2015 (12) TMI 612 - AT - Income Tax

Deduction u/s. 80IB(11A) - provisions of Sec.80AC ignored - whether no deduction under this section shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified under sub-section (1) of section 139? - CIT(A) allowed the claim - Held that - In the light of the decision of the Special Bench in the case of Saffire Garments (2012 (12) TMI 193 - ITAT RAJKOT) and Avasarala Technologies Ltd.(2013 (3) TMI 644 - ITAT BANGALORE), the plea raised on behalf of the Assessee cannot be accepted. Accordingly, we hold that provisions of Sec.80AC of the Act were mandatory and not directory, thus deduction u/s 80-IB(10) of the Act could not be allowed to an assessee who fails to furnish a return of income on or before the due date specified u/s 139(1) of the Act. We therefore reverse the order of CIT(A) and restore the order of the AO. - Decided against assessee.

Summary

Issues:
- Allowance of deduction u/s 80IB ignoring Sec.80AC provisions
- Failure to prove genuine hardship for late filing of return u/s 139(1)

Analysis:
1. Issue 1 - Deduction u/s 80IB and Sec.80AC Provisions:
- The case involved the denial of deduction u/s 80IB(11A) due to the late filing of the return of income by the assessee. The CIT(Appeals) allowed the deduction, emphasizing that the delay in filing the return was within the extended due date u/s 139(4) for AY 2011-12. The Revenue challenged this decision before the Tribunal.
- The Tribunal referred to Sec.80AC, which mandates that deductions under specified sections, including 80IB, are disallowed if the return is not filed by the due date under Sec.139(1). The Assessee filed the return on 16.10.2011, beyond the due date, leading to the AO's denial of the deduction.
- Citing a Special Bench decision, the Tribunal held that the provisions of Sec.80AC were mandatory, not directory. It noted that failure to file the return on time attracts interest under Sec.234A, making timely filing crucial. Relying on the Special Bench's interpretation, the Tribunal reversed the CIT(A)'s decision, upholding the AO's denial of the deduction.

2. Issue 2 - Genuine Hardship for Late Filing:
- The Revenue contended that the assessee failed to establish any genuine hardship justifying the late filing of the return u/s 139(1). However, the Tribunal's decision primarily focused on the mandatory nature of Sec.80AC provisions and the consequences of late filing, rather than delving into the issue of genuine hardship.
- The Tribunal's decision did not address the aspect of proving genuine hardship in detail, as the crux of the matter revolved around the statutory provisions governing the allowance of deductions under Sec.80IB and the implications of late filing under Sec.139(1).

In conclusion, the Tribunal allowed the Revenue's appeal, emphasizing the mandatory nature of Sec.80AC provisions and the significance of adhering to the prescribed timelines for filing returns to claim deductions under Sec.80IB. The decision underscored the legal consequences of late filing as per the Income Tax Act, leading to the denial of the deduction in question.