CHELLA SOFTWARE PVT LTD.,MADURAI vs. ACIT, MADURAI

आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:

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The assessee has raised sole substantive ground that 2.

Commissioner of Income Tax (Appeals) erred in confirming the findings of the Assessing Officer in denying deduction u/s.10A of the Act on presumption that return of income has to be filed within due date u/s.139(1) of the Act and also erred in not considering the detailed submissions and relied only on Tribunal Special Bench decision.

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"the return filing time-limit restriction u/s.10A is very much Aking to that of u/s.10B of the Incometax Act. In the following Cases, the Madras Bench of the ITAT has held that the 139(1) time- Limit restriction U/S.10B is only directory in nature and not Mandatory. Also held that, where the genuine reason for delay has been sufficiently explained, no disallowance need be made u/s 10B on this ground.

(i) Ployhose India Pvt. Ldt., Chennia Vs. Dept. Income Tax (ITA No.122/Mds/2011)- Chennai ‘D’ Bench. (ii) Bnazrum Agro Exports (P) Ltd vs. CIT (ITA No.774/Mds/2012) Chennai ‘B’ Bench.

Following decisions in the aforesaid cases in favour of the assessee, and the genuine hardship faced in filing the return of income, it is requested to kindly consider the bonafide nature of our claim and maintain allowability of exemption u/s.10A’’.

The ld. Assessing Officer has the knowledge of delay in filing due to difficulties in e-filing of the return which could not be uploaded to Income Tax website on nonpayment of self assessment tax as it is sufficient cause for not filing the return within the specified date.

Further, the ld. Assessing Officer distinguished the decisions relied by the assessee and suo-motu held that Assessing Officer does not have power to condone the delay and relief can be obtained only from the CBDT u/s.119 of the Act. Considering the findings and submissions of the assessee, the ld. Assessing Officer denied deduction u/s.10A of the Act and passed assessment order u/s.143(3) of the Act on ITA No.2081/Mds/2015. :- 4 -:

03.03.2014. Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals).

In the appellate proceedings, the ld. Authorised 4.

Representative reiterated his submissions made in assessment proceedings with judicial decisions and explained the circumstances in which return could not submitted within due date as the return should be accompanied by bank details of self assessment tax paid but due to financial difficulties the assessee could not pay the tax within due date u/s.139(1) of the Act but ultimately paid on 14.12.2011 and upload return on 29.12.2011. The ld. Authorised Representative relied on the Co-ordinate Bench decisions of the Tribunal in the case of M/s.

Polyhose India Private Ltd (supra) and M/s. Bnazrum Afro Exports Pvt. Ltd (supra) were it was held that Filing of Return of income within due date u/s.139(1) of the Act is only directory and not mandatory.

But the ld.Assessing Officer ignored the submissions and genuine hardship faced by the assessee in not filing the return within due date u/s.139(1) of the Act and denied deduction u/s.10A of the Act. The ld. Authorised Representative expressed inability of the company as it is passing through financial crisis and the availability of cash resources are very merge and with great difficulty self assessment tax was paid and supported his submissions with the copy of profit and loss account and the bank balance statement and the delay in filing the return of ITA No.2081/Mds/2015. :- 5 -: income was not wanton but circumstances beyond the control. The ld. Commissioner of Income Tax (Appeals) considered the judicial decisions and evidence but overlooked the Co-ordinate Bench decision and relied on the Special Bench decision of Rajkot Bench in case of Saffire Garments vs. ITO 151 TTJ 114 where held that the provisions of Sec. 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 u/s.10A 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. Authorised Representative reiterated his 5. submissions made before Assessing Officer and appellate proceedings.

The ld. Commissioner of Income Tax (Appeals) relied on the Special Bench decision and not considered sufficient cause for not filing return of income u/s.139(1) of the Act as the assessee company has to pay self assessment tax and filed the Return Belatedly u/s.139(4) of the Act. 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. Authorised Representative relied on the Tribunal decision of Hyderabad in the case of ITO vs. S. Venkataiah in ITA

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No.984/Hyd/2011, dated 31.05.2012 where the Hon’ble Members considered the technicalities and the assessee is legally entitled for deduction observed at page no.13 of order.

‘’13. We have heard both the parties and perused the material on record. In this case admittedly, the assessee filed the return of income on 23.12.2008. The due date for filing the return of income u/s. 139(1) of the Act for the assessment year under consideration in the case of the assessee is 31.10.2008. As such the return filed by the assessee is belated. In this the assessee claimed deduction u/s. 80IC of the Act which was disallowed by the Assessing Officer as the return of the assessee was not filed within the time as prescribed u/s. 139(1) of the Act. The assessee has given reasons for delay in filing the return of income that the assessee was preparing its accounts through computer and the computer got corrupted due to viruses and in spite of continuous efforts by the computer technical personnel to retrieve the data in time for filing the return of income, problem persisted in the system. By trying to retrieve the data for 4 days the required data could not be retrieved and the backed up data were available only up to 31st January, 2008 in the CD and the entire data for the two months period, February and March, 2008, had to be re-entered into the computer system again. On preparation of the final accounts and finalising of statutory audit it took a little extra time that resulted in belated filing of return of income. Thus there was a delay of 74 days in filing the return of income which is beyond the control of assessee. This was also confirmed by the statutory auditor vide his letter dated 20.3.2011. Being so, in our opinion there is a reasonable cause for filing the return of income belatedly and this is beyond the control of the assessee. When the substantial question of justice involved technicalities should be ignored. Further, we are supported by the order of the Tribunal in & 1199/Hyd/2010 in the case of DCIT vs. M/sVega Conveyors & Automation Ltd. order dated 31st December, 2010 wherein in para 5 of the order the Tribunal held as follows:

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"5. We have considered the rival submissions and perused the orders of the lower authorities, and other material available on record, including the case-law relied upon by the parties. It is an undisputed fact that the assessee in the present case has filed the audit report in Form lOCCB during the course of reassessment proceedings. The issue that arises for consideration is whether the Assessing Officer was justified in disallowing the assessee's claim for deduction under S. 80IB on the ground that the audit report in Form 10CCB was not filed along with the return of income; or whether the CIT(A) was correct in proceeding on the basis of Form 10CCB filed during the course of re-assessment proceedings and directing the Assessing Officer to allow the claim of the assessee for deduction under S. 80IB of the Act. It is settled position of law, as consistently held by various Benches of this Tribunal and as held in various decisions referred to by the CIT(A) in the impugned order, that though filing of audit report in Form 10CCB is mandatory and prerequisite for deduction under S. 80IB, non-filing of the same along with the return of income is only a curable defect, and assessee's claim for deduction has to be considered on its merits as and when the defect is cured by filing Form 10CCB. We are fortified in this behalf by the decision of the jurisdictional High Court in the case of Hemsons Industries (Supra), relied upon by the learned counsel for the assessee. It is contended by the Learned Departmental Representative that the assessee's claim for deduction under S. 80IB can be entertained and examined on merits, when the audit report is filed before the completion of assessment, which has not been done in the present case, since the audit report was filed only during the course of reassessment proceedings initiated by the Assessing Officer, which cannot end up giving additional deductions/benefits to the assessee. We do not find merit even in this contention of the learned Departmental Representative. In the case of Hemsons Industries (Supra), before the jurisdictional High Court, for one of the years under appeal before Hon’ble High Court, viz., assessment year 1979-80, audit report was filed during the course of re-assessment proceedings and in response to the show-cause notice under s. 148 issued by the Assessing Officer. In this view of the matter, respectfully following the decision of the jurisdictional High Court cited above, among others, we find no justification to interfere with the order of the CIT(A). We accordingly

ITA No.2081/Mds/2015. :- 8 -: uphold the same and reject the grounds of the Revenue in this appeal’’.

The ld. Authorised Representative also relied on the decision of Hyderabad Bench of the Tribunal in the case of G. Laxmi Devi vs. ACIT in and the Revenue has filed an appeal against the order of S. Venkataiah (supra) with the High Court of Andhra Pradesh and the lordship have confirmed the order of the Tribunal in I.T..T.A. No.114 of 2013 and observed as under:-

‘’The learned Tribunal on fact-finding held that there is a reasonable cause for filing the return on income belatedly and this is beyond the control of the assessee. On this fact-finding the learned Tribunal has dismissed the appeal filed by the Revenue. There is no element of law involved in the appeal and the fact-finding cannot be appreciated by this Court. Moreover, the Tribunal has followed its earlier order in & 1199/Hyd/2010 dated 31.12.2010 in the case of DCIT vs M/s. Vega Conveyors & Automation Limited’’.

Further, the assessee company to substantiate its bonafide as per the directions of the Assessing Officer referred in assessment order made an application for condonation of delay in filing return of income before CBDT u/s.119(2)(a) of the Act on 04.12.2014 and prayed for allowing the deduction u/s.10A of the Act.

Contra, the ld. Departmental Representative relied on the 6. decision of lower authorities and made a distinction of decision of High Court of Andhra Pradesh and Special Bench Tribunal decision

ITA No.2081/Mds/2015. :- 9 -: and relied on the decision of Bombay High Court CIT vs. Smt.

Godavaridevi Saraf 113 ITR 589 and argued that 10A parameters are different and vehemently opposed to the ground of assessee.

We heard the rival submissions and perused the material on 7. 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 ITA No.2081/Mds/2015. :- 10 -:

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.

In the result, the appeal of the assessee is partly allowed for 8. statistical purpose.

Order pronounced on Thursday, the 3rd day of March, 2016, at Chennai.