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TMI Blog2012 (12) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... t furnish a return of his income on or before the due date specified under sec.139(1), is mandatory or merely directory? (b) Whether, on a proper interpretation of the said proviso, it is permissible for the Tribunal to hold it to be merely directory and on that basis to hold that even if the return of income is not filed within the time-limit set by sec.139(1) the assessee cannot be denied the deduction u/s. 10A? (c) If the answer to question (b) is in the affirmative, would it not amount to conferring a power on the Tribunal to extend the time-limit for filing the return u/s.139(1) or to condone the delay in filing the same, when no such power is expressly conferred upon it by the Act? 2. The assessee is a partnership firm. The assessee filed return of income declaring total income of ₹ 2,72,730/- on 31.01.2007 which was processed u/s 143(1) of the Income tax Act, 1961. Thereafter, the case was selected for scrutiny and notice u/s 143(2) of the Income tax Act, 1961 was issued and served on 23.01.2008. The assessee had claimed deduction u/s 10A of the Income tax Act, 1961. When asked to explain this claim, the assessee submitted before the A.O. that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nr v. DGIT (Exemption) Ors 325 ITR 362 (c) CIT v. Gujarat Oil Allied Industries 201 ITR 325 (d) CIT v. Shivanand Electronics (supra) 209 ITR 63 (e) ITO v. VXL India Ltd. 312 ITR 187 (f) Bajaj Tempo Ltd. 196 ITR 188 4.1 Synopsis of contentions of the assessee was also filed and the same was also duly considered. 5. As against this, it was submitted by the Ld. D.R. that the fourth proviso to section 139(1) is specific which shall prevail on general provisions. He also placed reliance on the judgement of Hon'ble Apex Court rendered in the case of Prakash Nath Khanna v. CIT as reported in 266 ITR 01 (S.C.). Reliance was also placed on the Tribunal decision rendered in the case of Balkishan Dhawan HUF v. ITO as reported in 50 SOT 49 (ASR)(URO). He also submitted that remedy lies with the Board and not before the Appellate Authorities. He also submitted that there is difference between the provisions of Section 139(1) and Section 139(4) and, therefore, the proviso to section 139(1) should prevail. 5.1 Written submissions were filed by the Ld. D.R. and the same were also duly considered. 6. In the rejoinder, it was submitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains for further two consecutive assessment years, and thereafter; (ii) for the next three consecutive assessment years, so much of the amount not exceeding fifty per cent of the profit as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account (to be called the Special Economic Zone Re-investment Allowance Reserve Account ) to be created and utilised for the purposes of the business of the assessee in the manner laid down in sub-section (1B) : Provided that 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. 9. We are also required to consider Section 139(1) and the 4th proviso to Section 139(1) of the Income tax Act, 1961 which read as under:- Section 139(1) Every Person - (a) being a company or a firm or (b) being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 10A. We find that the provisions of the proviso to Section 10A(1A) is nothing but a consequence of failure of the assessee to file the return of income within the due date prescribed u/s 139(1) of the Income tax Act, 1961. For such a failure of the assessee to file his return of income within the due date prescribed u/s 139(1) of the Income tax Act, 1961, this is not the only consequence. One consequence of such failure is prescribed in Section 234A of the Income tax Act, 1961 also as per which, the assessee is liable to pay interest on the tax payable by him after reducing advance tax and TDS/TCS if any paid by him apart from some other reductions. Such interest is payable from the date immediately following the due date for filing return of income and is payable up to the date on which such return of income was furnished by the assessee and if the assessee has not furnished any return of income then the interest is payable till the date of completion of the assessment u/s 144. In our considered opinion, this is also one of the consequences of not filing return of income by the assessee within the due date. One may raise this argument that interest u/s 234A is payable only if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imprisonment along with fine and the quantum of such imprisonment and fine is dependent on the amount of tax which would have been evaded if the failure had not been detected. This issue was examined by Hon'ble Apex Court in the case of Prakash Nath Khanna (supra) as cited by the learned DR and it was held by the Hon'ble Apex Court in that case that even if the return of income is filed in terms of sub-section (4) of Section 139 and it does not dilute infraction in not furnishing return in due time as prescribed u/s 139(1) of the Act. This judgement also supports the view taken by us while answering question NO.1 as per above paras. When even for the purpose of prosecution also, it was held by the Hon'ble Apex Court that even if the return of income furnished by the assessee within the time allowed u/s 139(4), it does not dilute infraction in not furnishing the return in due time as prescribed under sub-section(1) of Section 139, then it cannot be accepted that such furnishing of return of income within time allowed u/s 139(4) will dilute the provisions contained in the proviso to Section 10A(1A) of the Income tax Act, 1961. 13. Regarding various submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the same are not in respect of failure of the assessee for filing the return of income within the due date prescribed u/s 139(1) of the Income tax Act, 1961 and hence not applicable. Still, we discuss, each of those judgments cited before us as under : - The first judgement submitted in paper book II is the judgement of Hon'ble Apex Court rendered in the case of Director of Inspection of Income Tax v. Pooran Mall Sons (96 ITR 390). In that case, the issue involved was regarding the validity of the order passed by the A.O. u/s 132(5) for retaining the seized assets and hence, this judgement is not relevant in the present case. - The 2nd judgement cited is the judgement of Hon'ble Madhya Pradesh High court rendered in the case of CIT v. Panama Chemical Works. In that case, the issue involved was regarding filing of audit report in Form 10CCB. The same was required to be filed along with the return of income filed by the assessee but in that case, the same was filed during assessment proceedings. Under these facts, it was held that the claim of the assessee regarding deduction u/s 80-I cannot be rejected if the required report in Form 10CCB was filed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of claiming exemption u/s 11 of the Income tax Act, 1961 and not the dispute was not regarding filing of return of income u/s 139(1) of the Act and hence, this judgement of Hon'ble Calcutta High Court is also not applicable in the present case. - The next judgement cited before us is the judgement of Hon'ble Delhi High Court rendered in the case of Church's Auxiliary for Social Acton and Anr v. Director General of Income Tax (Exemption) Others (325 ITR 362). In that case, the dispute was regarding deduction u/s 80G of the Income tax Act, 1961 and as per the facts of that case, the objection was regarding failure of assessee in rendering accounts to the competent authority within the prescribed period and it was held that such a requirement is directory and not mandatory. In the present case, the dispute is regarding filing of return of income itself within the due date and hence, this judgement of Hon'ble Delhi High Court is also not relevant in the present case. - The next judgement cited before us is the judgment of Hon'ble Gujarat High Court rendered in the case o CIT v. Gujarat Oil and Allied Industries (201 ITR 325). In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of this conclusion in this judgment that loss return can be filed within time specified u/139(4), this judgement is also not applicable in the present case because in the present case, the dispute is regarding filing of return of income within time allowed u/s 139(1) of the Income tax Act, 1961 and not u/s 139(4) of the Income tax Act, 1961 and hence, this judgement is also not applicable in the present case. 16. We have discussed all the judgments which were cited by the Ld. A.R. in the synopsis as well as copies of which are submitted in the paper book II and III and we have seen that none of these judgments is relevant in the present case. 17. In view of our above discussion, we have no hesitation in holding that the provisions of proviso to Section 10A(1A) is mandatory and not merely directory. 18. Now, we examine the 2nd question (b). In our considered opinion, since we have answered the 1st question (a) against the assessee and held that the provisions of the proviso to Section 10A(1A) is mandatory and not merely directory, the 2nd question (b) is not required to be answered because the same would have been required to be answered if we would have found ..... X X X X Extracts X X X X X X X X Extracts X X X X
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