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TMI Blog2013 (9) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80IB(1). The rider provided in section 80AC does not apply to the present cases, as the returns filed by the assesees under section 153A have been considered as returns filed under section 139(1) within time. Levy of interest under section 234A Held that:- Return filed under section 153A would be deemed to be a return of income under section 139 as per the express language of the provisions of section 153A(1)(a) and therefore the return of income filed under section 153A also is to be processed under section 143(1) and the income determined thereof. These are all consequences of search conducted under section 132 and the issuance of notice under section 153A. Once a recomputation in the assessment order under section 153A is done, the interest chargeable under section 234A would have to be reckoned from the date of determination of income under section 143(1), read with section 153A to the date of the recomputation of income under section 153A, read with section 143(3). This position is in tune with the law stated in section 234A(3). Levy of interest u/s 234B of the Income Tax Act Held that:- Interest under section 234B is to be levied only on the additional tax levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns of income for the period relevant to six assessment years. The notices under section 153A were issued on 26-7-2011. As the assessment in the case of HUF for the assessment year 2010-11 was a regular assessment completed under section 143(3), there was no question of issuing notice under section 153A for the said assessment year 2010-11, in the case of the HUF. 5. Even though the assessees have not filed the returns of income before the due date prescribed under section 139(1) for the impugned assessment years, they had furnished their returns of income before the issue of notices under section 153A of the Act. In the individual case and in the HUF case returns were filed on 11-11-2010, after the due date prescribed under section 139(1) and after the search conducted, but before the issue of notice under section 153A. The return in the case of HUF for the assessment year 2010-11 was filed on 29-11-2011. Thereafter, the assessees again filed returns for the assessment years 2008-09 and 2009-10 on 23-9-2011, in response to the notices issued under section 153A of the Act. 6. It is in the above background that the story of these appeals begins. In the returns filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the time limit stipulated under section 139(1) of the Act. 11. While adjudicating the issue as to whether section 80AC is directory or mandatory, the Commissioner of Incometax( Appeals) has relied on the various principles of statutory interpretations. Relying on the doctrine of substantial compliance, the Commissioner of Income-tax(Appeals) pointed out that if an attempt is made in good faith to perform the statutory requirements, even if it does not precisely meet the terms of the statutory requirements, the performance will still be considered complete if the essential purpose is accomplished. The Commissioner of Income-tax(Appeals) also referred to similar provisions as well as the restrictions provided under chapter VI-A, where a claim for deduction should be supported by an audit report, etc. and the cases where in such circumstances the courts have held that filing of audit report is directory and not mandatory. The Commissioner of Incometax(Appeals) also held that having considered the substantial compliance of statutory requirements made by the assessees, the principle of liberal interpretation should be adopted to decide whether the operation of section 80-AC is mand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn is to be filed within the time allowed under section 139(4). Any return filed beyond the time limit prescribed either under section 139(1) or under section 139(4) would be non est in law and cannot be acted upon. 16. On the above principle the Commissioner of Income-tax(Appeals) held that in these cases the assessees having not filed any return under section 139(1) or under section 139(4), no valid return existed before the issue of notices under section 153A of the Act. Accordingly, he held that the only valid returns filed by the assessees herein are the returns filed by them in response to the notices issued under section 153A of the Act. Since the returns under section 153A have to be construed as returns filed under section 139, all provisions of the Act would apply including the provisions of Chapter VI-A, which deals with various deductions. 17. The Commissioner of Income-tax(Appeals) relied on the order of the Income-tax Appellate Tribunal, Mumbai Bench-F in the case of Mr. Faisal Abbas vs DCIT in ITA No.3485 3487/Mum/2010, dated 25-10-2011 and the decision of the Income-tax Appellate Tribunal, Mumbai G-Bench, rendered in the case of DCIT vs. M/s. Eversmile Const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was inserted by the Finance Act, 2006 to ensure compliance in furnishing the return of income by the due date under section 139(1). Although furnishing the return of income by the due date under section 139(1) is mandatory and a precondition for claiming deduction under section 80IB(10) as clearly brought out in para 10 of the circular issued by the CBDT in circular No.14/2006 dated 28-12-2006, the assessees failed to furnish their returns of income by the due date under section 139(1) and thereby failed to satisfy the conditions of section 80AC. In fact, the assessees have not filed any valid return of income under section 139 for the impugned assessment years. There is no provision in the Income-tax Act to waive the condition imposed under section 80AC. The concept of liberal interpretation, minor lapse, etc. are not applicable since the legislative intention is clear and unambiguous. It is also the case of the Revenue that the Commissioner of Income-tax(Appeals) has failed to note that the decision of the Income-tax Appellate Tribunal, D-Bench, Chennai, rendered in the case of ACIT vs. M/s.Polyhose India Pvt. Ltd., dated 30-6-2011 in ITA No.122(Mds)/2011, is not directly releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prosecution under section 276CC and denial of various deductions under sections 10A, 10B, 10BA and various sections under Chapter VI-A, it cannot be said that the requirement of filing the return of income is a procedural aspect. 23. The learned Commissioner of Income-tax, therefore, explained that in view of the above Special Bench decision of the Tribunal, the decisions of the Tribunal relied on by the Commissioner of Income-tax(Appeals) stand overruled. Regarding the decision of the Delhi High Court in the case of CIT vs. Web Commerce(India) Pvt. Ltd., 318 ITR 135, relied upon by the Commissioner of Income-tax(Appeals), the learned Commissioner of Income-tax stated that the said decision covers filing of audit report and not filing of return within the due date provided under section 139(1) . He, therefore, submitted that the Commissioner of Income-tax(Appeals) has erred in holding that the provision of law contained in section 80AC is directory and not manddtory. 24. We heard both sides in detail on this point. Ofcourse, the Commissioner of Income-tax(Appeals) has discussed in a profound manner the principles regarding substantial compliance in the rules regarding interpret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x(Appeals) has decided in favour of the assessees holding that the returns filed under section 153A are to be treated as returns filed under section 139(1) within the time allowed under the statute. 29. The learned Commissioner of Income-tax appearing for the Revenue argued at length that this finding of the Commissioner of Income-tax(Appeals) is erroneous and unsustainable in law. He has pointed out that section 153A(1)(a) provides that the return filed in pursuance of notice under section 153A will be treated as a return required to be furnished under section 139 and it does not say that it will be treated as a return filed under section 139(1) . The learned Commissioner of Income-tax explained that the interpretation given by the Commissioner of Income-tax(Appeals) leads to absurdity. A person who did not file return before the date prescribed under section 139(1) will be denied the benefit of deduction under section 80IB(10) in view of section 80AC, but if the defaulter is subsequently searched under section 132 of the Act, he will be getting back his right to make claims for such deductions by filing a return consequent to notice issued under section 153A. This leads to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each assessment year falling within six assessment years in the prescribed form and verified in the prescribed manner and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. It is because of the above provision of law stated in section 153A(1)(a) that a statutory presumption is made that a return filed under section 153A is a return required to be filed under section 139(1). 33. Where the law has declared that all the provisions of the Income-tax Act will apply to the returns filed by an assessee in response to a notice issued by the Assessing Officer under section 153A as if such return filed by the assessee was a return filed under section 139(1), there cannot be a clash of interpretation between the character of section 139(1) and section 139 adopted in section 153A(1)(a). It is to be seen that the law stated in section 153A starts with a non obstante clause. It overrides all other provisions stated in the Act in matters of filing of return of income consequent to a search. By declaring through a non obstante clause when section 153A adopts section 139 for the purpose of completing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to extend the period of time to file the return. In these cases the assessees have filed returns within the extended time. Therefore, it is to be held that these returns were filed by the assessees under section 153A within the time. By way of a corollary stated earlier, these returns filed under section 153A within the time are necessarily to be treated as returns filed under section 139(1). 38. Where an assessee has filed his return of income as prescribed by law, even if as a consequence of search carried out under section 132 and in consequence of notice issued under section 153A, the assessee is obviously entitled for claiming corresponding deductions provided in law. The deduction claimed in a return filed under section 153A cannot be denied on the ground that the claim was not made earlier in a return filed under section 139(1). 39. In the present case, the returns were filed because of section 132, section 153A and consequently because of section 139. Income of the assessees had to be declared because of the event of search. At that time the assessees were equally entitled to claim lawful deductions available to them. A claim made by an assessee cannot be denied only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present cases, as the returns filed by the assesees under section 153A have been considered as returns filed under section 139(1) within time. 43. Therefore, we uphold the decision of the Commissioner of Income-tax(Appeals) on the alternate ground raised by the assessee as to whether the returns filed in response to notices under section 153A can be taken as returns filed within the time stipulated under section 139(1). We hold that the returns filed under section 153A need to be treated as returns filed within the time limit stipulated under section 139(1). Therefore, the rider provided in section 80AC does not apply to these cases. Therefore, the assessees are entitled for claiming the benefit of deduction available under section 80IB(10) of the Act. 44. Thus the first common issue raised in all these appeals relating to deduction under section 80IB(10) is decided in favour of the assessees and the orders of the Commissioner of Income-tax(Appeals) on this issue is upheld on the ground that the returns filed under section 153A are returns filed under section 139(1). 45. The second common issue raised in all these appeals is regarding levy of interest under section 234A. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) is justified in holding that the interest under section 234A is chargeable from the date of expiry of the notice period given under section 153A to the date of completing the assessment under section 143(3). This issue is decided in favour of the assessees. 46. The next common issue raised by the Revenue in all these appeals is that the Commissioner of Incometax(Appeals) has erred in directing the Assessing Officer to charge interest under section 234B from the date of determination of income under section 143(1), read with section 139, read with section 153A(1)(a) to the date of the assessment order under section 153A, read with section 143(3). It is to be seen that interest under section 234B is to be levied only on the additional tax levied on the enhanced income determined under section 153A, read with section 143 and therefore the period of charge should be from the date of determination of the income under section 143(1), read with section 153A to the determination of increased total income under section 153A, read with section 143(3). For the reasons already stated in the case of levy of interest under section 234A we hold that the decision of the Commissioner of Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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