INCOME TAX OFFICER, FEROZEPUR vs. UNIVERSAL BIOMASS ENERGY PVT LTD, GURUHARSAHAI
Facts
The assessee claimed a deduction of Rs. 4,17,68,024/- u/s 80-IA(4)(iv) for AY 2020-21, which was initially allowed during processing u/s 143(1). Subsequently, in a rectification order u/s 154, the CPC Bengaluru suo motu rejected this deduction without providing reasons or an opportunity to be heard, leading to an increased tax liability. The CIT(A) deleted the disallowance, and the Revenue appealed to the ITAT, citing the belated filing of Form 10CCB.
Held
The Tribunal upheld the CIT(A)'s order, stating that the CPC erred by disallowing the deduction u/s 154 without reasons or providing an opportunity to the assessee u/s 154(3). Relying on the Apex Court precedent, it held that even a belatedly filed audit report (Form 10CCB) should be considered if it was available before the completion of assessment or rectification proceedings. As the Form 10CCB was filed before the rectification order, the assessee is entitled to the deduction u/s 80-IA(4)(iv).
Key Issues
1. Whether disallowance of deduction u/s 80-IA(4)(iv) in a rectification order u/s 154, without reasons or hearing, is valid. 2. Whether belated filing of Form 10CCB before rectification proceedings should negate the claim for deduction u/s 80-IA(4)(iv).
Sections Cited
Section 250, Section 154, Section 143(1), Section 80-IA(4)(iv), Section 80-IA(7), Section 154(3), Chapter VIA, Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. UDAYAN DASGUPTA & SH. BRAJESH KUMAR SINGH
Per Udayan Dasgupta, J.M.:
This appeal is filed by the Revenue against the order of the ld. CIT(A) NFAC, Delhi, passed u/s 250 of the Income Tax Act, 1961 dated 20.03.2024 which has arisen from the order of the AO, CPC, Bangeluru dated 18.05.2023 passed u/s 154 of the I. T. Act, 1961.
2 I.T.A. No. 231/Asr/2024 Assessment Year: 2020-21
The grounds of appeal taken by the Revenue in Form No. 36 are as follows:
“1. That on the facts and circumstances of the case, the CIT(A) has erred on facis and law holding that the deduction claimed by the assessee company u/s 80-1A(iv) has rigntly been claimed.
That on the facts and circumstances of the case, the CIT(A) has erred on facts and its law allowing deduction u/s 80-1A(iv) of the Act without verifying the fact that the annessee failed to file its form no. 10CCB by the prescribed due date as uefined in section 801A(7) of the Income Tax Act, 1961
That on the facts and circumstances of the case, the CIT(A) has erred on facts and in law allowing appeal of the assessee without verifying the fact that the assesses filed its Audit report in Form 3-CA and Form-3CD after the prescribed one date.”
There are three grounds taken by the Revenue in Form No. 36 and at the
outset, the Revenue has withdrawn the ground no. 3 which relates to the non-filing of
audit report in Form 3-CA and 3-CD, which is not the matter in dispute here. As
such, this ground was treated as withdrawn.
The other two grounds relates to the disallowance of deduction claimed u/s
801A (4)(iv) of the Act, 1961 amounting to Rs.4,17,68,024/- claimed by the assessee
in the return of income (due to late filing of audit report in Form 10CCB).
Brief facts emerging from records are that the return of income has been filed
by the assessee on 15.02.2021 where the assessee has claimed a deduction of Rs.4.17
3 I.T.A. No. 231/Asr/2024 Assessment Year: 2020-21 crores u/s 80-1A(4)(iv) of the Act which according to the assessee is legally
allowable because the assessee is running a power generation unit and is eligible to
claim the said deduction in accordance with the provisions of the Act. The said return
was processed u/s 143(1) of the Act on 30.04.2021 and the said claim for deduction
was accepted and allowed by CPC, Bangeluru. Subsequently, on account of some
discrepancy in the claim of tax credit a rectification petition was filed u/s 154 by the
assessee which was subsequently rectified by allowing the tax credit, but the claim
for deduction u/s 80-1A(4)(iv) which was originally allowed in the intimation u/s
143(1), was suomoto rejected in the rectification order passed u/s 154, without citing
any reasons.
The matter was carried in appeal before the ld. first appellate authority and the
ld. CIT(A), NFAC, has allowed the appeal of the assessee by deleting the addition by
observing as under:
“4.2. Since the denial of tax credit was a mistake apparent from record, the appellant had preferred a rectification petition u/s 154 before the CPC against the order passed u/s 143(1) dated 30.04.2021. The rectification order u/s 154 was passed by the CPC on 03.06.2022, wherein, unfortunately the claim of deduction u/s 801A(4), which was originally entertained in the intimation u/s 143(1) was rejected without any reason. Therefore, the computation of liability to tax shifter to the normal provisions of the Act. Against the gross liability determined as the result of rejection of claim of deduction under Chapter VIA, which is incorrect, adding favour to the damage done to the appellant, the claim of credit of self-
4 I.T.A. No. 231/Asr/2024 Assessment Year: 2020-21 assessment tax of Rs.83,21,570/- continued to be denied, resulting in an enhanced tax demand of Rs. 1,38,27,800/-.
4.3. Aggrieved by such enhancement and also denial of tax paid u/s 140A the appellant preferred an appeal and submitted statement of facts and grounds of appeal which were carefully considered. While the claim of deduction under 801A(4), was originally granted while processing the return of income u/s 143(1), there is no reason to deny the same in the order passed u/s 154, without adducing any proper reason to undertake the same. Therefore, the JAO is directed to allow the deduction under Chapter VIA of Rs.4,17,68,024/- and determine the liability to tax under the MAT provisions of the Act.
Now, the Revenue is in appeal before the Tribunal on the grounds contained in
the memorandum of appeal. The ld. DR submitted that the disallowance of claim of
deduction u/s 80-1A(4)(iv) was due to the fact that the assessee has failed to file the
audit report in Form 10CCB by the prescribed due date as defined in section 80-
1A(7) of the Act and that is the reasons why the said claim for deduction has been
disallowed by the CPC, Bangeluru. However, he could not explain as to why this
claim for deduction has been initially allowed without any question, while processing
the return u/s 143(1) of the Act and why this claim for deduction has been
subsequently rejected in proceedings u/s 154, without any hearing and without any
opportunity to the assessee to show cause u/s 154(3) when the rectification order has
resulted in increasing the liability of the assessee.
The ld. DR further submitted that this deduction is legally not allowable in
absence of audit report in Form 10CCB, being filed within the specified time. This
5 I.T.A. No. 231/Asr/2024 Assessment Year: 2020-21 claim for deduction under Chapter VIA falls within the scope of adjustment u/s
143(1) and necessary adjustments has been done in the intimation vide a rectification
order u/s 154 and he prays that the order of the AO, CPC Bangeluru may please be
upheld.
The ld. AR of the assessee submitted that in the instant case, audit report in
Form 10CCB has been uploaded on 29.03.2023 (filed belatedly) and was before the
AO, CPC, Bangeluru when re-processing of the return was done on 18.05.2023. He
further submitted that this issue is raised by the Revenue in course of second
appellate proceedings and was never mentioned anywhere in the intimation passed
u/s 143(1) or in its rectification order u/s 154 which has been passed without any
hearing or without any opportunity to show cause u/s 154(3). He submits that the ld.
CIT(A) is fully justified in deleting the said addition and allowing the claim of the
assessee u/s 80-1A(4)(iv) because there was absolutely no reason to deny the same in
the rectification order passed u/s 154, without any discussion or reasons in the body
of the order.
He further submitted that even if the argument of the ld. DR is considered, then
also there is no scope for disallowing the deduction claimed because in the instant
case audit report in Form 10CCB has already been filed as evident from records and
the same was before the Assessing Officer, CPC, Bangeluru when the rectification
6 I.T.A. No. 231/Asr/2024 Assessment Year: 2020-21 order has been passed and there is no reason as to why the said audit report has not
been considered. He further relied upon the judgment of the Hon’ble Apex Court in
the case of CIT v. G. M. Knitting Industries (P) Ltd. & Anr. [2015] 279 CTR (SC)
534, [2015] 376 ITR Pg. 456 (SC), in support of his contention that even if the audit
report has been filed at any time before the framing of the assessment, the
requirements of the provisions is met and even though the assessee has not filed audit
report in Form 10CCB along with the return but has filed the same before the
completion of assessment, the same has to be considered for the purpose of
assessment. He prayed that the deduction of claim under 80-IA(4)(iv) may please be
allowed and the order of the ld. CIT(A) may please be upheld.
We have heard the rival submissions and considered the materials on record
and we find that in the instant case, the ld. AO, CPC, Bangeluru has disallowed the
claim for deduction under Chapter VIA in proceedings u/s 154 without allowing any
opportunity to the assessee to explain his case u/s 154(3), and after accepting the said
return and allowing the claim for deduction in original intimation u/s 143(1) and
thereafter without stating any reasons as to why the disallowance has been made.
Regarding the issue of late filing of audit report in Form 10CCB, we have
already decided this issue in favour of the assessee, in the assessee’s own case in ITA
No. 267/Asr/2024 dated 24.06.2025 and respectfully relying on the decision of the
7 I.T.A. No. 231/Asr/2024 Assessment Year: 2020-21 Hon’ble Apex Court in the case of CIT v. G. M. Knitting Industries (P) Ltd. and Anr.
(supra), we hold that the assessee is entitled to deduction u/s 80-1A(4)(iv) as per
claim in the return of income, which is also supported by the audit report in Form
10CCB filed by the assessee on 29.03.2023 which was already before the AO, CPC
Bangeluru on the date of rectification order on 18.05.2023, and should have been
considered.
As such, we uphold the order of the ld. CIT(A) and dismiss the appeal of the
Revenue being devoid of merits.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate
Tribunal) Rules, 1963 as on 28.07.2025
Sd/- Sd/- (Brajesh Kumar Singh) (Udayan Dasgupta) Accountant Member Judicial Member *GP/Sr.PS* Copy of the order forwarded to: (1)The Appellant: (2) The Respondent: (3) The CIT concerned (4) The Sr. DR, I.T.A.T True Copy By Order
