2012 (12) TMI 193 - AT - Income Tax

Deduction u/s 10A - Condonation of Delay in filing Return u/s 139(1) - held that - Provisions of the proviso to Section 10A(1A) is mandatory and not merely directory - no deduction u/s 10A shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified u/s139(1) - Order of CIT(A) is just and in accordance with law and the ground raised by the assessee is liable to be dismissed.

Summary

Issues Involved:
1. Whether the proviso to Section 10A(1A) of the Income Tax Act is mandatory or directory.
2. Whether the Tribunal can hold the proviso to be merely directory and allow the deduction under Section 10A even if the return is filed beyond the due date specified under Section 139(1).
3. Whether holding the proviso to be directory would amount to conferring a power on the Tribunal to extend the time-limit for filing the return or to condone the delay.

Detailed Analysis:

1. Mandatory vs. Directory Nature of Proviso to Section 10A(1A):
The primary issue was to determine if the proviso to Section 10A(1A) of the Income Tax Act, which mandates that no deduction shall be allowed if the return is not filed by the due date specified under Section 139(1), is mandatory or merely directory. The Tribunal concluded that the proviso is mandatory. This conclusion was based on the interpretation of the whole scheme of the Act, where the failure to file the return within the due date has significant consequences, such as the imposition of interest under Section 234A and the possibility of prosecution under Section 276CC. The Tribunal emphasized that the mandatory nature of these consequences implies that the proviso to Section 10A(1A) must also be mandatory.

2. Tribunal's Authority to Hold Proviso as Directory:
Since the Tribunal determined that the proviso to Section 10A(1A) is mandatory, the second question of whether the Tribunal can hold it to be merely directory and allow the deduction under Section 10A even if the return is filed late was rendered moot. The Tribunal did not need to address this question further.

3. Extension of Time-Limit and Condonation of Delay:
Similarly, the third question, which concerns whether holding the proviso to be directory would effectively allow the Tribunal to extend the time-limit for filing the return or to condone the delay, was also not addressed. This is because the Tribunal's decision on the first issue made it unnecessary to consider the third question.

Supporting Arguments and Judgments:
The Tribunal reviewed various judicial pronouncements and arguments presented by both sides. The assessee's reliance on several judgments and the argument that the filing of the return is a procedural aspect was not accepted. The Tribunal noted that the consequences of not filing the return on time are severe, including interest and possible prosecution, indicating that the requirement is substantive rather than procedural.

Conclusion:
The Tribunal upheld the order of the CIT(A), concluding that the proviso to Section 10A(1A) is mandatory. Consequently, the assessee's failure to file the return within the due date specified under Section 139(1) resulted in the denial of the deduction under Section 10A. The appeal by the assessee was dismissed, and the decision was in favor of the revenue. No further issues were involved, and the case was not sent back to the Division Bench.