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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI G. PAVAN KUMAR
आदेश /O R D E R
PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The assessee has filed the appeal against the order of the Commissioner of Income Tax (Appeals)-1, Madurai in dated 20.10.2015 under 143(3) and 250 of Income-tax Act, 1961 (in short 'the Act').
Before we proceed for hearing, there is delay of 52 days in filing the appeal. The Ld. Authorized Representative of the assessee filed condonation petition and explained the circumstances for delay which are not deliberate. Further the Ld. D.R. has no serious objection for condonation of delay. After hearing the submissions, we are satisfied with reasonable cause submitted in affidavit for filing the appeal belatedly. Therefore, the delay is condoned and appeal is admitted.
The grounds raised by the assessee are as under:-
(1) Commissioner (Appeals) erred in not acceding to the reasonable request to adjourn the appeal from October 2015 to December 2015 for the reason that the appellant’s representation to the Central Board of Direct Taxes to relax the requirements of Section 80AC by general or special order in exercise of its power u/s 119(2)(c) of the Act thereby allow the claim for deduction u/s 80IA of the Act is pending.
(2) The Commissioner (Appeals) erred in not appreciating the several grounds raised before him judicial decisions cited in support and denying the deduction claimed by the appellant u/s 80IA of the Act.
(3) The Commissioner (Appeals) failed to appreciate that under analogous provisions of the Act viz., belated filing of audit report, the Supreme Court has decided the issue in favour of the appellant – CIT Vs G.M. Knitting Industries (P) Ltd. (2015) 376 ITR 456 (SC)
The brief facts of the case are that the assessee-company is an agent of import and domestic cotton, wind energy farms and weaving mill. The assessee-company filed its e-return of income on 12.06.2012 admitting a total income of `96,93,260/-. The return was processed under Section 143(1) of the Income-tax Act, 1961 (in short 'the Act'). The Assessing Officer issued notice under Section 143(2) of the Act. In response to the notice, the Ld. AR of the assessee appeared before the Assessing Officer and filed the details. The Assessing Officer, on verification of the assessment records, found that the assessee-company has claimed deduction under Section 80-IA of the Act. But, as per the provisions of Section 80-AC of the Act, the assessee has to file return of income within the due date prescribed under Section 139(1) of the Act. But, the assessee has filed e-return belatedly on 12.06.2012, which is beyond the due date specified for the company. The A.O. was of the view that since it is mandatory to file return of income before the due date, the belated return cannot be treated as valid return for the purpose of allowing deduction under Section 80-IA of the Act. The Ld. A.O. held that information submitted cannot be accepted as there is a mandatory requirement applicable to the assessee by Finance Act, 2006 with effect from 1.4.2006 to file the return of income within the time allowed under Section 139(1) of the Act and the assessment was completed disallowing the amount of `70,00,000/- claimed by the assessee as deduction under Section 80-IA of the Act and assessed the total income of `1,69,17,120/- and passed order under Section 143(3) of the Act on 28.02.2014.
Aggrieved by the order of the Assessing Officer, the assessee has filed an appeal before the CIT(Appeals).
In the appellate proceeding, the Ld. Authorized Representative reiterated his submissions made in assessment proceedings with judicial decisions and explained the circumstances in which return could not be submitted within due date. The Ld. Authorized representative relied on various decisions and the co- ordinate Bench of this Tribunal and argued that filing of return of income within due date u/s 139(1) of the Act is only directory and not mandatory. The Ld. Commissioner of Income Tax (Appeals) considered the judicial decisions and application pending before the CBDT and overlooked the co-ordinate Bench decision and relied on the Special Bench decision of Rajkot Bench in the case of Saffire Garments v. ITO (151 TTJ 114) where held that the provisions of Section 10A(1A) of the Act in the case of deduction is mandatory and not directory by overruling the decisions of Chennai and Delhi Tribunals and confirmed the order of the Assessing Officer in denying deduction under Section 80-IA of the Act and dismissed the appeal of the assessee. Aggrieved by the order of the Commissioner of Income Tax (Appeals), the assessee assailed an appeal before the Tribunal.
Before us, the Ld. Authorized Representative reiterated his submissions made before Assessing Officer. The Ld. Commissioner of Income Tax (Appeals) relied only on Special Bench decision of Saffire Garments (supra) and distinguished the co-ordinate Bench decisions applicable to the assessee. The Ld. Authorized Representative submitted that the assessee-company has made an application to CBDT under the provisions of Section 119(2)(b) dated 14.08.2015 praying for relaxation of the provisions of Section 80AC of the Act and prayed for allowing the appeal.
Contra, the Ld. Departmental Representative’s contention that the assessee has not filed return of income under Section 139(1) of the Act which is mandatory requisite for claiming deduction under Section 80-IA of the Act and prayed for dismissing the grounds of the assessee.
We heard the rival submissions, perused the material available on record and judicial decisions cited. The sole crux of the issue argued by the Ld. AR that the order of the CIT(Appeals) is bad in law as the appellate authority without going into merits, considered the decision of Special Bench in the case of Saffire Garments (supra) overruling the co-ordinate Bench decision.
Whereas, the assessee-company has made an application before the CBDT under Section 119(2)(b) of the Act for condoning the delay for relaxation of filing the return of income belatedly. We perused the petition made under Section 119(2)(b) of the Act by the assessee dated 14.08.2015 where it was prayed that the provisions of Section 80AC of the Act may be relaxed in the assessee’s case.
The provisions of Section 80AC of the Act was inserted by Finance Act, 2006 with effect from 01.04.2006, for the assessment year 2007-08, is as under:-
“DEDUCTION NOT TO BE ALLOWED UNLESS RETURN FURNISHED. 80AC. Where in computing the total income of an assessee of the previous year relevant to the assessment year commencing on the 1st day of April, 2006 or any subsequent assessment year, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC, or section 80-ID or section 80-IE no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section139.”
Further, the Ld. AR of the assessee drew our attention to the application and supported his argument with the decision of co- ordinate Bench of this Tribunal in the case of Chella Software Pvt. Ltd. v. ACIT in dated 03.03.2016, where a similar issue was dealt and also the application was pending before the CBDT for condoning the delay in filing the return of income. We perused the order of the co-ordinate Bench of this Tribunal and concurred that the facts are similar to the present case held at para 7 of page 9 as under:-
“7. We heard the rival submissions and perused the material on record, judicial decisions cited. The ld. Authorised Representative emphasized that return could not filed within due date and filed submissions in assessment proceedings and appellate proceedings relying on the decision of Co-ordinate Bench of the Tribunal. But the ld. Commissioner of Income Tax (Appeals) without going into the merits, considered the decision of Special Bench in the case Saffire Garments(supra) and over ruled the assessee’s objections and observed filing return of income u/s.139(1) of the Act is mandatory. The ld. Authorised Representative drew attention to the decision of Hyderabad Bench, Tribunal in the case of S. Venkataiah (supra) where similar issue was dealt and delay was condoned due to technicalities. Subsequently, on appeal by Revenue u/s.260A of the Act the Hon’ble Andhra Pradesh High Court has confirmed the order of the Tribunal in I.T.T.A No.114 of 2013, dated 26.06.2013. The Andhra Pradesh High Court considered the technicalities and circumstances were the assessee could not file the return. The assessee company has made a application with CBDT for condonotion of delay by letter dated 4.12.2014. The assessee demonstrated the submissions made to CBDT. We considering the factual aspects, evidences, provisions of laws and decision of High Courts and Tribunal relied by the assessee, are inclined to remit the issue in dispute to the file of Assessing Officer as the application filed is pending with the CBDT u/s.119(2)(a) of the Act. The Assessing Officer has to pass the order based on the satisfactory directions from CBDT after providing adequate opportunity of being heard to the assessee.”
We find in the present case that the assessee has made an application to the CBDT for condonation of delay by letter dated 14.08.2015. We rely on the Tribunal’s decision and remit the disputed issue to the file of the Assessing Officer as the application is pending with the CBDT under Section 119(2)(b) of the Act. Further, the Assessing Officer shall pass the order based on the directions of the CBDT. The A.O. shall provide adequate opportunity of hearing to the assessee before passing the order. The appeal of the assessee is allowed for statistical purposes. Order pronounced on 24th October, 2016 Monday at Chennai. sd/- sd/- (चं� पूजार�) (जी. पवन कुमार) (Chandra Poojari) (G. Pavan Kumar) लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member चे�नई/Chennai, �दनांक/Dated, the 24th October, 2016. Kri.