TMI Blog2017 (11) TMI 1361X X X X Extracts X X X X X X X X Extracts X X X X ..... s 80IC was filed well within the extended time prescribed u/s 139(4). The said fact is evident from a reading of the assessment order itself. We also note that the principle of law as applicable to claim of exemption u/s 54 as considered by the Hon'ble jurisdictional High Court in the case of CIT V Jagriti Aggarwal [2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT] is fully applicable to the case at hand The claim of the assessee could not be ousted on the fact that the return was filed within the extended period of sub section(4) of Section 139. Accordingly, we hold that the assessee deserves to succeed in principle. The matter is remanded to the AO for the purposes of verification. Needless to say that the assessee shall be given a reasonable opportunity of being heard. Disallowance of interest u/s 36 - Held that:- We note that though the assessee had canvassed before the AO that the loans were advanced for business purpose namely to Shri Shatrughan Sinha as a sale promotion exercise and to Shri Adil Latif Khan who was a Sales Manager as advance to be adjusted against work, however, in the discussion in the assessment order or the impugned order, there is no finding of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.1 The ld. AR inviting attention to the condonation of delay application filed by the Director submitted that the order dated 28.102016 was received by the assessee on 18.11.2016 and was handed over to the Chartered Accountant Shri Sumit Aggarwal. The said counsel advised that four months time was available for filing the appeal before the ITAT and since he was not appearing before the ITAT, he would engage some other professional for filing of the appeal. The said Chartered Accountant on his visit to a professional in Ambala for filing of the appeal, it was submitted, then learnt that the time limit for filing the appeal before the ITAT was infact 60 days from the date of the order and not 120 days as understood by him. Acting on the said information, the assessee was accordingly advised who promptly filed the appeal. The said appeal, it was submitted, was late by 21 days solely on account of the ignorance of the counsel. Relying upon; (a) Improvement Trust Ludhiana vs. Ujagar Singh Ors Civil Appeal No. 2395 of 2008 of June 9, 2010, (b) Jayvantsinh N Vaghela vs. Income Tax officer 40 Taxmann.com 491 (Gujarat) and (c) Paras Rice Mills Kurukshetra vs. CIT Karnal ITA No. 657 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view taken by the Courts while considering the requirements of Section 276CC has no role to play in the present proceedings. The difference, it was submitted, has been noted by the Supreme Court itself as it takes note of the different treatments given to the returns filed u/s 139(1) and 139(4) as would be evident from para 20 of the said decision wherein it has been held that, For the purposes of assessment and losses set off, return u/s 139(1) and 139(4) is taken as one. The mere fact that for the purposes of assessment and carrying forward and to set off losses it is treated as one filed within sub-ss(1) or (2) cannot be pressed into service to claim it to be actually one such, though it is factually and really not by extending it beyond its legitimate purpose. Accordingly, it was his submission that even the judgement of the Apex Court in the case of Shri Parkash Nath Khanna recognizes the fact that different treatment has to be given to the returns filed u/s 139(1) and 139(4). 3.2 In the said background, it was submitted that for reasons beyond the control of the assessee, the delay in filing of the return has occurred and since all relevant supporting documents in suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another company by the name Saitech Medicare Private Limited where the assessee company had 77.30% shares. Apart from that, there were two other shareholders namely Shri Rajat Bhalotia and his father Shri P.D.Bhalotia who had file a suite with Company Law Board in Delhi against the major shareholder i.e. the assessee and other shareholders. The auditor colluded with the dissenting shareholders, as a result of which the return, it appears, deliberately was filed late despite the fact that balance sheet and audit report were filed well within time, mischief was discovered later on. These facts, it was submitted, are available on record by way of an affidavit and when they are considered in the background of the judicial precedent available, it was his submission that the claim of the assessee has wrongly been rejected. 3.4 Inviting attention to the Paper Book, attention was invited to page No. 1 to 19 which is copy of Tax Audit Report, Balance Sheet, Profit Loss Account alongwith annexures for the year ending 31.03.2013 filed on 09.08.2013. Copy of Audit Report on Form No. 10CCB for deduction u/s 80IC filed on 28.10.2013, it was submitted, is at pages 20 to 23. Copy of the Aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim is supported by the Balance Sheet, Audit Report u/s 80IC are filed well within time u/s 139(1) in the facts of that case. In fact, relying upon the proposition as considered in 2010-11 assessment year in the case of Sucram Pharmaceuticals, it was submitted that deduction has been allowed in that year holding that delay in e-filing of IT return could be said to be reasonable, as such, deduction was allowed. Thereby upholding the principle that if the delay is reasonably explained, deduction could be allowed, even in cases where return can be shown to be filed u/s 139(4) with a reasonable explanation. The said proposition, infact supports the claim of the assessee. 3.9 Similarly the decision of the Chandigarh Bench in the case of Lakshmi Energy Foods Ltd. relied upon by the CIT(A), it was submitted, was incorrectly applied. In the facts of that case, the due date for filing the return was 30.09.2008 and it had been filed on 31.03.2009. The shortcoming in the facts of the said case, it was submitted, would be evident on the reading of the said decision and would show that the tax audit report and the audit report u/s 80IC had not been filed alongwith return of income nor i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... precedent has laid down by the Apex Court in the case of Bajaj Tempo Ltd. V CIT 196 ITR 188 (S.C) it had been held that the incentive provision has to be interpreted in a manner so as to advance the objects of economic activities in the country and not to deny the claim merely on technical grounds. In the said case, it was submitted, as would be evident from page 62 para 55 of the said decision, it had been held that while referring to the finding of the assessment order, We have noted various decisions relied upon by the ld. Counsel for the assessee which held that Section 139(4) is to be allowed as proviso to Section 139(1) It had also been held that, It is true that the heading of Section 80AC clearly shows that deduction is not to be allowed unless return is furnished on or before the due date specified under sub-section (1) to Section 139. However, it cannot be denied that Section 80IC is an incentive provision and in view of various judicial pronouncements, particularly in the case of Bajaj Tempo Ltd. V ACIT 196 ITR 199 (SC) incentive provision has to be incorporated in a manner so as to advance the objects of economic activities in the country and not to deny the claim m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 139(4) and not Section 139(1). Attention was invited to page 77 para 7 onwards. 3.14 The last decision relied upon, it was submitted, is the decision of the ITAT in the case of Heera Moti Agro Industries dated 23.02.2017 ITA No. 740 741/CHD/2013 ors (copy placed at pages 108 to 126 of the Paper Book). Specific attention was invited to para 12 of the said decision wherein after considering the various decisions applied, it had held that filing of return of income on or before due date prescribed u/s 139(1) is directory and not mandatory. The said legal position, it was submitted, fully supports the case of the assessee. For ready reference, the same is reproduced hereunder : 12. Considering the above discussion in the light of various orders of the Tribunal referred to above, it is proved from the facts of the case that there was a valid reason for delay in filing of return of income as the photo copies of the seized documents were not made available to the assessee and assessee could not file return of income without the same. The provisions of Section 80AC of the Act are not mandatory and that the claim of the assessee cannot be denied on technicalities when as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handigarh Bench in the case of Lakshmi Energy Foods Ltd. relied upon by the CIT(A) and also by the ld. CIT-DR, it was submitted is a decision rendered on 26.02.2014 and apart from being distinguishable on facts as pointed out in the course of the arguments, it was his submission that the said decision has been considered by the Chandigarh Bench itself in the case of Heera Moti Agro Industries which is a decision more latest in point of time as it is dated 23.02.2017. Being the latest decision in point of time and also having considered the earlier decision, it was submitted, it has higher precedence value. Inviting attention to page 114 para 9, it was submitted, that the ld. CIT-DR was correct in stating that he has argued the said case before the ITAT and reliance had been placed by him on the aforesaid decision i.e. Lakshmi Energy Foods Ltd. Pvt. Ltd. as would be evident from page 114 para 9(ii). However, on account of the distinctions on facts and the position of law, the reliance placed in the peculiar facts is misplaced. It was his submission that if the Chartered Accountant who had the digital signatures, failed to click the relevant document for filing of the return and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80AC clearly indicates that the return of income of the assessee who claims deduction u/s 80IC must be furnished on or before due date in the relevant assessment year. The assessee could not justify its claim, hence, deduction u/s 80IC of ₹ 1,16,26,310/- is disallowed and added to the total income of the assessee's company. 6.2. The assessee carried the issue in appeal before the CIT(A) who also rejected the claim relying upon the decision of the Apex Court in the case of Prakash Nath Khanna. The applicability of the said decision to the facts of the present case is disputed by the ld. AR on the grounds that as per the settled legal position, the Rule of strict interpretation is to be applied to the charging and penal provisions. It has been argued that since Section 80AC and Section 80IC are procedural provisions, the rule of strict and literal interpretation are not to be applied. Attention has been invited to para 20 of the aforesaid decision of the Apex Court. The ld. AR has also sought to distinguish the decisions relied upon by the CIT(A). Since these arguments have been elaborated in the earlier part of this order, it is deemed appropriate only to refer to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed well within the extended due date u/s 139(4) i.e. on 29.09.2013. 6.4 We have considered the relevant findings in the assessment order and the impugned order and we find that the relevant documents in support of its claim of deduction were available before the tax authorities well within time namely Book Audit Report in Form No. 29B and Tax Audit Report in Form No. 3CA/3D on 29.09.2013, Audit Report u/s 80IC along with Balance Sheet etc. Consequently, the occasion to consider the possibility and the opportunity to interpolate and fudge up the claim was admittedly not available to the assessee. We note that the respective corresponding figures qua the claim as per the Reports and Balance Sheets remain the same. The legal position referring to various case laws have been addressed by the authorities which we have elaborately discussed in the earlier part of this order. On consideration thereof, we find that the claim of the assessee that in the peculiar facts and circumstances of the present case where the filing of the return was delayed for reasons not attributable to the assessee and all other supporting evidences in the form of audit report u/s 80IC, balance sheet prepar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director of the assessee company is on record. Perusal of the same shows that it has been explained that on account of collusion of the tax consultant i.e. Chartered Accountant Shri A.S.Malhotra in regard to allotment of shares in another company i.e. Saitec Medical Pvt. Ltd. wherein the assessee company had a major share holding resulting in filing of suite before the Company Law Board etc. and in connivance of the Tax Consultant with Mr. Bhalotia and his son who were having minor shareholding in M/s Saitech, the routine exercise normally done by the Tax Consultant without any follow up or supervision as digital signatures had been entrusted to the tax consultant for uploading of documents etc. in the Income Tax Portal, the mischief was occurred. For ready reference, the contents of the affidavit on record are reproduced hereunder : AFFIDAVIT I, Jagbir Singh s/o Sh. Om Pal, Managing Director of Symbiosis Pharmaceuticals (P) Ltd., having its Regd. office at SCO 4, Ground Floor, 14, Raghunath Puri, Yamuna Nagar, do hereby solemnly affirm and declare as under: 1. That I am Managing Director of the Company Symbiosis Pharmaceuticals (P) Ltd., Yamuna Nagar. 2. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same with our Tax Consultant CA. A.S. Malhotra; who did not give any satisfactory reply for delay in filing of Income Tax return and we asked for his resignation and changed our consultants as well as Auditors of both the Companies. 'His replies confirmed our suspicions that he is in hand with glove with Mr. Bhalotia and the mischief i.e. non filing of ITR in time was carried on us at the behest of Mr. Bhalotia. 6. That we would also like to add that Bhalotias had filed the case only in July 2015 after we issued Seventy six lakh shares of Saitech Medicare Private Limited to Symbiosis Pharmaceuticals (P) Ltd. He was showing his grievances against the allotment since last more than one year before the allotment on some technical grounds which only a professional like a Chartered Accountant is in position to guide. Due to the case filed with Company Law Board; which case has since been transferred to National Company Law Tribunal, Chandigarh Bench in February, 2017; we had not been able to hold AGM of Saitech Medicare Private Limited since 2015. Whenever we tried to hold AGM; Mr. Bhalotia invoked CLB which restrained us from holding AGM and ultimately we had to give an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the assessee. Mention may also be made of the order of the Hyderabad Bench of the Tribunal in the case of S.Venktiah, (cited supra) and another order of the Delhi Bench in the case of Dheer Global Industries P.Ltd. (cited supra) also support the view taken. Support may also be drawn by making reference to the order of the Chandigarh Bench of the Tribunal in the case of Rajwinder Kaur Mahal (stated supra) wherein considering the claim of deduction u/s 54 after considering the decision of the Apex Court in the case of Prakash Nath Khanna and also considering the decision of the jurisdictional High Court in the case of Jagriti Aggarwal, the claim made in the extended period available under sub-section (4) of Section 139 was allowed. The order in the case of Heera Moti Agro Industries (cited supra) also deserves a mention. 6.7. Accordingly, considering the peculiar facts and circumstances of the case and position of law as canvassed by the parties before the Bench, we hold that the claim of the assessee could not be ousted on the fact that the return was filed within the extended period of sub section(4) of Section 139. Accordingly, we hold that the assessee deserves to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was given, was entrusted with any sales promotion exercise or not and whether Shri Adil Latif Khan was the sales Manager of the company and the advance was adjusted against the work which he was stated to be performing. Accordingly, we deem it appropriate to set aside the issue back to the AO directing the said authority to first address the facts and thereafter consider the applicability of decisions thereon. Accordingly, in the absence of any relevant discussion in the order or the material fact, ground No. 2 of the assessee is set aside and restored back to the file of AO. 8. Addressing the issue in ground No. 3, the ld. AR has relied upon the decision of Sagun Foundry Pvt. Ltd. Vs CIT 145 DTR 265 (All)(copy placed at pages 79 to 92) for the proposition even if PF ESI has been paid after due as in the respective Act but before the due date of filing of the return, no disallowance can be made. The ld. CIT-DR has relied upon orders of the tax authorities. We find that though the issue is addressed before the CIT(A), however, there is no specific finding coming out from the order. Since the issue is first to be considered on facts, it is also, accordingly, set aside back to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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