1995 (3) TMI 157 - AT - Income Tax

Summary

Issues Involved:
1. Stay of demand for Rs. 16,84,563.
2. Relief under Section 80HHC of the Income Tax Act.
3. Validity of revised computation and auditor's certificate.
4. Jurisdiction of the Assessing Officer (AO) to review the stay order.

Detailed Analysis:

1. Stay of Demand for Rs. 16,84,563:
The assessee sought a stay of the demand amounting to Rs. 16,84,563 until the disposal of the second appeal by the Tribunal. The demand arose from the denial of relief under Section 80HHC by the AO, which was subsequently contested by the assessee. The Tribunal found that the balance of convenience favored the assessee and granted the stay of collection of tax until the disposal of the second appeal.

2. Relief under Section 80HHC of the Income Tax Act:
The core issue in the second appeal was the denial of relief under Section 80HHC. The AO denied the relief on three grounds:
- The assessee did not claim the deduction in the original return filed on 28th Dec., 1989.
- No auditor's certificate in the prescribed Form No. 10CCAC was furnished with the original return.
- The assessee did not account for losses of earlier years (1987-88 and 1988-89) in the deduction claim.

The Tribunal noted that the assessee filed a revised computation on 28th Oct., 1991, claiming the deduction and submitted the auditor's certificate on 25th Sept., 1990. The Tribunal considered whether the revised computation and the late submission of the auditor's certificate could satisfy the requirements of Section 80HHC.

3. Validity of Revised Computation and Auditor's Certificate:
The AO argued that the revised computation filed on 28th Oct., 1991, did not amount to a revised return under Section 139(5) and was, therefore, not legally admissible. The Tribunal acknowledged that the limitation for filing a revised return under Section 139(5) had expired. However, the assessee contended that the revised computation was necessary due to the retrospective amendment of Section 28 by the Finance Act, 1990, which changed the treatment of CCS, DDB, and I/L receipts.

The Tribunal considered precedents where courts held that procedural requirements, such as filing an auditor's certificate, should be treated as directory rather than mandatory. The Tribunal noted that the auditor's certificate filed during the assessment proceedings could be considered sufficient compliance with the law.

4. Jurisdiction of the Assessing Officer (AO) to Review the Stay Order:
The assessee had obtained a stay order from the Dy. CIT on 24th March, 1993, which stayed the collection of the remaining demand until the disposal of the appeal by the Tribunal. However, the Asstt. CIT reviewed this order and demanded payment of the outstanding amount within 15 days.

The Tribunal examined whether the AO had the jurisdiction to review the stay order. It concluded that the initial stay order was unconditional and should remain in effect until the appeal's disposal. The Tribunal held that the subsequent order by the Asstt. CIT was beyond the AO's powers and without jurisdiction.

Conclusion:
The Tribunal granted the stay of the demand until the disposal of the second appeal, recognizing the balance of convenience favored the assessee. The Tribunal found that the AO's denial of relief under Section 80HHC was primarily based on procedural grounds, which could be considered directory rather than mandatory. The Tribunal also determined that the AO lacked jurisdiction to review the initial stay order, rendering the subsequent demand for payment invalid.