2021 (1) TMI 40 - AT - Income Tax

Deduction u/s 80IB - denying deduction u/s 80 IB for non filing of the audit report in electronic manner in time (on or before the due date of filing of the return of income) - HELD THAT - As perused the communication of the proposed adjustment u/s 143 (1) (a) of the income tax act issued by the central processing centre, Bangalore on 24/9/2018 wherein it is intimated to assessee that there is an incorrect claim Under Chapter VIA of the income tax act of ₹ 271,654 for non filing of the audit report u/s 80 IB in form number 10 CCB within due date of the filing of the return of income. The facts clearly shows that the due date of filing of the return of income was 7/11/2017 whereas the assessee filed his return of income on 6 November 2017 however according to his own version he uploaded that form on 6/11/2017 the income tax return and all other attachments however found number 10CCB was accepted by the assessee only on 12 December 2017 which is much beyond the due date of the filing of the return of income i.e. 7/11/2017. Therefore it is apparent that as on the due date of filing of the return assessee did not file audit report in form number 10 CCB for claiming deduction u/s 80 IB (11B), therefore we do not find any infirmity in denying deduction to the assessee. Assessee is also aware about the same because it is filed the audit report on 6/11/2017 but did not care to accept the same till 12 December 2017. Therefore even without any intimation the assessee approved the form 10 CCB uploaded by the accountant on 6/11/2017 on 12th/12/2017. Therefore it is not the correct explanation of the assessee that assessee was unaware about the procedure of filing of the audit report. According to us, after introduction of the electronic filing of the return of income as well as all other documents, there is no debate available that even if the audit report is filed before the assessment is made, same is acceptable and the deduction cannot be denied to the assessee. When selection of the cases for further scrutiny, processing of the return of income, claim of the refunds of the assessee or all determined based on the return filed by the assessee and when the provisions of the law and the relevant rules strictly provides that all necessary documents must be filed and approved along with the return of income or prior to that, subsequent filing of any document cannot be considered for processing of the return and intimation u/s 143 (1A) of the act. No infirmity either in the procedure or in passing of intimation u/s 143 (1A) of the act as well as in denying deduction u/s 80 IB of the act to the assessee for non filing of the audit report in electronic manner in time (on or before the due date of filing of the return of income) as prescribed Under income tax rules and having the mandate of the provisions of Section 80 IB(11B)(iv) - Decided against assessee.

Summary

Issues Involved:
1. Service of communication under section 143(1).
2. Powers and jurisdiction under section 143(1).
3. Allowability of deduction under section 80IB(11A) when there is a delay in filing the report of an accountant.

Issue-wise Detailed Analysis:

1. Service of Communication under Section 143(1):

The assessee contended that the intimation under section 143(1) was not effectively communicated as it was sent to an incorrect email address, which was not provided in the income tax return. The relevant law, as per the proviso to section 143(1), stipulates that no adjustments shall be made unless an intimation is given to the assessee either in writing or in electronic mode, and any response from the assessee must be considered before making adjustments. The assessee argued that the adjustments made were in violation of principles of natural justice and without jurisdiction due to improper service of communication.

The tribunal found that the communication was sent to an email address mentioned by the assessee, and there was no infirmity in the order passed under section 143(1). The tribunal upheld the CIT(A)'s decision, stating that the intimation was based on data provided by the assessee and there was no scope for using an imaginary address.

2. Powers and Jurisdiction under Section 143(1):

The assessee challenged the adjustment made under section 143(1)(a)(ii), arguing that the disallowance of the claim under section 80IB(11A) was not covered under this section and that the Deputy Commissioner of Income Tax (DCIT), CPC, Bengaluru exceeded his jurisdiction. The reasons given for the adjustment were: (a) the deduction was claimed without filling the corresponding schedule 80IB, and (b) the form 10CCB was not filed within the due date.

The tribunal noted that the form 10CCB was filed by the accountant within the due date but was approved by the assessee only on 12/12/2017, after the due date of filing the return. The tribunal held that the DCIT, CPC was within his powers to make the adjustment, as the filing of the report of the accountant is a mandatory condition under section 80IB(11B)(iv).

3. Allowability of Deduction under Section 80IB(11A) with Delay in Filing the Report:

The assessee argued that the delay in approving the report of the accountant was due to his lack of computer literacy and that the filing of the audit report along with the return is not mandatory but only directory. The assessee also contended that the deduction under section 80IB(11A) was allowed in previous and subsequent assessment years despite similar delays.

The tribunal rejected these arguments, stating that the provisions of section 80IB(11B)(iv) and rule 12(2) of the Income Tax Rules are clear that the audit report must be furnished electronically on or before the due date of filing the return. The tribunal emphasized that subsequent filing of any document cannot be considered for processing the return and intimation under section 143(1A). The tribunal further noted that the judgments relied upon by the assessee did not pertain to the era of electronic filing and thus were not applicable.

Conclusion:

The tribunal dismissed all the grounds of appeal raised by the assessee, upholding the adjustments made under section 143(1) and the denial of the deduction under section 80IB(11A) due to the failure to file the audit report in the prescribed manner within the due date. The appeal of the assessee was dismissed, and the order was pronounced in the open court on 23/10/2020.