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TMI Blog2014 (5) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... ith it then he cannot invoke provisions of section 263 of the Act to revise the AO’s order – thus, the CIT was not justified in invoking the provisions of section 263 of the Act – Decided in favour of Assessee. - ITA No.1014/Del./2012 - - - Dated:- 18-12-2013 - Diva Singh And B C Meena, JJ. For the Appellants : Shri Salil Aggarwal and Gautam Jain, Advs. and Shri Shalesh Gupta, CA. For the Respondent : Shri R S Meena, CIT DR ORDER:- PER : B C Meena This appeal filed by the assessee against the order of the CIT, Delhi-VI, New Delhi dated 06.02.2012. 2. The return of income for the assessment year 2008-09 was filed on 02.04.2009. The return was filed beyond the time limit specified in section 139(1) of the Income-tax Act, 1961. In the return of income, deduction u/s 80IB (10) was claimed which was allowed by the Assessing Officer while making the assessment u/s 143(3) of the Income-tax Act, 1961 dated 30.12.2009. CIT initiated the proceedings u/s 263 of the Income-tax Act, 1961 and withdrew the deduction u/s 80IB (10) allowed by the Assessing Officer of Rs.30,14,60,000/- by treating the claim as wrong in view of the application of section 80AC of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance made is not in accordance with law. 2.2 That the finding that section 80AC includes all assessee, whatever its status may be i.e. individual, HUF, Company, AOP, BOI, Local authority or Artificial Juridical person is not based on correct interpretation of statutory provision of the Act and, therefore unsustainable. 2.3 That the learned Commissioner of Income Tax has further erred both in law and on facts in holding that, requirement to furnish return of income within the due date u/s 80AC of the Act is mandatory and, not directory and as such, disallowance made is unjustified and, misplaced. 2.4 That further the learned Commissioner of Income Tax has completely and totally misapplied and misinterpreted the judgment of Apex Court in the case of May George vs. Special Tehsildar Or in Civil Appeal No. 2255 of 2006 dated 25.05.2010 and therefore, denial of deduction is contrary to law and unsustainable. 2.5 That learned Commissioner of Income Tax has also erred both in law and on facts in holding that decision of Hon'ble Tribunal in the case of Dhir Global India (P) Ltd reported in 133 TTJ 500 (Del) is distinguishable by failing to appreciate that in the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rests of the revenue. If any of one is absent then the Commissioner has no jurisdiction to initiate the proceedings u/s 263 of the Act. These provisions cannot be invoked to correct each and every type of mistakes or errors committed by the AO. Further, he submitted that once the Assessing Officer has adopted a course which is permissible in law at the relevant time and it has resulted into loss or where two views are possible and the CIT did not agree with the view taken by the Assessing Officer then the order cannot be treated as erroneous or prejudicial to the interests of revenue unless the view taken by the Assessing Officer is unsustainable in law. The ld. AR submitted that the Assessing Officer made the order for assessment year 2008-09 on 30.12.2009. The assessee made the claim for deduction u/s 80IB of the Act on the profit of Horizon Project, Greater Noida which is evident from page 2 of the paper book. During the assessment proceedings, the Assessing Officer asked details supported with documents on the hearing dated 30.11.2009 which is evident from page 78 of the paper book which is the reply of the assessee to the queries raised by the Assessing Officer submitted along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y was debatable during the relevant period when the Assessing Officer made the order. Therefore, the view taken by the Assessing Officer was sustainable at that time. He also relied on the decision of Hon ble Delhi High Court in the case of CIT vs. Contimeters Electricals P. Ltd. - 317 ITR 249 wherein the Hon ble jurisdictional High Court has held that the Tribunal has arrived at the correct conclusion that requirement of filing the audit report along with return was not mandatory but directory and that if the audit report was filed at any time before permitting the assessment, the requirement of section 80IA (7) would be met. Ld. AR also submitted that provisions giving incentives should be liberally construed as held by various judgments, namely, CIT vs. Pranoy Roy - 309 ITR 231, Bajaj Tempo Ltd. vs. CIT - 196 ITR 188 (SC)) and Gem Granites vs. CIT - 271 ITR 322 (SC). Ld. AR pleaded that provisions of section 80IB are incentives, hence technicalities of section 80AC should not come in the way. He also submitted that in many of the cases, the word "shall" had been interpreted as "may", therefore, "shall" occurs in section 80AC be read as "may". Therefore, filing the return as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent-if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue-recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase "prejudicial to the interests of the Revenue" is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T can invoke the revisional power for the reason no enquiry was made. Now, the second issue which is raised is whether the two views are possible at the relevant time when the Assessing Officer made the order with regard to the filing of the return of income u/s 139(1) whether it was directory or mandatory was debatable. The provisions of section 80AC read as under :- "80AC. Where in computing the total income of an assessee of the previous year relevant to the assessment year commencing on the 1st day of April, 2006 or any subsequent assessment year, any deduction is admissible under section 80-IA or section 80- IAB or section 80-IB or section 80-IC [or section 80-ID or section 80-IE], no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139.]" The provisions of section 10B(5) read as under :- "10B .. (5) The deduction under sub-section (1) shall not be admissible for any assessment year beginning on or after the 1st day of April, 2001, unless the assessee furnishes in the prescribed form, along with the return of income, the report of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnical default. However, keeping in view the fact that the Assessing Officer has not examined the claim of the assessee on merits as to whether or not the assessee is fulfilling the conditions laid down in section 80-IC, the matter is restored back to the file of the Assessing Officer to examine whether these conditions are satisfied by the assessee." The ITAT Bangalore Bench A , in the case of M/s. Vanshee Builders Developers P. Ltd. vs. ITO in ITA No.386/Bang/2012 for Assessment Year 2008-09 dated 07.12.2012, after analyzing judicial precedent on the subject for entitlement of deduction u/s 80IB read with section 80AC for filing the return of income within the due date of filing the return u/s 139 of the Act, has held as under :- "(1) In the case of Bajaj Tempo Limited v. CIT reported in (1992) had held that A provision in the taxing statute granting incentives for promoting growth and development should be construed liberally. Since a provision intended for promoting economic growth has to be interpreted liberally, the restriction on it too has to be construed so as to advance the objective of the provision and not to frustrate it. (2) The Hon ble jurisdictional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se factual factors have not been disputed by the Revenue. In these circumstances, there was genuine and valid reason for the delay in filing of return and moreover these provisions are directory and not mandatory. Once the validity of the return has not been questioned by the Revenue, the rejection of the assessee s claim under s. 10B(1) at the threshold by the AO was not justified. The Act does not prohibit that relief in this regard when genuine hardship is faced cannot be granted by appellate authority. Further, the very fact that the Act envisages that relief regarding exemption should be considered and granted when application is made after the specified period in cases of genuine hardship clearly indicates that provision in this regard is directory and not mandatory. Hence, in case of genuine hardship the relief can be granted by the appellate authority................................... In its conclusion, the Hon ble Bench had observed thus - "Proviso fourth to s. 10B(1) which prohibits deduction under this section if the return is not furnished on or before the due date specified under s. 139(1) is directory and not mandatory and, therefore, relief can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income that the assessee was preparing its accounts through computer and the computer got corrupted due to viruses and in spite of continuous efforts by the computer technical personnel to retrieve the data in time for filing the return of income, problem persisted in the system. By trying to retrieve the data for 4 days the required data could not be retrieved and the backed up data were available up-to 31st January 2008 in the CD and the entire data for the two months period, February and March, 2008, had to be re-entered into the computer system again. On preparation of the final accounts and finalizing of statutory audit it took a little extra time that resulted in belated filing of return of income. Thus, there was a delay of 74 days in filing the return of income which is beyond the control of assessee. This was also confirmed by the statutory auditor vide his letter dated 20.3.2011. Being so, in our opinion there is a reasonable cause for filing the return of income belatedly and this is beyond the control of the assessee. When the substantial question of justice involved, technicalities should be ignored. Further, we are supported by the order of the Tribunal in ITA Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... audit report was filed during the course of re-assessment proceedings and in response to the show-cause notice under s. 148 issued by the assessing officer. In this view of the matter, respectfully following the decision of the jurisdictional High Court cited above, among others, we find no justification to interfere with the order of the CIT (A). We accordingly uphold the same and reject the grounds of the Revenue in this appeal. 14. In our opinion, in view of the above discussion, the claim of the assessee cannot be denied on technicalities when the assessee is legally otherwise entitled for deduction. As such, we are inclined to dismiss the appeal filed by the Revenue as devoid of merit." 7. Considering the facts and circumstances of the issue as deliberated upon in the fore-going paragraphs and also in conformity with the rulings of the Hon ble Supreme Court, the Hon ble jurisdictional High Court and also the findings of the Hon ble Benches of Delhi and Hyderabad Tribunals cited supra, we are of the considered view that s. 80AC of the Act which prohibits deduction u/s 80IB if the return is not furnished on or before the due date specified u/s 139(1) of the Act i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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