M/S SHARAVATHY CONDUCTORS (P) LTD vs. THE COMMISSIONER OF INCOME TAX

3 to a world bank aided project, for which the petitioner received proceeds in convertible foreign exchange. The petitioner is said to have filed its original return of income for the assessment year 1997-98 on 9.10.1997 declaring a total income of Rs.70,99,279/- after claiming deduction under section 80IA of the Income Tax Act, 1961 (Hereinafter referred to as the ‘Act’, for brevity). The petitioner did not claim any deduction under section 80HHC in the belief that the same was impermissible in law. The said return was filed within the prescribed time and the return of income was processed and an intimation was issued which was received by the petitioner on 20.5.1999. The department had granted a refund of Rs.10,09,763/-. In the year 2002, the Supreme Court had laid down the test for determining whether the transaction is eligible for deduction under section 80HHC of the Act, as reported in Ram Babu and Sons vs. Union of India, (1996) 222 ITR 606. Pursuant to the affirmation of the test as laid down, the

4 petitioner was advised to file a revised return. Accordingly, the revised return of income was filed declaring the total income as nil. The petitioner had not claimed deduction under Section 80HHC of the Act and accordingly declared its income as nil.

The assessing officer had refused to process the return and held that the revised return filed on 28.3.2003 could not be considered for processing as it is barred by limitation, by order dated 17.9.2003.

A revision petition was filed under Section 264 of the Act before the Commissioner of Income Tax, Bengaluru seeking rectification of the intimation under Section 143(1) of the Act dated 27.11.1998 issued by the Department in relation to the original return dated 9.10.1997 as on 26.12.2003. The Commissioner of Income Tax had held that insofar as the condonation of delay in filing the revised return was concerned, the letter dated 17.9.2003 was not an order against which a revision could be filed under Section

5 264(1) of the Act and accordingly, had rejected the revision petition by order dated 29.11.2004. Pursuant to such rejection, the petitioner had filed a second revision petition before the Commissioner of Income Tax seeking rectification of intimation under Section 143(1).

The petitioner had also placed reliance on a judgment in the case of Sneha Latha Jain vs. CIT, 140 Taxman 156, in support of the contention that a revision petition can be entertained at any point of time if there is a benefit that is accruing to the assessee. The petitioner had also produced a Certificate of Discharge of Export Obligations. The Commissioner of Income Tax however has dismissed the revision petition on the ground that there was inordinate delay in filing the petition and further no sufficient cause had been explained for the said delay. Further, it was held that there was nothing in the return filed on 28.3.2003 or in the revision petition filed on 26.12.2003 and 28.9.2005, to indicate that the concerned transaction involved clearance

6 at any customs act. The primary grounds on which the petition is filed is that the department ought to have accepted the return filed by the assessee and process the same as per the procedure established in law.

The petitioner having failed to claim deduction under Section 80HHC of the Act in its return filed on 9.10.1997, constituted an apparent mistake in the return of income filed and therefore, respondent no.1 ought to have rectified the apparent mistake and allowed the benefit under Section 80HHC of the Act without any claim by the petitioner, as held in Poothundu Plantations Private Limited vs. Agricultural Income Tax Officer and others, 221 ITR 557. The respondent having failed to appreciate the same, the present writ petition is filed.

7 on the ground that it was barred by limitation. And when there was a Circular issued by the Central Board of Direct Taxes (CBDT), to the effect that the revised return filed within a period of six years could be considered for condonation of delay if there were valid reasons in support of the same, it is in clear negation of such a circular that the revised return has been rejected off hand. The commissioner in turn, having affirmed such an order while also observing that even on merits the petitioner did not make out a case is adding insult to injury and the matter ought to have been condoned and the revised return ought to have been examined on its merits, since there were adequate reasons for the delay which have been explained by the petitioner.

Incidentally, an order having been passed by a learned single judge in this writ petition dated 7.3.2011, whereby the impugned annexures were set aside and the petitioner was given leave to file an application for

8 condonation of delay, since the revised assessment had been filed within six years from the date of original return and since the assessing authority could exercise rights only within two years. It was further observed that the matter could thereafter be referred to the assessing authority to consider the revised returns filed seeking exemption, which he had not claimed in the original return filed. The petition having been disposed of on those terms, was challenged before a division bench of this court which in turn, had opined that the sequence of events had not been considered by the learned single judge in the proper perspective and the order of the learned single judge was found fault with and therefore the matter has been remanded to consider the petition afresh on merits.

9 for sufficient reason. Therefore, the present petitioner having filed such an application for condonation of delay was never taken up, but proceeded on the footing that the revised assessment could not be filed, since even during the pendency of this petition, the petitioner having filed an application seeking condonation of delay in filing such revised returns, as no such application was filed in the first instance though the revised return was admittedly filed within a period of six years, it would be for the authorities to consider whether there is sufficient reason to condone the delay and if the delay could be condoned, thereafter the revised return filed by the petitioner could be examined on merits. The impediment however is the observation by the commissioner by his order dated 13.2.2007 passed on the revision petition filed under section 264 of the Act, to the effect that the revision petition cannot be entertained even on merits, which would be an observation which would impede the Commissioner of coordinate jurisdiction in

10 considering the revised assessment on merits. It is made clear that such observation and finding by the Commissioner would not bind the Commissioner in considering the revised return on merits. If the delay is condoned for the reasons which are assigned by the petitioner, no injustice is caused, since all contentions, including the question of maintainability of such revised returns is left open. It is for the Commissioner to consider the case on merits with liberty to dispose of the same.

With that observation the petition stands disposed of. Since the amount involved is substantial and since the assessment order is of the year 1997, it would be in the fitness of things if the authority should consider the case at the earliest, in any event, within a period of three months from the date of receipt of a certified copy of this order.

Sd/- nv

JUDGE