COMMISSIONER OF INCOME TAS vs. EXPO PACKAGING

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ITR/207/1995HC GujaratGJHC24022530199528 July 2006Bench: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE R.S.GARG5 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the requirement of filing a declaration under Section 10A of the Income Tax Act is a procedural requirement and not a mandatory one. The Court relied on a previous Division Bench judgment in Commissioner of Income Tax Vs. Gujarat Oil And Allied Industries (201 ITR Page 325), which dealt with Section 80-J. In that case, the Court held that filing of audit reports after the return but before assessment was framed amounted to sufficient compliance, as the requirement was directory and not a condition precedent. Applying this principle, the Court reasoned that if a similar procedural requirement under Section 80-J could be complied with later, then the procedural requirement under Section 10A, which assists the Assessing Officer, should also be considered as not mandatory. Therefore, filing the declaration under Section 10A subsequent to the filing of the return, but before the assessment was finalized, was deemed sufficient compliance. The Tribunal was justified in its conclusion.

What were the facts?

The Income Tax Appellate Tribunal (ITAT) referred a question to the Gujarat High Court at the instance of the Revenue. The dispute concerns the applicability of Section 10A of the Income Tax Act for a particular assessment year. The assessee, Expo Packaging, did not file the declaration under Section 10A along with its return. Instead, the declaration was filed during the course of assessment proceedings. The Revenue contended that failure to file the declaration with the return forfeits the assessee's right to claim the benefit of Section 10A. The ITAT had confirmed the view of the CIT(Appeals) that the assessee was entitled to the benefit.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in confirming the view taken by the CIT (Appeals) that when the declaration under Section 10A of the Act was not filed along with the return, but filed during the course of assessment proceedings, the assessee was entitled to claim that the provisions of Section 10A should not be made applicable? Assessee's contentions: The judgment does not record specific contentions made by the assessee. However, the ITAT's decision implies that the assessee argued for the procedural nature of the filing requirement. Revenue's contentions: The Revenue argued that if the declaration under Section 10A is not filed along with the return, the right to file it at a later stage during assessment proceedings is lost, and the assessee is not entitled to claim the benefit of Section 10A. The Revenue was unable to point to any specific penal consequences in the Income Tax Act for not filing the declaration with the return.

Which sections of the Income-tax Act were involved?

Section 10A,Section 80-J

AI-generated summary — verify with the full judgment below

ITR/207/1995 1/5 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 207 of 1995 For Approval and Signature: HONOURABLE MR.JUSTICE R.S.GARG HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= COMMISSIONER OF INCOME TAS - Applicant(s) Versus EXPO PACKAGING - Respondent(s) ========================================================= Appearance : MR MANISH R BHATT for Applicant(s) : 1, NOTICE SERVED for Respondent(s) : 1, ========================================================= CORAM :  HONOURABLE MR.JUSTICE R.S.GARG and HONOURABLE MR.JUSTICE M.R. SHAH Date : 28/07/2006 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE R.S.GARG)

ITR/207/1995 2/5 JUDGMENT At the instance of the Revenue, the Income Tax Appellate Tribunal has referred the following question to this Court for its opinion; “Whether, the Appellate Tribunal is right in law and on facts in confirming the view taken by the C.I.T. (Appeals) to the effect that when the declaration under section 10A of the Act was not filed alongwith the return, but filed during the course of assessment proceedings, the assessee was entitled to claim that the provisions of section 10A should not be made applicable?” 2. Learned counsel for the Revenue, after taking us through the provisions of Section 10A of the Income Tax Act (as applicable), has submitted that if the declaration under the said Section is not filed along with the Return, the right to file the declaration, at a later stage during the course of the assessment proceedings, would stand lost and the assessee would not be entitled to claim that provisions of Section 10A should not be made applicable.

ITR/207/1995 3/5 JUDGMENT 3. Barring reading the Section, as it is, learned counsel was unable to say that the Income Tax Act provides that if a declaration under Section 10A is not filed along with the Return, what shall be the penal consequences. 4. It cannot be disputed that filing of declaration under Section 10A is a procedural requirement and the procedural requirements, in fact, are handmaids to assist us in reaching a proper conclusion. 5. From the order passed by the Tribunal it appears that, it placed its strong reliance upon the judgment in the matter between Commissioner of Income Tax Vs. Gujarat Oil And Allied Industries, 201 ITR Page 325, where a Division Bench of this Court was concerned with Section 80-J of the Act. According to Section 80J, the requirement was that, audit report should be filed along with the Return. In that case also, the audit reports were filed during the process of the assessment and an objection was raised by the Revenue that subsequent to filing of the Return the audit reports could not be filed. The Division Bench held that the requirement was procedural and was only directory and was not a condition

ITR/207/1995 4/5 JUDGMENT precedent or a mandatory requirement. The Division Bench held that the filing of the audit reports after Return was submitted but before assessment was framed, tantamount to sufficient compliance of the provisions of law. 6. In relation to filing of the documents under Section 80-J, if it is held that the requirement is procedural and not mandatory, and would not lead to penal consequences, then yet another requirement under Section 10A of the Act which also is procedural cannot be taken to be mandatory as it is procedural and helps and assists the Income Tax Officer/Assessing Officer to reach to a positive conclusion it cannot be taken to be a mandatory requirement. 7. The Tribunal was justified in holding that the requirement is not mandatory and filing of a declaration under Section 10A of the Act, subsequent to filing of the Return, but before the assessment is finally done, would be sufficient compliance.

ITR/207/1995 5/5 JUDGMENT 8. The Reference is answered accordingly against the interests of the Revenue. The Reference stands disposed of accordingly. No costs. [ R.S. Garg, J. ] [ M.R. Shah, J. ] RMR.

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