2020 (5) TMI 616 - AT - Income Tax

Revision u/s 263 - Deduction u/s 80IA - as per CIT-A since the Assessee in the present case had filed the return of income on 23-11-2011 which was beyond the time allowed u/s 139(1) for assessment year 2011-12, the AO ought not to have allowed deduction u/s 80IA - HELD THAT - It is not disputed before us that in view of the decision in the case of M/s Saffire Garments vs ITO 2012 (12) TMI 193 - ITAT RAJKOT wherein the provisions of section 80AC were held to be mandatory and that an assessee who does not file its return of income on or before the due date prescribed u/s 139(1) of the Act will not be entitled to claim deduction u/s 80IA of the Act. Therefore on merits of the claim for deduction u/s.80IA of the Act, the Assessee has no case. We are of the view that in the present case, the order of the AO is erroneous and prejudicial to the interest of revenue for the failure on the part of the AO to make proper enquiries on the claim of deduction as claimed by the Assessee u/s 80IA of the Act and therefore, as laid down in the case of M/s GEE VEE Enterprises Vs Addl.CIT Others 1974 (10) TMI 29 - DELHI HIGH COURT the jurisdiction u/s 263 of the Act was rightly invoked by the Pr.CIT. We therefore, find no merit in this appeal filed by the assessee and accordingly, we dismiss the same. - Decided against assessee.

Summary

Issues:
1. Validity of deduction u/s 80IA of the Income Tax Act for assessment year 2011-12.
2. Jurisdiction of Pr.CIT under section 263 of the Income Tax Act.

Analysis:
1. The Assessee, engaged in cotton merchandise and wind power generation, filed a return for assessment year 2011-12 claiming deduction u/s 80IA. The AO accepted the claim, but Pr.CIT invoked sec. 263, stating that as per sec. 80AC, filing the return beyond due date u/s 139(1) disqualifies deduction u/s 80IA. Assessee argued sec. 80AC was directory, not mandatory, but Pr.CIT found AO's failure to verify return filing date erroneous, citing M/s GEE VEE Enterprises case. Pr.CIT distinguished Vanshree Builders case, emphasizing AO's lack of enquiry on belated return filing and deduction claim, rejecting Assessee's contentions.

2. Assessee appealed to the Tribunal, citing Vanshree Builders case and ITAT Bangalore's decision. Tribunal noted Special Bench's ruling in Saffire Garments case, making sec. 80AC mandatory for deduction u/s 80IA. Tribunal found AO's lack of enquiry on sec. 80AC applicability prejudicial, dismissing Assessee's reliance on Vanshree Builders and Sharp Designers cases. Tribunal upheld Pr.CIT's jurisdiction under sec. 263, following GEE VEE Enterprises case precedent. Consequently, the appeal was dismissed, affirming Pr.CIT's decision and emphasizing AO's failure to conduct proper enquiries as the basis for upholding the order under sec. 263.

This detailed analysis covers the issues of validity of deduction u/s 80IA and the jurisdiction of Pr.CIT under sec. 263, providing a comprehensive understanding of the legal judgment delivered by the ITAT Bangalore.