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TMI Blog2024 (1) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... in section 139(1) of the I.T. Act, 1961 whereas the assessee has filed its return of income after the due date. 3. Whether on the facts and in the circumstances of the case, the CIT(A) is right in holding that even without fulfilling the statutory conditions for claiming deduction u/s 80IC r.w.s. 80AC of the I.T. Act, 1961, the assessee is entitled to deduction. 4. Whether on the facts and in the circumstances of the case, the CIT(A) is right in deleting the addition made by the AO on account of low gross profit declared by the assessee." 3. Ground Nos. 1 to 3 relate to a single issue i.e. the challenge of the Department against the action of the ld. CIT(A) in deleting the disallowance of Rs. 1,43,23,507/- made by the AO u/s 80IC of the Income Tax Act, 1961. In the assessment proceedings, the AO, referring to the provisions of Section 80AC of the Act, show caused the assessee to justify the claim made u/s 80IC, where the return of income for the year under consideration had not been filed on or before the due date, i.e. 30.09.2013. The assessee submitted that the Income Tax Return alongwith submission of income had been filed on 31.03.2014; that the Audit Report, through which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee has placed strong reliance on the impugned order. 8. We have heard the parties and have perused the material on record regarding this issue. We find that while deleting the disallowance made by the AO u/s 80IC of the Act, the ld. CIT(A) has noted that the ld. CIT(A) has observed for the immediately preceding assessment year, i.e. assessment year 2013-14, in the assessee's own case, vide order dated 28.10.2016. In the said order, for assessment year 2013-14, the ld. CIT(A) had observed as follows : 5.2 I have gone through the facts of the case and written submission filed by the appellant. This issue is decided by my predecessor in the appellant's own case for the A.Y. 2013-14 in Appeal No. 259/YN/15-16 dated 2S.10.2016. The finding is reproduced as under:- "5.2 I have gone through the facts of the case and -written submission filed by the appellant. It is noted that the appellant filed a return of income on 31.03.2014 with claim of deduction u/s 80IC. The return was filed beyond the due date, i.e. 30.09.2013, prescribed under sub section (1) of section 139 of the Act. The audit report for claim of deduction in Form No. 10CCB was also filed belated, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished in indicated only in sub section (1) of section 139 and not in sub section (4) of section 139. That being so, even if a return is filed in terms of sub section (4) of section 139. that would not dilute the infraction in not furnishing the return in due time as prescribed under sub section (1) of section 139. Otherwise, the use of the expression 'in due time' would loose its relevance and it cannot be said that the said expression was used without any purpose. Before substitution of the expression 'clause (i) of sub section (1) of section 142' by Direct Tax Laws (Amendment) Act, 1987 with effect from 01.04.1989, the expression used was 'sub section (2) of section 139' at the relevant point of time. The Assessing Officer was empowered to issue a notice requiring furnishing of a return within the time indicated therein. That means the infractions which are covered by section 276CCC relate to no furnishing of return within the time in terms of sub section (1) or indicated in the notice given under sub section (2) of section 139. There is no condonation of the said infraction, even if a return is filed in terms of sub section (4), Accepting such a plea woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Dwarkasdas G Panchmatiya Vs. ACIT [2015] 57 taxmann.com 2 held that assessee would be deemed to have furnish valid return of income if duly verified Form ITR-V is filed within 15 days; after e-fling of return, if ITR-V is filed thereafter, no deduction for section 80IB etc. would be allowed. Since, the physical return was submitted after expiry of date specified u/s 139(1), the assessee's claim for deduction u/s 80IB(10) was rightly rejected by Revenue Authorities. Further, the jurisdictional Hon'ble ITAT, Chandigarh in Lakshmi Energy & Foods Ltd. Vs. ACIT [2014] 44 taxmann.com 248 held that the assessee as per provisions of section 80AC is not entitled to avail deduction u/s 80 IB unless and until he files return with such claim within due date as provided u/s 139(1) of the Act. 5.6 Therefore, in view of the facts of the case and the decisions of Hon'ble Tribunal, the appellant is not entitled for claim of deduction u/s 80IC as the return of income was not filed on or before the due date as prescribed under sub section (1) of section 139 of the Act. Thus, this ground of appeal is dismissed. " 8.1 The ld. CIT(A), in the impugned order, has further observed that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. " 8.2 The ld. CIT(A) has further noted in the impugned order that in pursuance of the aforesaid Tribunal order dated 04.10.2017, for assessment year 2013-14, the AO vide order dated 18.10.2018, withdrew the addition made on account of disallowance of deduction claimed u/s 80IC, for assessment year 2013-14. 8.3 Finding that the facts for the year under consideration on this issue are exactly in pari materia with those having a reason for assessment year 2013-14, the ld. CIT(A) followed the aforesaid Tribunal order dated 04.10.2017, passed in ITA 501/CHD/2017, in the assessee's own case, for assessment year 2013-14. 9. Before us, the Department has not been able to show that the facts for the year under consideration are any different from those present for assessment year 2013-14. As also taken note of by the ld. CIT(A) in the impugned order and not disputed by the department, in year under consideration, the assessee got its books audited on 22.08.2014 and furnished the Audit Report in Form No. 3CA and 3CD and report of specified domestic and international transactions u/s 92E in form 3CEB on 30.11.2014, and claim for deduction u/s 80IC in Form No. 10CCB on 29.11.2014; an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 had been signed by the authorized Directors and Auditors on 22.08.2014 and the said Balance Sheet was adopted by the Board of the Company; that on this very date, i.e., on 22.08.2014, they handed over the digital signatures of the deponent to their Auditor and Tax Consultant for filing the Income Tax Return and other Reports on the Income Tax Portal, as Reports and all Audit Reports had to be compulsorily e-filed; that they came to know about the fact that the Tax Audit Report and the Balance Sheet with annexures were filed on 30.11.2014 and report u/s 80IC in Form 10CCB was filed on 29.11.2014 and the return of income was uploaded only on 31.03.2015; that the filing of Income Tax Return and Audit Report etc., on the Income Tax Portal, as a matter of routine is handled by the Tax Consultant and as a normal practice, digital signatures were also handed over to him alongwith the Board Resolution authorizing him to use and affix their digital signatures on the documents to be submitted to the Income Tax Department; that their company is having 77.30% shares in another company, namely, Saitech Medicare Pvt. Ltd. and their Auditor was also the Auditor of that company; that besides th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CLB, of not holding any AGM without its permission; that they are not conversant with the Income Tax Act and hence, they had to rely on their consultants' that as is a normal practice, the Income Tax Consultant prepares and files Income Tax Returns on behalf of the assessee and that they were also following the instructions of their Tax Consultants and the late filing of the Income Tax Return was not due to any fault of any of the officers of the assessee company, but due to their Tax Consultants. 11. As stated, the above facts have been taken into consideration by the ld. CIT(A) also and the same have not been refuted by the Department before us too. The delay concerned, therefore, was entirely beyond the control of the assessee company and due to said delay, the assessee company has also stated to have changed its Auditor and Tax Consultant. 11.1 It is further not under challenge that all the conditions contained in Section 80IC of the Act were duly complied with by the assessee. These conditions are that the claimant of deduction u/s 80IC should not manufacture any article other than those enumerated in the 13th Schedule if it situated in the industrial zone of the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the CBDT in Circular No.14/2006, dated 28.12.2006, a copy whereof has been filed on behalf of the assessee at pages 47 to 50 of the assessee's case law Paper Book (ACL PB -II), are eloquent in this regard. Para 10.1 of the said Circular clearly states, inter-alia that it is with a view to enforce the compliance for furnishing the return of income by the due date that no deduction u/s 80IC shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified in Section 139(1). 12. In this regard, the Chandigarh Bench of the Tribunal in assessee's own case (supra), for assessment year 201314, vide order dated 04.10.2017 (copy at ACL PB -1, pages 1 to 19), in M/s Symbiosis Pharmaceuticals (P) Ltd. Vs the DCIT, Circle, Yamuna Nagar" in ITA No.501/CHD/2017, concurring with the argument of the assessee, held that liberal interpretation is to be given to the procedural requirement in as much as provisions of Section 80AC being machinery provisions, and, thus, being directory, they do not stand as a bar in the facts of a case wherein it can be demonstrated that there was a justifiable and reasonable cause for delay in filing of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was being made available; and that the approval in that case had been granted to the assessee on a later date, but without raising any objection that the meaning and the intent of the legislature would be gathered not on the basis of the phraseology of the provision but taking into consideration its nature, its design and the consequences which would follow from interpreting it in a particular way alone; that the purport of Explanation (2) to Section 80IB(10(a) is to safeguard the interests of the Revenue wherever the construction has not been completed within the stipulated period; that thus, it cannot mean that the requirement is mandatory in nature and would disentitles an assessee to the benefit of Section 80IB(10(a) even in respect of those cases where the assessee had completed the construction within the stipulated period and had made an application to the local authority within the prescribed time; and that the issuance of the requisite certificate was within the domain of the competent authority, over which, the assessee had no control. "Ambey Developers" (supra), we find is squarely applicable hereto. As discussed, the digital signatures of the competent authority ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contain machinery provisions CIT v. National Taj Traders [1980] 121 ITR 535 (SC). In our opinion, the conditions embodied in sub-section (1), the fulfilment of which entitles the assessee to claim deductions are mandatory because the substratum of the claim of deductions is the deposit of the amount in the account maintained by the assessee with the Development Bank or utilisation thereof for the purchase of new ship, new aircraft, new machinery or plant and, therefore, unless the conditions embodied in this sub-section are satisfied, the assessee cannot claim deductions. However, this is not true of subsection (5) which only provides for filing of the report of audit prepared by the accountant as defined in the Explanation below sub-section (2) of section 288 along with the return of income. The assessee's claim for deduction under clause (a) of sub-section (1) of section 32AB does not depend on the submission of the audit report along with the return of income, but on deposit of the amount in the account maintained by him with the Development Bank before the expiry of six months from the end of the previous year or before furnishing the return of his income, whichever is ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act; that the said circular does not expressly say so; that as explained by the Bombay High Court in "Sitaldas K. Motwani Vs Director General of Income Tax (International Taxation) New Delhi" 323 ITR 223 (Bom.), the phrase "genuine hardships" in Section 119(2)(b) of the Act ought to be construed liberally; that as observed by the said High Court, when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non deliberate delay. Since in the present case, the entitlement of the assessee to claim deduction under the provisions of Section 80IC of the Act has never been in question, the department cannot claim a vested right in injustice being caused to the assessee by the denial of the claim of deduction u/s 80IC because of a non deliberate delay on the part of the assessee. 14.6 In "Colonel Ashwani Kumar Ram Singh (Retd) Vs PCIT" 2019 (9) TMI 316 (M.P. High Court) (ACL PB -II, pages 100 to 105), it has been held that there is a power with the CBDT to condone the delay; that there appears to be no justificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 and other cases, it was held that filing of return of income on or before the due date prescribed u/s 139(1) is directory and not mandatory. Delay has also been condoned in similar cases, some of which are as follows : a. 2019 (10) TMI 235 - ITAT Chandigarh M/S East Bourne Hotels Pvt. Ltd. Versus Asstt. CIT, Circle Shimla ITA No. 301/Chd/2015 Dated August 9, 2019 b. 2019 (6) TMI 1045 - ITAT Chandigarh M/S Shree Ganesh Concast Group of Industries Vs The DCIT , Circle- Palampur, (H.P.) No.- ITA No. 829/Chd/2018 Dated.- June 6, 2019. c. 2019 (5) TMI 1122 - ITAT Indore M/s. Laxmi Mangal Warehouse Vs Deputy Commissioner of Income Tax, Ratlam ITA No. 612/lnd/2017 Dated.- May 16, 2019 d. 2019 (5) TMI 845 - ITAT Chandigarh HIMUDA Nigam Vihar Shimla Vs The ACIT Circle, Shimla ITA Nos. 480, 481 And 972/Chd/2012 Dated.- May 10, 2019 15. The above apart, the ld. Counsel for the assessee has also laid emphasis on the doctrine of substantial compliance and intended use. It has been submitted that there has been substantial compliance of the provisions of Section 80IB, rather full compliance thereof, and that the intent for which the Statute was enacted needs must be carried out. 15.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpliance made by the assessee in fulfilling of the conditions prescribed by the provisions of Section 80IB, is substantial compliance. Besides, even the non compliance was beyond the control of the assessee, as discussed. 16. None of the decisions cited on behalf of the Department, in view of the above discussion, are applicable to the facts of the present case. These decisions are; i) Padma Sundara Vs State of Tamilnadu 255 ITR 147 (S.C); ii) Umesh Chandra Dalakoti Vs ACIT, order dated 27.08.2012, passed in ITA No.7 of 2012 (U.K.) iii) Suolificio Linea Italia (India) (P.) Ltd. Vs Joint Commissioner of Income-tax, Circle-8, Kolkata" 93 taxmann.com, order dated 04.05.2018 (Calcutta High Court ); iv) CIT Vs Shelcon Properties (P.) Ltd. 44 taxmann.com 170, dated 16.01.2014 (Calcutta High Court ); v) Saffire Garments Vs ITO, Ward-2, Gandhidham, 28 taxmann.com 27 (Rajkot), order dated 30.11.2012. 16.1 In particular, the facts in Shelcon Properties (supra) were entirely different and it was a case where the return was filed late due to the fact that on-line filing of the return was being done by a Junior Advocate in the office who left the job in the second week of October, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A) failed to appreciate that the explanation offered by the assessee was not sustainable and it was, therefore, rightly rejected by the AO. The ld. Counsel for the assessee has, again placed heavy reliance on the impugned order. 18.2 Here, it is seen that as rightly contended on behalf of the assessee and also as rightly taken note of by the ld. CIT(A), the AO did not point out any specific defect or discrepancy in the books of the assessee or its vouchers, rather, then rejecting the books of account before making the addition in question. The AO accepted the sales figures declared in such books. Firstly, addition in GP without rejection of books of account has not been held to be good addition by the Courts. In "S.V.Auto Industries, Phagwara Vs CIT, Jalandhar & another", vide order dated 21.02.2014, passed in ITA No. 194 of 1999 (copy at ACL PB -1, pages 27 to 33), the Hon'ble jurisdictional High Court of Punjab & Haryana has held that, "when the books of account including Stock Register etc. have neither been rejected nor are doubted, accounts could not be bye-passed merely on the whims and fences of the parties". Almost, the same view was taken in "Madnani Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercentage of sales. 19. As rightly observed by the ld. CIT(A), the AO had not controverted, in the assessment order, any of these submissions of the assessee. Neither had these submissions been shown to be false, nor was any reason for disbelieving the explanation offered by the assessee given by the AO in the assessment order. Before us also, the position remains the same. The Department has brought nothing on record to controvert the specifics laid bare by the assessee before the AO and maintained through out. Again, as correctly observed by the ld. CIT(A), in the light of the case laws discussed, mere decrease in gross profit as compared to the earlier year is not a ground sufficient for making an addition and that too, without finding any specific defect in the books of account regularly maintained by the assessee. In this regard, the ld. CIT(A) has correctly placed reliance on "CIT-12 Vs Smt. Poonam Rani" 326 ITR 223 (Del) : 192 taxman 167 (Del) and Ms. Nirmal Rani Vs ACIT, Ambala 66 taxmann.com 40 (CHD-Tribunal). 20. In view of the above, we do not find any merit in ground No. 4 raised by the Department and the same is rejected. The action of the ld. CIT(A) in deleting the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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