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Income Tax Appellate Tribunal, DELHI BENCH “SMC-2”: NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M.
This is an appeal filed by the assessee against the order of the ld CIT (A)-12, New Delhi dated 07.06.2019 for the Assessment Year 2017-18.
The brief facts of the case shows that assessee is an individual who filed his return of income on 6 November 2017 wherein the due date for filing of the original return was 7/11/2017, showing gross total income of ₹ 1,086,615 and there from claiming deduction Under chapter VI A of Rs. 4,46,654 and showing total income at ₹ 639,960. The centralized processing Centre, Bangalore passed an intimation u/s 143 (1) of The Income Tax Act on 10th of January 2019 wherein there was some change in the return of income, a. gross total income was computed at ₹ 1,096,287/– which was offered by the assessee at ₹ 1,086,615, b. granted deduction Under chapter VI A of only ₹ 175,000 whereas the claim of the assessee was ₹ 446,654 and c. Consequently determining the total income of the assessee at ₹ 921,290/– against the total income offered by the assessee in the return of income at ₹ 639,960/–. According to that intimation u/s 143 (1) demand of ₹ 74,035 was payable.
3. The assessee challenged the above order u/s 143 (1) of the act passed by the learned Deputy Commissioner of income tax, CPC, Bangalore before the learned Commissioner of income tax (appeals) – 12, New Delhi. The assessee claimed before him that the claim of deduction u/s 80 IB amounting to ₹ 271,654 is denied to the assessee and further there is an adjustment of ₹ 9672 made by the CPC Bangalore. The assessee contested before him that there was no intimation by CPC Page | 1 Bangalore before making the adjustment at the correct email address and the intimation given in the electronic mode is not as provided in law. He further stated that as per rule 127, the communication which is transmitted electronically has to be at the email address available in the income tax return or to the email address available in the last income tax return or in the case of the company, email address of the company as available on the website of the Ministry of corporate affairs of the image any email address made available by the addressee. He therefore submitted that the email address at which the intimation was given was not as per email address given in the return. The learned CIT – A held that the intimation letter is based on the data provided by the assessee as it picks up the email address there from. Therefore there is no scope for using any imaginary address. He therefore rejected this claim. The next claim for the dispute was with respect to the adjustment of ₹ 271,654/– which was made on account of non-filing of the form number 10 CCB along with the return of income or filing it beyond the due date of filing of the return. The appellant has submitted that the audit report furnished by the accountant in form number 10 CCB was approved by the assessee after the due date of filing of the return of income, the due date was 7/11/2017 and the return of income was filed by the appellant on 6/11/2017. The audit report for the deduction u/s 80 IB (11 A) of the act in form number 10 CCB was uploaded on 6/11/2017 by the accountant however the approval of such form was done by the assessee only on 12/12/2017 and therefore the claim of the assessee u/s 80 IB of ₹ 271,654/– was rejected. The learned CIT – A decided this issue as per paragraph number 6.7 of his order as Under:- “6.7 The basic question is whether incomplete filing of form number 10 CCB with the return of income could be made a ground for disallowing the claim of deduction. Subsection (7) of Section 80 IA provides that the deduction Under the relevant Section shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed is been audited by the accountant and the assessee furnishes along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant. The relevant rule for furnishing the audit report is 18 BBB of the income tax rules. This rule only provides that the audit report from the account and shall be informed number 10 CCB. The reason for incomplete furnishing of audit report as described by the appellant is not comprehensible. Even if that is to be accepted, the inference is that the appellant failed to furnish the audit report along with the return of income, duly signed and verified by the accountant. Such adjustment is permissible within the provisions of Section 143 (1) of the IT act. Therefore the adjustment of ₹ 271,654/– is upheld.”
Therefore, assessee is aggrieved with the above order and has preferred this appeal raising following grounds of appeal:-
1. That on the facts and in the circumstances of the case, the learned CIT(A)-12 New Delhi, has erred on facts and in law in holding that there has been effective communication/service of the intimation as per the first proviso to section 143(1), just because it is sent by the computer Page | 2 systems of the department, Rs. 63,908/- even though the relevant law states otherwise and facts point in other direction.
2. That on the facts and in the circumstances of the case, the learned CIT(A) -12 New Delhi, has erred on facts and in law in confirming the adjustment/addition of Rs. 271654.00 u/s 143(l)(a), being claim of the assessee under section 80IB(11A) of the income tax act 1961 by holding that such adjustment is permissible under section 143(1) (a), even though (a) the same was duly supported by the audit report in form 10CCB filed by the accountant along with the return of income (b) the report of the accountant was duly approved by the assessee even before the sending of the intimation and making of the adjustment in pursuance of such intimation.
3. That the learned CIT(A)-12, New Delhi has erred on facts and in law in not entertaining the claim of Rs. 271,654.00 of the appellant under section 80IB (11 A) of the act, which he was empowered to admit and allow even when the same is made before him for the first time.
4. That the appellant craves leave of the Honorable Income Tax Appellate Tribunal to add, alter, modify, substitute, delete any grounds of appeal
at any stage of the proceedings before the honorable Income Tax Tribunal.”
5. Addressing the above grounds of appeal, the learned authorised representative submitted a written synopsis and argued on that basis. The written synopsis are as Under:-
Ground Number 1: No service of the communication under section 143(1): (a) Perusal of the communication and intimation under section 143(1) would reveal that email communications have been sent to one csveenuqupta@qmail.com (Page 67 of the paper book filed with CIT(A) (b) e mail id given in the income tax return of the assessment year in question as well in the immediate previous assessment year is tuandco2Ol l@email.com ( page 4 of the paper book filed with worthy CIT(A) and page number 1 of the current paper book. (c) proviso to section 143(1) stipulates that "provided no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode. "Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made." (d) giving of intimation, in a proper and effective manner is prerequisite of adjustments under section 143( 1a) and without which the intimation would be null and void. (e) The adjustments made, therefore, are also in violation of principles of natural justice and without jurisdiction.
2. Limited powers under section 143(1): Disallowance of claim under section 80IB (11A) is not covered in section 143(1)(a)(ii) and thus worthy DCIT, CPC, Bengaluru exceeded his jurisdiction under section 143(1). Two reasons are given in the communication as well in the intimation to make this adjustment, (a) Page | 3 that in schedule VI-A part C deduction in respect of certain incomes in SN 2q,, deduction is claimed under section 80IB without filling the corresponding schedule 80IB and (b) form number 10CCB filed is not within due date. First reason is not factually correct. Form 10CC B is duly filed on the portal by the accountant within due date which is approved by the assessee on 12.12.2017 , much before the date of processing by CPC which is 10.1.2019. The issue whether the filing of the report of accountant is mandatory or directory is a debatable issue and, therefore, DCIT, CPC was not within his powers to make adjustments under section 143(1)(a)(ii) on such debatable issue.
Deduction under section 80 IB is allowable when there is delay in filing the report of an accountant: a) Appellant is not much educated person and is not computer literate at all, which is the primary reason of the technical default of delayed approving of the report of the accountant. It is established position in law as endorsed by circular number l4(XL-35) dated L 1 .4. 1955 to the effect that department should not take advantage of ignorance of an assessee and every assessee should be made known of his/its tax liability as well as benefits, relief deduction available under statute. b Filing of audit report along with the return is not mandatory and is only directory. In case the audit report is submitted at any time before framing of the assessment, there would be substantial compliance with the provisions. c. The appellant had been allowed the deduction under section 80 IB (11A) for the previous year and in the subsequent assessment years also. (Page numbers 4 and 11 of the paper book) Application of section 80 AC: Though this is not the issue in dispute, yet we wish to submit that the said section is not applicable to the case of the 4 company as the appellant has filed the return of income within the due date under sub section 1 of section 139.
The learned authorised representative further referred to the paper book submitted by him containing the return of income filed, form number 10 CCB, the communication received proposed adjustment u/s 143 (1) (a) dated 24 September 2018 and the copy of the intimation. He further referred to the decision of the various judicial authorities.
The learned departmental representative vehemently supported the order of the learned CIT – A. He referred the paper book of the assessee and the communication of the central processing centre Bangalore dated 24th of September 2018. He submitted that the assessee was given complete information about the proposed adjustment. He further submitted that as assessee has been communicated prior to making an adjustment which was received by the assessee on one of the emails mentioned by him, there is no infirmity in the order passed u/s 143 (1A) the act. He further submitted that provisions of Section 80 IB (11 B) (iv) of the act has a necessary condition to claim the Page | 4 above deduction of furnishing along with the return of income the report of audit in such form and containing such particulars as may be prescribed, duly signed and verified by an accountant. He further referred that under proviso to rule 12 (2) audit report shall be furnished electronically always. He submitted that in the present case the assessee was supposed to file the above audit report along with the return of income prior to the due date of the filing of the return. The assessee filed his return of income before the due date however he did not filed the audit report prior to the due date but on 12/11/2017, therefore there is no infirmity in the intimation denying the above deduction as it has failed to comply with one of the basic conditions. He further submitted that even if before the processing of the return such audit report is available, it violates the conditions prescribed u/s 80 IB (11 B) (iv) of the act and therefore the condition is not in accordance with the law and hence the deduction is required to be disallowed.
We have carefully considered the rival contention and perused the orders of the lower authorities. We have also perused the communication of the proposed adjustment u/s 143 (1) (a) of the income tax act issued by the central processing centre, Bangalore on 24/9/2018 wherein it is intimated to assessee that there is an incorrect claim Under Chapter VIA of the income tax act of ₹ 271,654 for non filing of the audit report u/s 80 IB in form number 10 CCB within due date of the filing of the return of income. The facts clearly shows that the due date of filing of the return of income was 7/11/2017 whereas the assessee filed his return of income on 6 November 2017 however according to his own version he uploaded that form on 6/11/2017 the income tax return and all other attachments however found number 10CCB was accepted by the assessee only on 12 December 2017 which is much beyond the due date of the filing of the return of income i.e. 7/11/2017. Therefore it is apparent that as on the due date of filing of the return assessee did not file audit report in form number 10 CCB for claiming deduction u/s 80 IB (11B), therefore we do not find any infirmity in denying deduction to the assessee. The provisions of rule 12 (2) of the income tax rules 1962 are also very clear in this regard. Assessee is also aware about the same because it is filed the audit report on 6/11/2017 but did not care to accept the same till 12 December 2017. Therefore even without any intimation the assessee approved the form 10 CCB uploaded by the accountant on 6/11/2017 on 12th/12/2017. Therefore it is not the correct explanation of the assessee that assessee was unaware about the procedure of filing of the audit report. According to us, after introduction of the electronic filing of the return of income as well as all other documents, there is no debate available that even if the audit report is filed before the assessment is made, same is acceptable and the deduction cannot be denied to the assessee. When selection of the cases for further scrutiny, processing of the return of income, claim of the refunds of the assessee or all determined based on the return filed by the assessee and when the provisions of the law and the relevant rules strictly provides that all necessary documents must be filed and approved along with the return of income or prior to that, subsequent filing of any document cannot be considered for processing of the return and intimation u/s 143 (1A) of the act. The several judgments relied upon by the assessee do not pertain to the era of the electronic filing of the return/documents and therefore same does not apply to the facts of the present case.