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TMI Blog2024 (8) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... 013-14 and 2014-15 were commenced with the issuance of notices u/s 148 - An action to reopen assessment prior to the amendments introduced by virtue of Finance Act, 2021 could have at best been initiated within a period of four years and subject to a maximum of six years in terms of the provisions of Section 149 as it existed at the relevant time. The reassessment action, insofar as AY 2013-14 is concerned, being beyond the maximum window of six years would thus falter and fail on this score additionally. Legal requirements flowing from Section 80-IA read along with Rule 12 - We find that insofar as the directory nature of Section 80-IA (7) is concerned, the same stands conclusively answered by this Court in Contimeters Electricals [ 2008 (12) TMI 4 - HIGH COURT DELHI] and the aforesaid position having been followed consistently by various other High Courts. We thus find no justification to tread down a different path or deviate from a position in law which has clearly held the field for some time. Analysed independently, we note that Section 80-IA (7) as it existed prior to its amendment in terms of Finance Act, 2020, only placed a requirement of the assessee furnishing the Audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has always existed in Section 10B from inception and since its insertion by virtue of Finance Act, 1988. This is a significant distinguishing feature bearing in mind the indisputable position of the Audit Report being tied to the specified date contemplated in Section 44AB was a stipulation which came to be introduced for the first time and with sufficient certitude by virtue of Finance Act, 2020. Writ petitions allowed. We thus quash the impugned notices issued u/s 148 and the consequent initiation of reassessment proceedings quashed. - Decided in favour of assessee. - HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE RAVINDER DUDEJA For the Petitioner Through: Mr. Satyen Sethi Mr. Arta Trana Panda, Advs. For the Respondents Through: Mr. Vipul Agarwal, SSC with Mr. Gibran Naushad Ms. Sakashi Shairwal, JSCs. JUDGMENT YASHWANT VARMA, J. 1. These two writ petitions W.P.(C) 8972/2019 and W.P.(C) 8980/2019 pertaining to Assessment Years [AY] 2014-15 and 2013-14 respectively impugn the reassessment action initiated in terms of notices issued under Section 148 of the Income Tax Act, 1961 [Act] , both dated 26 March 2019. The principal question which stands posited for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50B, section 80-1A , section 80-1B, section 80-le, section .80-10, section 80JJM, section 80LA, section 92E, section 115JB or section 115W1/ or to give a notice under clause (a) of sub-section (2) of section 11 of the Act, the assessee shall furnish the same electronically. The assessee failed to furnish the report u/s 80lA electronically. During the course of assessment proceedings, the assessee failed to point out this discrepancy and thus there is non-disclosure of true and complete particulars. ii) As regards the third proviso to section 147, it is stated that the same is with respect to the relevant assessment year for which the matter is subjected to appeal and cannot be applied to other years. Each assessment year is a different assessment year and thus third proviso to section 147 is not applicable to be instant assessment year. The various case laws relied upon by the assessee are not applicable to the year under consideration in view of the insertion/ amendment to Rule 12 of I.T. Rules, 1962 w.e.f. 01.04.2013. In view of the above, the objections raised by the assessee stands disposed off. 4. For the purposes of examining the challenge which stands raised, we deem it app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port is a procedural requirement and would not detract from the right of an assessee to claim deductions which are otherwise permissible in terms of Section 80-IA. In order to buttress the aforesaid submission Mr. Sethi drew our attention to the following pertinent observations as rendered by this Court in Commissioner of Income Tax vs. Contimeters Electricals (P.) Ltd. 2008 SCC OnLine Del 1458: 3. According to the Commissioner of Income-tax, since no Audit Report, duly verified and signed in the prescribed Form No. 10CCB under rule 18BBB had been furnished along with the return, the condition for claiming deduction had not been satisfied and, therefore, the action of the Assessing Officer in allowing rebate under section 80-IA was erroneous and prejudicial to the interest of the Revenue. xxxx xxxx xxxx 5. Being aggrieved by the said order, the assessee preferred an appeal before the Tribunal which was allowed by the Tribunal by virtue of the impugned order. The Tribunal took the view that the provisions of section 80-IA (7) with regard to filing of the Audit Report along with the return were not mandatory and were merely directory. In coming to such conclusion, the Tribunal referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the report of such audit in the prescribed form duly signed and verified by such accountant. 9. Our attention was then drawn to amendments which came to be introduced in the 1962 Rules by the 2013 Amendment and in terms of which Rule 12 came to be recast to read as follows: (2) The return of income required to be furnished in Form SAHAJ (ITR-1) or Form No. ITR-2 or Form No. ITR-3 or Form SUGAM (ITR-4S) or Form No. ITR-4 or Form No. ITR-5 or Form No. ITR-6 or Form No. ITR-7 shall not be accompanied by a statement showing the computation of the tax payable on the basis of the return, or proof of the tax, if any, claimed to have been deducted or collected at source or the advance tax or tax on self-assessment, if any, claimed to have been paid or any document or copy of any account or form or report of audit required to be attached with the return of income under any of the provisions of the Act: [ Provided that where an assessee is required to furnish a report of audit specified under sub-clause (iv), (v), (vi) or (via) of clause (23C) of section 10, section 10A, section 10AA, clause (b) of sub-section (1) of section 12A, section 444B, section 44DA, section 50B, section 80-IA, sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. According to learned counsel, it was the aforesaid rationale which informed the amendments ultimately made in sub-section (7). Mr. Sethi sought to highlight the fact that the requirement of the Audit Report being liable to be furnished before the specified date referred to in Section 44AB was a prescription which came to be incorporated for the first time by virtue of Finance Act, 2020. It was his submission that the provision as it stands now is distinct from the statutory obligations which were otherwise imposed upon an assessee in terms of that provision as it stood prior to the amendments ushered in by way of Finance Act, 2020, and which had only spoken of the Audit Report being furnished along with a Return of Income. According to learned counsel, the amendments so introduced are still liable to be viewed as being merely directory and the requirements of Section 80-IA (7) would be deemed to have been fulfilled as long as the Audit Report is submitted before the AO prior to conclusion of assessment proceedings. 14. Mr. Sethi then contended that Rule 12(2) as it came to exist on the statute book after the 2013 Amendment cannot possibly be interpreted so as to eclipse the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have to be based on the formation of an opinion that income chargeable to tax has escaped assessment. That primordial condition would clearly not be satisfied on the mere allegation of a delayed digital filing of Form 10. 17. Controverting the aforenoted submissions Mr. Agarwal, learned counsel appearing for the respondent, contended that Rule 12 as it came to exist in its amended avatar and post the 2013 Amendment, in unequivocal terms required an assessee seeking to claim deductions in terms of Section 80-IA to furnish the Audit Report electronically. According to Mr. Agarwal, this position would hold good even when one were to view the provisions of Section 80-IA (7) as it stood at the relevant time and prior to amendments which came to be introduced by virtue of Finance Act, 2020. This, according to Mr. Agarwal, is evident from that provision using the expression and the assessee furnishes along with his return of income, the report of such audit in the prescribed form . 18. The bulwark of the submissions of Mr. Agarwal, however, was the decision of the Supreme Court in Principal Commissioner of Income Tax III Anr. vs. Wipro Limited 2022 SCC OnLine SC 831 . According to Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. 39. In such a situation, filing a revised return under section 139 (5) of the IT Act claiming carrying forward of losses subsequently would not help the assessee. In the present case, the assessee filed its original return under section 139 (1) and not under section 139(3). Therefore, the Revenue is right in submitting that the revised return filed by the assessee under section 139 (5) can only substitute its original return under Section 139 (1) and cannot transform it into a return under Section 139(3), in order to avail the benefit of carrying forward or set-off of any loss under Section 80 of the IT Act. The assessee can file a revised return in a case where there is an omission or a wrong statement. But a revised return of income, under Section 139 (5) cannot be filed, to withdraw the claim and subsequently claiming the carried forward or setoff of any loss. Filing a revised return under Section 139 (5) of the IT Act and taking a contrary stand and/or claiming the exemption, which was specifically not claimed earlier while filing the original return of income is not permissible. By filing the revised return of income, the assessee cannot be permitted to substitute the ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Therefore, the said decision shall not be applicable to the facts of the case on hand, while considering the exemption provisions. Even otherwise, Chapter III and Chapter VIA of the Act operate in different realms and principles of Chapter III, which deals with incomes which do not form a part of total income , cannot be equated with mechanism provided for deductions in Chapter VIA, which deals with deductions to be made in computing total income . Therefore, none of the decisions which are relied upon on behalf of the assessee on interpretation of Chapter VIA shall be applicable while considering the claim under Section 10B (8) of the IT Act. 42. Even the submission on behalf of the assessee that the assessee had a substantive statutory right under Section 10B (8) to opt out of Section 10B which cannot be nullified by construing the purely procedural time requirement regarding the filing of the declaration under Section 10B (8) as being mandatory also has no substance. As observed hereinabove, the exemption provisions are to be strictly and literally complied with and the same cannot be construed as procedural requirement. 43. So far as the submission on behalf of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o digitally file the Audit Reports in Form 10CCB. However, we propose to examine and answer the question which stands posited on both scores. 20. However, and before proceeding to rule on the statutory requirements of Section 80-IA (7), we note that the reasons assigned in the impugned orders nowhere allude to escapement of income which is a pre-condition for the purposes of invoking Section 148. As is manifest from a reading of the reasons which came to be recorded, the only allegation levelled against the petitioner is of its failure to digitally upload the Audit Reports. In our considered opinion, the same clearly does not qualify or meet the prescription of the First Proviso to Section 147 as it existed at the relevant time and which read as under: Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpression before the specified date referred to in section 44AB and the assessee furnishes by that date . Thus, it is only by virtue of Finance Act, 2020 that Section 80-IA (7) now embodies a stipulation for the Audit Report being furnished before the specified date referred to in Section 44AB. 25. The requirement of the said report being furnished electronically, however, came to be introduced for the first time in 2013 and which is when Rule 12 came to be amended. However, at this point in time, the requirement of an electronic submission of Form 10CCB stood confined to Rule 12 since Section 80-IA (7) had not been amended in the manner noted above. 26. Viewed in that light, in our considered opinion, as long as that Audit Report was duly furnished to the AO and was available to be scrutinized and examined by that authority during the assessment proceedings, the provisions of Section 80-IA (7), as it stood prior to the amendments introduced in 2020, would be recognized to have been substantially fulfilled. In any event, a failure to digitally file that report cannot be countenanced to be fatal to the claim that may be laid in terms of Section 80-IA (7). 27. We note that the variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by virtue of Finance Act, 2020. 30. We note that in G.M. Knitting, the Supreme Court had in unequivocal terms while construing the furnishing of an Audit Report in Form 10CCB approved the consistent position taken by various High Courts holding that the assessee was entitled to claim deductions even where the Audit Report had not been filed with the return but was otherwise submitted before the assessment was completed. This becomes evident from a reading of the following passages of that decision: 1. It would be suffice to reproduce para 2 of the impugned order [ CIT v. G.M. Knitting Industries (P) Ltd., Income Tax Appeal No. 2336 of 2010, order dated 24-6-2011 (Bom)] whereby action of the Income Tax Appellate Tribunal was held to be justified in allowing additional depreciation as claimed by the respondent assessee herein: Additional depreciation is denied to the assessee on the ground that the assessee has failed to furnish Form 3-AA along with the return of income. Admittedly, Form 3-AA was submitted during the course of assessment proceedings and it is not in dispute that the assessee is entitled to the additional depreciation. In these circumstances, in the light of the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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