2018 (8) TMI 268 - AT - Income Tax

Revision u/s 263 - non sufficient compliance for the provision of the Income Tax Act, 1961, - CIT-A directed to AO to examine the limited issue, i.e., relating to allowance of deduction u/s. 80-IB of the Act after giving sufficient opportunity of being heard - Held that - The submission of return within time as specified under sub section (4) of section 139 has to be taken as sufficient compliance for the provision of the Income Tax Act, 1961, as it was expounded that the sub section (1) and sub section (4) of section 139 have to be read together and, hence, it is the inevitable conclusion that a return made within the time specified in sub section (4) has to be considered as having been made within the time prescribed in sub section (1) of the Act. On the touch stone of the above said exposition, we find that there is no infirmity in the Assessing Officer s order on granting the assessee the deduction u/s. 80IB of the Income Tax Act, 1961. It is not the case that the returns were filed beyond the time limit for sub section 139(4). Even otherwise, we find that the Hon ble Apex Court in the case of Malabar Industrial Co. Ltd. vs. CIT 2000 (2) TMI 10 - SUPREME COURT has expounded that when there are two views possible and the Assessing Officer has adopted one of the views with which the Commissioner of Income Tax does not agree, the same will not give rise to granting the Commissioner of Income Tax the power to exercise jurisdiction u/s. 263 of the Income Tax Act, 1961. Here we find that in view of the above said decision, if the Assessing Officer has formed a view that the assessee deserves deduction u/s. 80IB, having complied with the overall provisions of section 139, it cannot be said that the Commissioner of Income Tax can legally assume jurisdiction u/s. 263 if he does not agree with the view of the Assessing Officer. Thus we quash the direction of the Commissioner of Income Tax to examine the allowability of deduction u/s. 80IB for both the years. Assessee has claimed double deduction on account of partners salary - Held that - Commissioner of Income Tax has overlooked the submission of the assessee that it is entitled to deduction u/s.80IB. In this view of the matter, the entire additional income was not liable for taxation. Still the assessee has offered ₹ 65 lacs for taxation which the assessing officer has accepted, which cannot be said to be erroneous so as to be prejudicial to the interest of revenue. Furthermore we note that in this regard except for the statement on survey there was no corroborative material supporting the addition of ₹ 1.55 crores. As held in the case of S kader Khan 2013 (6) TMI 305 - SUPREME COURT dehorse any corroborative material addition only on account of a statement obtained under survey is not sustainable. In the background of aforesaid discussion and precedent we find that the assessing officers acceptance of ₹ 65 lakh offered for taxation cannot be said to be erroneous so to be prejudicial to the interest of revenue - decided in favour of assessee

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of the order passed by the Pr. Commissioner of Income Tax under section 263 of the Income Tax Act, 1961.
3. Examination of the allowance of deduction under section 80-IB.
4. Alleged double deduction on account of partners' salary.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appellant requested the condonation of a 196-day delay in filing the appeal, attributing the delay to the indisposition of a partner due to hypertension and bronchial asthma, supported by a medical certificate. The tribunal, after careful consideration and in the interest of substantial justice, agreed to condone the delay.

2. Validity of the Order Passed by the Pr. Commissioner of Income Tax under Section 263:
The Pr. Commissioner of Income Tax set aside the Assessing Officer's order which accepted the assessee's claim of deduction under section 80-IB, citing that the returns were filed belatedly. The tribunal noted that the Commissioner directed the Assessing Officer to re-examine the allowance of the deduction under section 80-IB after providing the assessee an opportunity to be heard.

3. Examination of the Allowance of Deduction under Section 80-IB:
The Commissioner of Income Tax observed that the returns for the assessment years 2011-12 and 2012-13 were filed late, and thus, the deduction under section 80-IB should not have been granted as per section 80AC. The tribunal, however, referred to multiple case laws, including decisions by the Hon'ble jurisdictional High Court and the Hon'ble Supreme Court, which held that returns filed within the extended time specified under section 139(4) should be considered as filed within the time prescribed under section 139(1). Consequently, the tribunal found no infirmity in the Assessing Officer's order granting the deduction under section 80-IB, as the returns were not filed beyond the time limit specified under section 139(4).

4. Alleged Double Deduction on Account of Partners' Salary:
The Commissioner of Income Tax noted a survey conducted under section 133A, where the assessee declared additional income of ?1.55 crores for the assessment year 2011-12. The Commissioner directed the Assessing Officer to examine the alleged double deduction of partners' salary. The tribunal observed that the assessee had already claimed remuneration to partners in the profit and loss appropriation account and had offered ?65 lakhs for taxation, which the Assessing Officer accepted. The tribunal emphasized that the additional income declared was eligible for deduction under section 80-IB and that the statement obtained during the survey lacked corroborative material. Therefore, the tribunal concluded that the Assessing Officer's acceptance of ?65 lakhs for taxation was not erroneous or prejudicial to the interest of revenue.

Conclusion:
The tribunal quashed the directions of the Commissioner of Income Tax under section 263, finding that the Assessing Officer's actions were justified and in compliance with the relevant provisions of the Income Tax Act. The appeals by the assessee were allowed.

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