TMI Blog1995 (3) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... record, the CIT(A) erred in confirming the order of the D.C. charging additional tax under section 143(1A) of the Income-tax Act, 1961 in the instant case. (5) That the above grounds of appeal will be urged in detail at the time of hearing and the assessee further craves leave to submit additional grounds of appeal, if any, at or before the time of hearing. 2. Ground Nos. 1 and 2 relate to the grievance of the assessee that the CIT(A) erred in holding that Form No. 10CCAC under rule 18BBA(3) read with section 80HHC(4) of Income-tax Act, 1961 was not filed along with the Return and in confirming the order of the Assessing Officer under section 154 by which he refused to rectify the income taken in the intimation slip on the basis of Form No. 10CCAC filed subsequently. 3. Briefly stated facts of the case are that the assessee filed Return of income on 25-10-89 declaring total income at Rs. 87,356 and assessment was completed under section 143(1)(a). Intimation under section 143(1)(a) was issued on 8-8-90 on an adjusted total income of Rs. 5,88,706. In the intimation under section 143(1)(a), deduction under section 80HHC amounting to Rs. 5,01,350 was not allowed on the ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the said Form 10CCAC was filed along with the return. Therefore, in my opinion, the A.O. is quite justified in refusing to rectify the income taken in the intimation slip, on the basis of a Form filed subsequently. I am conscious that this will cause hardship to the appellant as substantial amount of tax is involved. But I am afraid there is no appellate remedy available to the appellant against such hardship. It can be suggested that the appellant can take resort to certain other provisions of the Act for removal of hardship, viz., sec. 119(2)(b) or 264." 6. The assessee was neither satisfied with the sympathy expressed nor with the advice and suggestions made by the CIT(A) and, therefore, being still aggrieved by the order of the CIT(A), the assessee preferred this appeal to the Tribunal. 7. Sri P.K. Kataruka, ld. counsel for the assessee appeared at the stage of hearing and filed a paper book containing 86 pages along with Board Circular Nos. 601, 669 and 680 dated 4-6-91, 25-10-93 and 24-8-94 respectively. He invited our attention to the Audit Report and Form No. 10CCAC, computation of income filed with the return, copy of acknowledgement receipt and a certificate fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. Ltd v. CIT [1968] 70 ITR 45 (Cal.) CIT v. K.N. Oil Industries [1983] 142 ITR 13(MP) CIT v. Gangappa Cables Ltd. [1979] 116 ITR 778 (AP). 10. Lastly the counsel for the assessee drew our attention to the Circulars of the Central Board of Direct Taxes No. 581 dated 28-9-90 ; No. 669 dated 25-10-93 and No. 689, dated 24-8-94 and submitted that the departmental authorities rejected the claim of the assessee having in their mind and following the Board's circular No. 581 dated 28-9-90 which has already been modified in favour of the assessee by Circular Nos. 669 and 689, dated 25-10-93 and 24-8-94 respectively. It was further clarified that according to the latest circular application under section 154 can be entertained if the required certificate is furnished afterwards and the claim of the assessee under section 80HHC can be allowed. In view of all these arguments and contentions, Shri Kataruka urged to allow the claim of the assessee. 11. Sri. A.K. Das, the ld. senior departmental representative, on the other hand, vehemently argued and strongly supported the orders of the departmental authorities. 12. We have carefully considered the rival contentions, relevant facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating a mandatory rule is a proposition by now well-settled. We find that in past, the claim of assessee under section 80HHC has been allowed and this year it has been disallowed simply because the certificate was not filed along with the return. The question of fulfilling all the conditions laid down under section 80HHC are not under dispute. In our opinion, therefore, the instant case is covered by Calcutta High Court decision in the case of Rai Bahadur Bissesswarlal Motilal Malwasie Trust wherein it was held as under : " That, in the instant case, the assessee, for the past several years, was treated as as charitable institution and granted exemption under section 11 of the Act. It was not shown that, in the relevant assessment year, the delay in getting the accounts audited and in filing of the report in Form No. 10B defeated any object of the Act or the assessee's action was in substance not in conformity with the intent and purpose of the Act. The Tribunal was right in law in holding that the assessee could not be denied exemption for the assessment year 1984-85." Thus, according to this decision of the Calcutta High Court, submission of audit report along with the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by an order under section 154 by rectifying the assessment even though relief under that section had not been claimed by the assessee in the original assessment proceedings ". (e) In Gangappa Cables Ltd.'s case where the claim under section 80J was neither raised before the ITO nor before the AAC but was raised before the Tribunal only, the High Court held that the Tribunal was correct in allowing the claim of the assessee as there was material on record for allowing the same. 14. If we put the facts of the instant case to these decisions, we find that the assessee's claim is placed on better position. In the case of assessee all the material were available on record and the certificate was also filed at the level of Assessing Officer only at the stage of the proceedings under section 154. The Assessing Officer and the CIT(A) have admitted that the certificate was filed along with the application under section 154 submitted before the Assessing Officer. In this view of the matter, there was no question of denying the claim of the assessee made under section 80HHC. According to the principles laid down in these cases, the Assessing Officer and the CIT(A) should have entertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee submitted once again a certificate under section 80HHC(4) along with rectification application under section 154 dated 24-9-90, the Assessing Officer has not taken cognizance of the same. He simply ignored the certificate filed along with the application under section 154 and did not decide the issue on merit as to whether there is a mistake apparent from the record and can be rectified on the basis of the certificate filed subsequently. 16. Although the CIT(A) has taken cognizance of the certificate filed along with the application under section 154, he held that there is no evidence that the said Form No. 10CCAC was filed along with the return and, therefore, the Assessing Officer is quite justified in refusing to rectify the income taken in intimation slip on the basis of Form No. 10CCAC filed subsequently. Of course, while taking this sort of decision, he is completely governed by the new assessment procedures laid down by the Direct Tax Laws (Amendment) Act, 1987 and Direct Tax Laws (Amendment) Act, 1989 and also by Board Circular as mentioned by him in his order. For the sake of convenience, the relevant portion of section 143(1)(a) after amendment and effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reproduced as under for the sake of convenience : " 3. Similarly, filing of evidence in support of an exemption/deduction at the time of furnishing the return of income has been prescribed as a necessary condition in certain other sections of the Income-tax Act, such as sections 32AB(5), 33AB(2), 54(2), 54B(2), 54D(2), 54F(4), 54G(2), 80HH(5), 80HHA(4), 35D(4), 35E(6), 80HHB(3), 80HHC(4), 80HHD(6), 80-I(7), etc. in such cases also, where the exemption/deduction claimed in disallowed as prima facie inadmissible for want of evidence in support thereof under section 143(1)(a), it cannot be subsequently allowed by a rectification order under section 154 if the assessee later on furnishes evidence in support thereof. 4. Such a view is also necessary from the administrative angle as if the department condones such lapses in the initial stages, a tendency may develop amongst the taxpayers not to file relevant evidence at the time of filing the return and then make a claim by putting in an application under section 154. This tendency would unnecessarily infructuous work for the department. Hence, a strict view which is in accordance with the legal provisions is necessary in such case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), 80HH(5), 80HHA(4), 80HHB(3), 80HHD(6), 80HHE(4), 80-I(7), 80-IA(8) and the like. But if evidence is subsequently furnished, rectification under section 154 should be carried out to the extent permitted by Board's Circular No. 669 dated 25-10-93. No prima lacie disallowance shall however be made if any evidence, required to be filed along with the return of income only in pursuance of the non-statutory guidance notes for filing in the return of income, is not so filed." 20. From these circulars we find that the Board have relaxed the strict view taken by them in Circular No. 581 and have extended the concession which was so far confined to only section 43B as per Circular No. 669 to other sections like 33AB(2),35E(b), 54(2),80HH(5),80HHA(4), 80HHC(1), etc. According to this circular if the evidence is subsequently furnished the rectification under section 154 should be carried out. But it is restricted or allowed to the extent permitted by Board Circular No.669, dated 25-1093. According to Circular No. 669 the Assessing Officer can entertain application under section 154 for rectification of intimation under section 143(1) (a) or order under section 143(3), as the case may be, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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