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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI G. PAVAN KUMAR
आदेश /O R D E R
PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The Revenue has filed the appeal against the order of the
Commissioner of Income Tax (Appeals) in ITA No.24/2013-14 dated
02.12.2014 and the cross-objection was filed by the assessee.
2 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 2. At the time of hearing, the Ld. AR of the assessee did not
press the C.O. No.41/Mds/2015, therefore, the same is dismissed
as not pressed.
The grounds raised by the Revenue are as under:-
(1) The CIT(A) erred in holding that the assessee has filed the return u/s 139(1) of the Act. (2) The CIT(A) has not given its reason why and what basis it is condoning the delay of filing the return of income by the respondent. (3) The CIT(A) erred in relying on case laws of Chennai and Hyderabad Tribunals which were clearly distinguished on facts by the CIT(A) in his detailed order. (4) The CIT(A) failed in its duty in not following the Supreme Court Judgment in the case of Orissa State Warehousing Corporation Vs. CIT reported in 103 Taxman 623(SC) relied by the department. (5) The CIT(A) also failed to consider that the e-filing accepts the return even without payment of self assessment tax and when the Respondent had not established any valid reason for belated filing of return of income.
The brief facts of the case are that the assessee is
manufacturing and exporting Gherkins. The assessee filed its
return of income on 27.03.2008 admitting a total income of
`11,65,820/-. The return was processed under Section 143(1) of
the Income-tax Act, 1961 (in short 'the Act'). The Assessing Officer
having reason to believe that income escaped assessment, initiated
notice under Section 148 of the Act. In response to the notice, the
Ld. AR of the assessee appeared before the Assessing Officer.
3 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 The Assessing Officer, on verification of the assessment records,
found that the assessee-company has claimed deduction under
Section 10B of the Act in respect of exports and as per the
conditions laid down for claiming of deduction under fourth proviso
to Section 10B 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 under Section 139(4) of
the Act on 27.03.2008, 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 10B of the Act. The assessee has also challenged
the validity of issue of notice for reassessment and prayed for
dropping the reassessment proceeding. But, the Assessing Officer
based on the information and the provisions of the Act, has
considered the facts submitted in the assessment proceeding and in
the return filed belatedly and the Ld. A.O. held that information
submitted cannot be accepted as there is a mandatory requirement
applicable to the assessee from the assessment year 2007-08 to file
the return of income within the time allowed under Section 139(1) of
the Act. With this finding, the assessment was completed and an
4 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 amount of `3,14,32,640/- claimed by the assessee as deduction
under Section 10B of the Act was disallowed along with addition
under income from other sources and assessed the total income to `3,25,98,460/- and passed order under Section 143(3) r.w.s. 147 of
the Act on 28.03.2013. Aggrieved by the order of the Assessing
Officer, the assessee has filed an appeal before the CIT(Appeals).
In the appellate proceeding, the Ld. AR argued the grounds
and submitted the facts and reasons for filing the return of income
beyond the due date prescribed under Section 139(1) of the Act.
The contention of the assessee that the reassessment proceedings
are not valid but the Ld. CIT(Appeals) confirmed the reassessment
proceeding as valid relying on the judicial decisions. In respect of
allowance of deduction under Section 10B of the Act, the Ld.
CIT(Appeals) has made a categorical finding that though there is a
specified condition under Section 10B of the Act to file return of
income within the time allowed under Section 139(1) of the Act,
since the assessment year 2007-08 being the first year after the
amendment, therefore, the proviso has to be interpreted liberally
and since the e-filing of return was introduced recently during that
period and there was software and other technical problems which
5 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 are faced by the assessee. The Ld. CIT(Appeals) considered the
judicial decisions relied on by the assessee and finally relied on the
decision in the assessee's own case for the assessment year 2008-
09 passed by the Tribunal in I.T.A. No.774/Mds/2012 dated
19.09.2012 where the Tribunal held that due date for filing of return
of income under Section 139(1) of the Act is directory in nature and
not mandatory and the delay alone cannot be a reason for denying
the exemption if there are other substantive conditions necessitating
for claiming deduction. With these observations, the Ld.
CIT(Appeals) has directed the Assessing Officer to allow deduction
under Section 10B of the Act. Aggrieved by the order of the
CIT(Appeals). Revenue has filed the appeal.
The Ld. Departmental Representative’s contention is that the
CIT(Appeals) has erred in condoning the delay when the assessee
has not filed return of income under Section 139(1) of the Act which
is mandatory requisite for claiming deduction under Section 10B of
the Act. The Ld. D.R. submitted that there is no clarity as to on
what basis the delay was condoned for filing the return of income.
The CIT(Appeals) has not relied on the decision of Supreme Court.
Further, the assessee’s reasons are not satisfactorily supported with
6 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 any evidence. The Ld. D.R. prayed for setting aside the order of the
CIT(Appeals).
Contra, the Ld. AR of the assessee relied on the order of the
CIT(Appeals) and submitted that the assessee-company has made
an application to the Central Board of Direct Taxes under the
provisions of Section 119(2)(b) of the Act praying for relaxation of
fourth proviso to Section 10B of the Act and opposed to the grounds
raised by the Revenue.
We heard the rival submissions, perused the material
available on record and judicial decisions cited. The sole crux of the
issue envisaged by the Ld. Departmental Representative is that the
order of the CIT(Appeals) is bad in law as the provisions of Section
10B of the Act mandatorily require to file return of income within the
time allowed under Section 139(1) of the Act which, according to the
Ld. D.R., the Ld. CIT(Appeals) has overlooked. When the same
issue came before this Tribunal, in the assessee's own case, it was
held that the delay cannot be technically considered for allowing
exemption. Whereas, in the present case, the assessee has filed
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
7 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 belatedly. We perused the petition made under Section 119(2)(b) of
the Act by the assessee dated 20.07.2015 where it was prayed that
the four proviso to Section 10B of the Act may be relaxed in the
assessee’s case. The fourth proviso to Section 10B of the Act was
inserted by Finance Act, 2006 with effect from 01.04.2006, for the
assessment year 2007-08, is as under:-
“Provided also that no deduction under this section shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified under sub- section (1) of section 139”
Further, the Ld. AR of the assessee drew our attention to the
petition and also supported his argument with the decision of co-
ordinate Bench of this Tribunal in the case of Chella Software Pvt.
Ltd. v. ACIT in I.T.A. No. 2081/Mds/2015 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 which has
held at para 7 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
8 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15
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
20.07.2015. 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
9 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 directions of the CBDT. The A.O. shall provide adequate opportunity to the assessee before passing the order. The appeal of the Revenue is allowed for statistical purposes.
In the result, the appeal of the Revenue is allowed for statistical purposes and the cross-objection of the assessee is dismissed as not pressed.
Order pronounced on 18th October, 2015 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 18th October, 2015.
Kri. आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A)-1, Madurai 4. आयकर आयु�त/CIT, Central-II, Madurai 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.