisions contended that two

8 He further contended that the claim which was made u/s 80A been held as under:-

In Ascharajlal

We get support from the earlier decision of this Court in Dharampur Leather Co. Ltd. case MANU/SC/0192/1965 : [1966]60ITR165(SC) . Allowance of depreciation is calculated on the written down value of the assets, which written down value would be the actual cost of acquisition less the aggregate of all deductions "actually allowed" to the assessee for the past years. "Actually allowed" does not mean 'notionally allowed'. If the assessee has not claimed deduction of depreciation in any past year it cannot be said that it was notionally allowed to (21 of 27) [ITA-99/2012] him. A thing is "allowed" when it is claimed. A subtle distinction is there when we examine the language

We thus uphold the views expressed by the High Courts of Bombay, Punjab and Haryana, Karnataka, Andhra Pradesh, Calcutta and Kerala.

1 He also relied upon the decision of Gujarat High Court in Principal Commissioner of Income Tax-I vs. Babu Bhai Ramamn Bhai Patel (2017) 84 Taxman.com 32 (Guj.) wherein it has been held as under:-

Sub-section (5) of Section 139, therefore, gives right to an assessee who has furnished a return under sub-section (1) or sub-section (4) to revise such return on discovery of any omission or a wrong statement. Such revised return, however, can be filed before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. This is precisely what the assessee did while exercising the right to revise the return. Sub-section (5) of Section 139 does not envisage a situation whereupon revising the return if a case for loss arises which the assessee wishes to carry forward, the same would be impermissible. In terms, sub-section (5) of Section 139 allows the assessee to revise the return filed under subsection (1) or sub-section (4) as long as the time frame provided therein is adhered to and the requirement of the revised return has arisen on discovery of any omission or a wrong statement in the return originally filed. Accepting the contention of the revenue would amount to limiting the scope of revising the return already filed by the assessee flowing from sub-section (5). No such language or intention flows from such provision.

1 The Allahabad High Court in case of Income Tax, Delhi Central reported in [1973] 90 ITR 323 wherein it has been held as under:-

The question raised in this appeal relates to whether the appellant assessee could make a claim for deduction other than by filing a revised return. The assessment year in question was 1995-96. The return was filed on 30-11- 1995, by the appellant for the assessment year in question. On 12-1-1998, the appellant sought to claim a deduction by way of a letter before the assessing officer. The deduction was disallowed by the assessing officer on the ground that there was no provision under the Income Tax act to make amendment in the return of income by modifying an application at the assessment stage without revising the return.

This appellant's appeal before the Commissioner (Appeals) was allowed. However, the order of the further appeal of the department before the Income Tax Appellate Tribunal was allowed. The appellant has approached this court and has submitted that the Tribunal was wrong in upholding the assessing officer's order. He has relied upon the decision of this court in National Thermal Power Company Ltd. v. CIT MANU/SC/1287/1997 : [1998]229ITR383(SC) , to contend that it was (23 of 27) [ITA-99/2012] 90 ITR 236 wherein it has been held as under:-

The question however remains as to whether this return will continue to form the basis for purposes of assessment even after it was substituted by a revised return. Section 22(3) of the 1922 Act as also Section 139(5) of the 1961 Act permit an assessee to file a revised return if he discovers any omission or wrong statement in the return filed by him. The Income-tax Actcontemplates the filing by the assessee of a correct and complete return. The law gives him a right to substitute and bring on record a correct and complete return if he discovers any omission or wrong statement in the return originally filed by him. The law cannot contemplate the making cf assessment on the basis of a return which even the assessee claims contains wrong statements. When an assessee files a revised return, he in fact admits that the original return filed by him was not correct or complete and substitutes the same by a revised return which according to him is correct and complete. The effective return for purposes of assessment is thus the return which is ultimately filed by an assessee on the basis of which he wants his income to be assessed. Learned counsel for the assessee, to support his contention to the contrary, urged

There is a distinction between a revised return and a correction of the return. If the assessee files some application for correcting a return already filed or making amends therein, it would not mean that he has filed a revised return. It will still retain the character of an original return, but once a revised return is filed, the original return must be taken to have been withdrawn and to have been substituted by a fresh return for the purpose of assessment. The same view has been taken in Gopaldas Parshottamdas v. Commissioner of Income-tax, [1941] 9 I.T.R. 130 (All.).

4 He also relied upon the decision of this court in M/s. Young Steel Pvt. Ltd. vs. Commissioner of Central Excise, Jaipur-I D.B. Central/Excise Appeal No.1/2006 decided on 23.8.2017 wherein it has been held as under:-

Taking into consideration that no basis was laid even before first authority or the Tribunal and when the act and provisions are made it is not to be presumed ultra vires unless it has been quashed and set aside by the High Court or any High Court or the Supreme Court, in writ jurisdiction.

In our considered opinion, regarding Section 35G it will not be appropriate to held any provision to be unconstitutional because power under section 35G is only to be exercised in substantial question of law arising out of the Central Excise Act and not on any constitutional point.

In that view of the matter, the fist question is required to be answered against the assessee in favour of the department. On the second issue which is posed for our consideration is Section 10 of the General Clauses Act and the judgment of Manglore Chemicals (supra).

In our considered opinion, when considering the rule there are five conditions which are required to be fulfiled since the assessee is claiming exemption. If one is to claim exemption and non-payment of tax, interpretation of such exemption should be construed and it is in aid to rule. Once the interpretation is found to be proved one has to go by the rule.

In our considered opinion, the rule even if it is construed liberally cannot travel beyond the next working day of the closure either it is Saturday, Sunday and public holiday or any other circumstances where the movement of a person is not possible to reach the office of the Central Government or the respondent namely in a case of curfew or any other exigency, the time can be extended and all documents on record do not show that on the date of intimation of there was curfew in the area which is to be proved by the assessee and not by the department.

We have heard counsel for the parties.

1 Before proceeding with the matter, the crucial question which came for our consideration is whether return filed u/s 139(5) is revised return and return filed on 7.5.2008 Annexure-5 can be (26 of 27) [ITA-99/2012] allowed to be withdrawn vide letter dt. 7.9.2009. 8. On a close reading of Sub-Sec.(5) of Sec.139, it is very clear that the legislature has given a chance to the assessee to check his position within one year or before the end of the relevant assessment, whichever is earlier. Since, the period was expired but for the year the assessee has taken his position and withdrawn his claim after that position is taken. Sec.139(5) is very clear that the assessee could not have withdrawn the claim, having withdrawn the same by filing revised return. It is only open for the department to accept it or not to accept it. Having taken advantage of the position of claiming benefit u/s 139(5) and to avoid penalty, in our considered opinion, it is not desirable to allow any party to blow hot and cold. If the tribunal decision would not have been in his favour, the assessee could not have contended that this is nonest. Even if the department would have denied that this is nonest, he would have contested the matter.

Apart from that, it is very settled law that a person who is taking advantage of provisions of Sec. 139(5), he cannot say that it is nonest. In that view of the matter, even if the view taken by the tribunal subsequently but legally Sec.139(5) benefit cannot be withdrawn vide letter dt. 7.9.2009, which is reproduced here for ready reference:-

Therefore in view of the decision of Hon'ble ITAT, I hereby request to your good self to please consider my claim of deduction u/s 10BA as made by me in my original return filed on 31.10.2007 for which necessary documents are already on record. Again copies of all necessary documents are enclosed hereby for your reference.

It may be pointed out that it is a settled law that there can be no estoppels against law. If a claim is legitimately allowable to me the same has to be allowed even if I make such a claim in assessment proceeding. In present case I have originally made the claim but for the reasons stated above I withdrew the said claim but now in view of the ITAT decision I be allowed the claim of deduction u/s 10BA as originally claimed by me.

In that view of the matter, revised return was not permissible and revised return of revised return is not thought of by the legislature. Thus, u/s 139(5) once return is filed after the period of limitation which is prescribed under the Act, the position of the assessee is very clear that he cannot do it. It is only for the department to take the call whether to accept or not.

On the point of Sec.80A (5), in our considered opinion the return which is claimed under consideration not of return which he has filed. In that view of the matter, the contention of Mr. Pathak that the revised return alongwith the earlier return ought to have been considered, in our considered opinion, the return which is referred in 80A(5) is to be considered which is filed for the relevant year under consideration of the AO and not of the return which he stated and he cannot claim any benefit of the same.

In view of the above, all the issues are answered in favour of the department and against the assessee. Hence, the appeal stands dismissed. (VIJAY KUMAR VYAS)J. (K.S. JHAVERI)J. //bm gandhi 47