IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH `H' : NEW DELHI)
SMT. DIVA SINGH, JUDICIAL MEMBER
and
BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER
ITA No.1014/Del./2012
(ASSESSMENT YEAR : 2008-09)
M/s. Unitech Limited, vs. ACIT, Circle 18 (1),
6, Community Centre, New Delhi.
Saket, New Delhi.
(PAN : AAACU1482H)
(APPELLANT) (RESPONDENT)
ASSESSEE BY : S/Shri Salil Aggarwal & Gautam Jain, Advocates
and Shri Shalesh Gupta, CA
REVENUE BY : Shri R.S. Meena, CIT DR
ORDER
PER B.C. MEENA, ACCOUNTANT MEMBER :
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,
2 ITA No.1014/Del./2012
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 Act, 1961. CIT's view is that
the provisions of section 80AC are mandatory. Now, the assessee is in appeal
before us by taking the following grounds :-
"1. That order made u/s 263 of the Act dated 6.02.2012 is
without satisfying the statutory pre-conditions provided under
section 263 of the Act i.e. order of assessment under section
143(3) of the Act dated 30.12.2008 was neither erroneous and,
nor prejudicial to the interest of revenue, thus the same was
without jurisdiction and, deserves to be quashed as such.
1.1 That finding of the learned Commissioner of Income Tax
that the learned Assessing Officer did not examine whether
deduction u/s 80IB(IO) of the Act can be claimed in the belated
return and as such, Assessing Officer did not apply his mind and
allowed deduction u/s 80IB(l0) without considering the
provision of section 80AC of the Act is not based on correct
appreciation of facts and evidence on record and therefore, the
finding that order is erroneous is misconceived, misplaced and
untenable.
1.2 That learned Commissioner of Income Tax has failed to
appreciate that claim of deduction u/s 80IB was specifically
examined in the course of assessment proceedings and
specifically allowed in the order of assessment and as such, there
was no basis much less valid basis to conclude that, the learned
Assessing Officer did not make necessary enquiries, regarding
claim of deduction and hence, impugned order made by
overlooking facts is not sustainable.
1.3 That learned Commissioner of Income Tax has failed to
appreciate that since the learned Assessing Officer had found
that section 80AC of the Act had no application to the facts of
the appellant company, therefore the mere fact that the learned
Commissioner of Income Tax held an opinion different from the
opinion of learned Commissioner of Income Tax could not
3 ITA No.1014/Del./2012
render the order of assessment to be erroneous, so as to warrant
invocation Act.
2 That learned Commissioner of Income Tax has further
erred both in law and on facts in disallowing the claim of
deduction of Rs.30,14,60,000/- u/s 80IB(l0) of the Act by
relying on provision contained in section 80AC of the Act.
2.1 That while making the aforesaid disallowance, the learned
Commissioner of Income Tax has failed to appreciate that
section 80AC of the Act could not be applied on the facts of
appellant company and as such, disallowance 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 said case too it was held that, requirement to furnish return
of income within the due date for claim of deduction is directory
and not mandatory and as such, disallowance made is invalid
and contrary to law.
4 ITA No.1014/Del./2012
2.6 That finding that "assessee could have filed e-return
without payment of self assessment tax" and therefore
disallowance is warranted u/s 80AC of the Act is also
misconceived, misplaced and unsustainable.
2.7 That the learned Commissioner of Income Tax has failed
to appreciate that the return filed by the assessee on 02.04.2009
could not be disregarded to be as not filed u/s 139(1) of the
Income Tax Act on the facts and in the circumstances of the
case.
2.8 Without prejudice that the aforesaid provisions of section
80AC were inapplicable in the case of a company and that the
Assessing Officer was satisfied that the assessee could not
furnished the return of income on or before 30.09.2008 on
account of genuine difficulty under this circumstances it had
furnished return of income on 02.04.2009 and not on or before
30.10.2008.
2.9 That the learned Commissioner of Income Tax also failed
to appreciate that it is not the case where the return of income
was not filed but was a case where return of income was
belatedly filed. The deduction claimed of Rs.30,14,60,000/-
could not have been forgone as no return could have been filed
and could not have been accepted without paying self
assessment tax.
2.10 That various adverse findings and observation recorded in
order u/s 263 of the Act without granting opportunity are not
only contrary to facts but also law and therefore, unsustainable.
It is therefore prayed that, impugned order made under
section 263 of the Act dated 6.02.2012 be held to be without
jurisdiction and, further disallowance made u/s 80IB(10) of the
Act may kindly be deleted and appeal of the appellant company
be allowed."
3. While pleading on behalf of the assessee, ld. AR submitted that a bare
reading of section 263 of the Income-tax Act, 1961 makes it clear that the pre-
5 ITA No.1014/Del./2012
requisite of exercising of jurisdiction by the CIT suo motu under this section
is that the order of the Assessing Officer must be erroneous insofar as it is
prejudicial to the interest of revenue. The Commissioner has to be satisfied of
twin conditions, namely, the order of the AO sought to be revised is
erroneous; and it is prejudicial to the interests 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 with the documents. This reply is dated
6 ITA No.1014/Del./2012
07.12.2009. It is clear from Point No.10 of the reply that the assessee has
submitted working of profit along with relevant back-up papers in respect of
deduction claimed u/s 80IB in respect of the project Horizon Project along
with approvals etc. which were enclosed. Thus, the Assessing Officer has
examined the claim of the assessee during the proceedings u/s 143(3) of the
Act. He further submitted that when the Assessing Officer has taken a view
then the revisionary authority has no jurisdiction to initiate proceedings u/s
263 of the Act, as held by Hon'ble Karnataka High Court in the case of
Fatima Bai vs. ITO reported in [2009] 32 DTR 243 (Kar). Ld. AR also relied
on the decision of Hon'ble Delhi High Court in the case of Director of
Income-tax vs. Jyoti Foundation reported in (2013) 357 ITR 388 (Delhi)
wherein Hon'ble jurisdictional High Court has held that revisionary power u/s
263 of the Income-tax Act, 1961 is confirmed by the Act on the CIT/DIT
when an order passed by lower authorities is erroneous and prejudicial to the
interest of revenue. Orders which are passed without enquiry or investigation
is treated as erroneous and prejudicial to the interests of revenue, but orders
which are passed after enquiry/investigation on the question/issue are not per
se or clearly detailed as erroneous and prejudicial to the interests of the
revenue because the revisionary authority feels and opines that further
enquiry/investigation is required or deeper or further scrutiny is undertaken
then Commissioner must record a finding that order/enquiry made is
7 ITA No.1014/Del./2012
erroneous. In the assessee's case, the enquiries were certainly made by the
Assessing Officer and it was not a case of no enquiry. This fact is evident
from pages 78 to 80 of the paper book. Similar view has also been upheld by
the Hon'ble Delhi High Court in the case of ITO vs. DG Housing Projects
Limited 343 ITR 329. He further submitted that the order passed by
Assessing Officer should not be mere pre-judicious to the revenue or a mere
erroneous view which can be revised u/s 263 of the Income-tax Act, 1961.
There should be added element of unsustainability of the order of Assessing
Officer which calls the Commissioner with jurisdiction to issue notice and
proceeded to make appropriate orders. The issue regarding the provisions of
section 80AC are directory or mandatory 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,
8 ITA No.1014/Del./2012
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 per the provisions of section 139(1) of
the Act was only to be taken as directory in nature. Such view has been taken
by various Benches of ITAT and has been reaffirmed by Hon'ble
jurisdictional High Court in the case of CIT vs. Contimeters Electricals P.
Ltd., cited supra.
4. On the other hand, ld. DR submitted that there is expressed provision in
the law where the deduction is not to be allowed unless the return furnished
on or before the due date specified under sub-section (1) of section 139 of the
Act. Therefore, the order of the Assessing Officer was erroneous and
prejudicial to the interest of revenue and the CIT was having all the powers to
revise the order of the Assessing Officer. He further submitted that the powers
of Commissioner to revise the order of the Assessing Officer are plenary. In
this case, the order of the Assessing Officer was not only erroneous but also
prejudicial to the interest of revenue, therefore, two ingredients were in co-
existence, therefore, the CIT was justified in invoking the revisional
jurisdiction. He further submitted that once the expressed provisions are
9 ITA No.1014/Del./2012
available in the law, there was no scope for any debate on the issue.
Therefore, the issue was not debatable and the Assessing Officer has not
considered the provisions of law and the CIT was justified in invoking the
provisions of section 263 in this case. He further submitted that various
decisions relied upon by the ld. AR where the provisions of section 10B(1)
have to be directory rather than mandatory cannot be applied to the provisions
of section 80IB when a clear cut provision in the law is available u/s 80AC of
the Act. He relied on the order of the CIT and pleaded to sustain the same.
5. We have heard both the sides on the issue. It is a well settled law that
the provisions of section 263 of the Income-tax Act, 1961 cannot be invoked
only when the order of the Assessing Officer is erroneous as well as
prejudicial to the interest of revenue. This proposition has been decided by
Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT
reported in 243 ITR 83 (SC). The relevant head note is reproduced as under :-
"A bare reading of section 263 of the Income-tax Act, 1961,
makes it clear that the prerequisite for the exercise of
jurisdiction by the Commissioner suo motu under it, is that the
order of the Income-tax Officer is erroneous in 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
10 ITA No.1014/Del./2012
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 accordance with the provisions of the Act and this task is
entrusted to the Revenue. If due to an erroneous order of the
Income tax Officer, the Revenue is losing tax lawfully payable
by a person, it will certainly be prejudicial to the interests of
the Revenue. The phrase "prejudicial to the interests of the
Revenue" has to be read in conjunction with an erroneous
order passed by the Assessing Officer. Every loss of revenue
as a consequence of an order of the Assessing Officer cannot
be treated as prejudicial to the interests of the Revenue, for
example, when an Income tax Officer adopted one of the
courses permissible in law and it has resulted in loss of
Revenue, or where two views are possible and the Income tax
Officer has taken one view with which the Commissioner
does not agree, it cannot be treated as an erroneous order
prejudicial to the interests of the Revenue, unless the view
taken by the Income tax Officer is unsustainable in law."
It is also well settled by Hon'ble Supreme Court that where two views are
possible and the Assessing Officer has taken one view with which the
Commissioner does not agree, it cannot be treated as erroneous order
prejudicial to the interest of the revenue unless the view taken by the
Assessing Officer is unsustainable in law. The following facts of this case are
undisputed. The return of income was filed on 02.04.2009 wherein the
deduction u/s 80IB was claimed and the profits of Horizon Project, Greater
Noida were claimed as exempted u/s 80IB of the Income-tax Act, 1961. The
11 ITA No.1014/Del./2012
assessee has got its account audited whether the auditor has made a report in
Form 10CCB as per Rule 10BBB for the claim of assessee u/s 80IB which is
dated 25.09.2008 which is placed at pages 5 to 12 of the paper book. Thus,
the assessee was able to get its audit report with regard to the claim of section
80IB(Form No.10CCB on 25.09.2008). The case was selected for scrutiny
and the Assessing Officer raised various queries to the assessee which
includes queries with regard to the claim of the assessee u/s 80IB which is
evident from page no.79 of the paper book wherein the assessee has submitted
relevant papers in support of the claim deduction u/s 80IB in respect of
Project Horizon, Greater Noida along with approvals. Thus, the claim of the
assessee has been allowed after considering the reply of the assessee.
Therefore, this cannot be a case where the CIT 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
12 ITA No.1014/Del./2012
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
an accountant, as defined in the Explanation below sub-section
(2) of section 288, certifying that the deduction has been
correctly claimed in accordance with the provisions of this
section."
In both these provisions, the deduction was held to be not admissible unless
the assessee furnishes the prescribed form along with return of income or the
return of income on or before due date of filing return. The ITAT, Delhi
Bench in the case of Hansa Dalakoti vs. ACIT in ITA No.3352/Del/2012
dated 25.01.2012 held as under :-
"The language of section 80AC and section 10B(1) is pari
materia. Both of these sections debar the assessee from claiming
deduction under section BO-IC and exemption under section
10B, in a case where return of income is not filed by the
assessee within the prescribed statutory time under section
139(1). The provisions of section 10B(1) were considered by the
co-ordinate Bench of the Tribunal in Asstt. CIT v. Dhir Global
Industries (P.) Ltd. [2011] 43 SOT 640 / [2010] 8 taxmann.com
208 (Delhi). According to the facts of the said case, there was a
delay of 1A½ months. Considering the facts that the provisions
was new and there was reasonable cause for late filing of the
return, the Tribunal directed the Assessing Officer to consider
the claim of the assessee under section 10B irrespective of the
fact that the return has been filed late by 1A½ months.
13 ITA No.1014/Del./2012
The facts of the instant case are almost identical. The assessee
had filed all the necessary documents which were supporting the
claim of the assessee for deduction under section 80-IC before
due date of filing the return. The default of the assessee for not
filing the return was only a technical default as the return was
not filed, but supporting documents were filed. Therefore, the
claim of the assessee should be considered on merits and it
should not be rejected for the reason that the assessee did not file
her return of income within the prescribed date. In view of the
aforementioned ratio of the decision of the Tribunal, the claim of
the assessee under section 80-IC cannot be denied simply for the
reason that the return of income was not filed within the due
date as prescribed under section 139(1) by keeping in view the
fact that the assessee had submitted the necessary documents
with the department before the due date of filing the return and
the default of the assessee was only a technical 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
14 ITA No.1014/Del./2012
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 High Court in the case of
Uddeereswara Mining Industries v. CIT reported in (1993) 204
ITR 550 (Kar) had ruled that -
"5. There can be no dispute about the proposition that the
term used in a fiscal legislation describing the subjects of
taxation are to be normally understood in their popular
sense unless the law itself indicates a different approach.
Scientific and technical meanings are to be attributed to
those words only when the context requires such meanings
to be given. The normal rule is to give that meaning which
to persons engaged in dealing with that subject matter
attribute to that term, describing the subject. It is also true
that a beneficial provision in a fiscal stature should be
liberally construed to advance the purpose behind the
Legislation........."
(3) The Hon'ble `B' Bench of the Delhi Tribunal in the case
of ACIT v. Dhir Global Industrial (P) Ltd reported in (2011) 43
SOT 640 recorded its finding which is extracted as below:
"A proviso has been inserted during the current year in s.
10B(1) which provides that no deduction under this
section shall be allowed to an assessee if the return of
income is not furnished on or before the due date specified
under sub-section (1) of s. 139. This proviso in s. 10B(1)
is directory and not mandatory. In the present case, there
was only a marginal delay of 1 ½ month infilling the
return of income. The return filed was valid one. The same
has also been accepted as a valid return by the AO. The
reasonable cause attributed by the assessee for the delay is
that new provision of e-filing of the return was introduced
from the current assessment year. There was some
problem under the new provisions due to which the date of
filing the return had been extended by the CBDT from
time to time and from 31st October 2006, the same was
extended to 30th November, 2006. The new provision
regarding e-filing of return was introduced in this first
year; the software did not accept the return, if self-
15 ITA No.1014/Del./2012
assessment tax was not paid. Assessee's case is that due to
some financial problems it could not pay the self-
assessment tax on time, as a result of which there was a
delay in the payment of tax and consequent filing of return
by about 1 ½ months. It was further claimed that
subsequently the software has been modified and now
returns are being accepted, even when self-assessment tax
is not paid. These 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 granted by
the appellate authority in case, there was genuine and
valid reason for the marginal delay in filing of return"
(4) An identical issue to that of the present one was
considered by the Hon'ble `B' Bench of Hyderabad Tribunal in
the case of ITO v. Shri S Venkataiah in ITA No.984/Hyd/2011
dated 31.5.2012 for the assessment year 2008-09. The Revenue
had, among others, approached the Hon'ble Tribunal with the
following relevant grounds:
"1. The order of the CIT(A)..........................................
16 ITA No.1014/Del./2012
2. The CIT (A) erred in allowing the additional
evidence without giving a reasonable opportunity to the
AO to examine the evidence which is in contravention to
the rule 46A(3) of IT Rules 1962;
3. The CIT (A) ought to have appreciated that the AO
had rightly disallowed the deduction claimed u/s 80IC
following the provisions of section 80AC;
4. The CIT (A) ought to have held that the explanation
offered by the assessee was nothing but an after thought
and devoid of any merit as no effort was made by him to
take recourse u/s 119(2)(b) for extension of time for filing
the return of income;
5. The CIT (A) erred in coming to a conclusion that
the assessee was prevented by a genuine reason in filing
the return belatedly; &
6. The CIT (A) ought to have appreciated that the
intention of the Legislature behind incorporating s. 80AC
was to impose stringent guidelines on the assessee who
claim exemption of profits u/s 80IA to 80IE."
(i) Taking into account the submission of the assessee and the
rebuttal of the learned D R as recorded in its findings, the
Hon'ble Tribunal had decided the issues against the Revenue.
The relevant portions of findings of the Hon'ble Bench, for
appreciation of facts, are extracted as under:
"13..........................In this case, admittedly, the assessee
filed the return of income on 23.12.2008. The due date for
filing the return of income u/s 139(1) of the Act for the
assessment year under consideration in the case of the
assessee is 31.10.2008. As such, the return filed by the
assessee is belated. In this, the assessee claimed deduction
u/s 80IC of the Act which was disallowed by the assessing
officer as the return of the assessee was not filed within
the time as prescribed u/s 139(1) of the Act. The assessee
has given reasons for delay in filing the return of income
that the assessee was preparing its accounts through
17 ITA No.1014/Del./2012
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. 1231
& 1199/Hyd/2010 in the case of DCIT v. M/s. Vega
Conveyors & Automation Limited order dated 31st
December 2010 wherein in para 5 of the order, the
Tribunal held as follows:
`5. We have considered the rival submissions and
perused the orders of the lower authorities, and other
material available on record, including the case-law relied
upon by the parties. It is an undisputed fact that the
assessee in the present case has filed the audit report in
Form 10CCB during the course of re-assessment
proceedings. The issue that arises for consideration is
whether the assessing officer was justified in disallowing
the assessee's claim for deduction under s.80IB on the
ground that the audit report in Form 10CCB was not filed
along with the return of income; or whether the CIT (A)
was correct in proceeding on the basis of Form 10CCB
filed during the course of re-assessment proceedings and
directing the assessing officer to allow the claim of the
assessee for deduction under s. 80IB of the Act. It is
settled position of law, as consistently held by various
Benches of this Tribunal and as held in various decisions
18 ITA No.1014/Del./2012
referred to by the CIT (A) in the impugned order, that
though filing of audit report in Form 10CCB is mandatory
and pre-requisite for deduction under s. 80IB, non-filing
of the same along with the return of income is only a
curable defect, and assessee's claim for deduction has to
be considered on its merits as sand when the defect is
cured by filing Form 10CCB. We are fortified in this
behalf by the decision of the jurisdictional High Court in
the case of Hemsons Industries (supra), relied upon by the
learned counsel for the assessee. It is contended by the
learned Departmental Representative that the assessee's
claim for deduction under s. 80IB can be entertained and
examined on merits, when the audit report is filed before
the completion of assessment, which has not been done in
the present case, since the audit report was filed only
during the course of re-assessment proceedings initiated
by the assessing officer, which cannot end up giving
additional deductions/benefits to the assessee. We do not
find merit even in this contention of the learned
Departmental Representative. In the case of Hemsons
Industries (supra) before the jurisdictional High Court, of
one of the years under appeal before Hon'ble High Court,
viz., assessment year 1979-80, 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
19 ITA No.1014/Del./2012
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 is only
directory and not mandatory, provided there was reasonable
cause for filing of return of income belatedly."
The Hon'ble jurisdictional High Court in the case of CIT vs. Contimeters
Electricals P. Ltd. (317 ITR 249 (Delhi)) in its order dated 2nd December,
2008 has held as under :-
"The Commissioner issued a notice under section 263 of the
Income-tax Act, 1961 stating that the assessee was not entitled
to the deduction under section 80-IA as the assessee did not
fulfil the condition laid down in section 80-IA(7). Therefore he
held that assessment completed by the Assessing Officer was
prejudicial to the interest of the Revenue. The commissioner
cancelled the assessment and directed the Assessing Officer to
complete the assessment as per law. In an appeal filed by the
assessee, the Tribunal held that the provisions of section 80-
IA(7) were not mandatory and were merely directory. On
appeal :
Held, dismissing the appeal, that the Tribunal arrived at the
correct conclusion that the requirement of filing the audit report
along with the return was not mandatory but directory and that if
the audit report is filed at any time before the framing of the
assessment, the requirement of section 80-IA(7) would be met.
The Tribunal was also right in holding that the Commissioner
did not even call for any explanation of the assessee and the
issue of fulfillment of the conditions of section 80-IA had not
been part of the show-cause notice. Therefore, it could not form
the basis for revision of the assessment order under section 263.
No substantial question of law arose."
In this case, the order of Assessing Officer is dated 30.12.2009. For the
purpose of revision u/s 263 of the Act, the legal position at the time of passing
20 ITA No.1014/Del./2012
the impugned order by the Assessing Officer is to be considered and not the
legal position at the time of filing the return of income or after the finalization
of assessment. The facts of the case clearly establishes that at the time of
passing the assessment order, two views were possible with regard to the
claim of deduction u/s 80IB in view of provisions of section 80AC. The
Assessing Officer has adopted one of the courses permissible in law at the
relevant time. It is well established law that where two views were possible
and Assessing Officer had taken one view and if CIT do not agree with it then
he cannot invoke provisions of section 263 of the Act to revise the A.O.'s
order. Therefore in our considered view, the CIT was not justified in invoking
the provisions of section 263 of the Act in this case. The appeal of the
assessee is allowed.
6. In the result, the appeal of the assessee is allowed.
Order pronounced in open court on this 18th day of December, 2013.
Sd/- sd/-
(DIVA SINGH) (B.C. MEENA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated the 18th day of December, 2013/TS
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A)
5.CIT(ITAT), New Delhi.
AR, ITAT
NEW DELHI.
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