ACIT, Faridabad V. Shri Parveen Jain, Faridabad

ITA 1713/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4237 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 12-04-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 27-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Section: 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F DELHI) BEFORE SHRI A.D. JAIN AND SHRI R.C. SHARMA ITA NO. 1713(DEL)09 ASSESSMENT YEAR: 2006-07 ASSTT.COMMISSIONER OF INCOME TAX, SH. PARVEEN JAIN, PROP. CIRCLE II, FARIDABAD. V. M/S. AIM FINANCIAL, 5D/121A, NIT FARIDABAD. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI H.K. LAL, SR. DR RESPONDENT BY: NONE ORDER PER A.D. JAIN, J.M. THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2006-07 TAKING THE FOLLOWING GROUND:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN ALLOWING REBATE OF RS. 18,87,817/- U/S 88E OF THE INCOME TAX ACT, 1961 EVE N THOUGH THE ASSESSEE HAD NOT SATISFIED THE CONDITIONS FOR REBAT E IN RESPECT OF SECURITIES TRANSACTION TAX. 2. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE DESP ITE ISSUANCE OF NOTICE OF HEARING, WHICH HAS NOT RETURNED UNSERVED. HOWEVER, FINDING ITA 1713 (DEL)09 2 THAT THE MATTER CAN BE PROCEEDED WITH IN THE ABSENC E OF THE ASSESSEE, WE ARE DOING SO. 3. THE ASSESSEE INDIVIDUAL IS ENGAGED IN THE BUSINE SS OF CONSTRUCTION AND OF TRADING IN SHARES UNDER THE NAME AND STYLE O F M/S. AIM FINANCIAL. FOR THE YEAR, THE ASSESSEE RETURNED INCOME OF RS. 5 8,86,739/-. THE AO DISALLOWED REBATE U/S 88E OF THE INCOME TAX ACT, AM OUNTING TO RS. 18,86,977/- AND FINALLY ASSESSED THE ASSESSEE AT RS . 60,50,000/-. THE AO OPINED THAT THE ASSESSEE HAD NOT SATISFIED THE 3 RD CONDITION OF SECTION 88E OF THE ACT IN RESPECT OF THE ENTIRE CLAIM MADE BY H IM IN THE RETURN OF INCOME, AS HE HAD FILED FORM 10 DB IN RESPECT OF A SUM OF RS. 840/- ONLY OUT OF THE TOTAL CLAIM OF RS. 18,87,817/-. IT WA S OBSERVED THAT FORM 10 DB FILED FOR RS. 19,94,201/- DURING THE ASSESSMENT PROCEEDINGS WERE NOT ACCEPTABLE , SINCE AS PER THE REQUIREMENT OF SECTIO N 88E, AS PER WHICH, THE ASSESSEE WAS TO FURNISH EVIDENCE OF PAYMENT OF SECU RITY TRANSACTION TAX IN FORM 10DB, ALONG WITH THE RETURN OF INCOME; THAT SI NCE THE ASSESSEE HAD FILED ONLY FROM 10DB ONLY AMOUNTING TO RS. 840/- A LONG WITH THE RETURN OF INCOME, OUT OF THE CLAIM OF RS. 18,87,817/- MADE IN THE RETURN OF INCOME, DISALLOWANCE OF RS. 18,86,977/- OUT OF THE ENTIRE CLAIM U/S 88E WAS TO BE MADE; THAT WHERE THE LANGUAGE OF A STATUT ORY PROVISION IS CLAIMED, THE PLAIN MEANING OF THE WORDS SHOULD NOT BE DISREGARDED, AS THE ITA 1713 (DEL)09 3 INTENTION OF THE LEGISLATURE IS TO BE GATHERED PRIM ARILY FROM THE WORDS USED IN THE STATUTE. 4. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE DISALLOWANCE MADE BY THE AO. THIS BRINGS THE DEPA RTMENT IN APPEAL BEFORE US. 5. CHALLENGING THE IMPUGNED ORDER, THE LD. DR HAS C ONTENDED THAT THE LD. CIT(A) HAS ERRED IN ALLOWING RS. 18,87,817/- U/ S 88E OF THE I.T. ACT, DESPITE THE FACT THAT THE ASSESSEE HAS NOT SATISFIE D THE CONDITIONS FOR REBATE IN RESPECT OF SECURITIES TRANSACTION TAX. 6. WE HAVE CONSIDERED THE MATERIAL ON RECORD IN THE LIGHT OF THE ARGUMENTS RAISED BY THE LD. DR. THE ONLY REASON F OR DISALLOWANCE BY THE AO WAS THAT FORMS 10DB IN SUPPORT OF THE ENTIRE CLA IM U/S 88E, AS MADE BY THE ASSESSEE, WERE NOT FILED ALONG WITH THE RETU RN OF INCOME. THE AO WAS OF THE VIEW THAT THE SECTION ITSELF REQUIRES SU CH EVIDENCE TO BE FILED ALONG WITH THE RETURN OF INCOME AND THAT THE LANGUA GE OF SECTION BEING PLAIN, IT WAS REQUIRED TO BE GIVEN A STRICT INTERPR ETATION. THE LD. CIT(A) DELETED THE DISALLOWANCE, OBSERVING THAT THE FORMS 10 DB WERE FILED DURING THE ASSESSMENT PROCEEDINGS AND THAT NON-FILI NG OF SUCH FORMS ALONG WITH THE RETURN OF INCOME COULD NOT BE FATAL TO THE CLAIM OF THE ASSESSEE. ITA 1713 (DEL)09 4 7. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A). AS OBSERVED BY THE LD. CIT(A), IN CIT V. PUNJAB FINANCIAL CORP ORATION, 254 ITR 6(P&H), IT HAS BEEN HELD THAT A STRICT INTERPRETATI ON OF THE TAXING STATUTES NEEDS TO BE APPLIED ONLY TO THE DELETING PROVISIONS OF TH E ACT. THE AO DOES NOT DENY THE ASSESSEE HAVING FILED FORMS 10 DB IN SUPPO RT OF HIS CLAIM DURING THE ASSESSMENT PROCEEDINGS. THE ISSUE IS ONLY AS TO W HETHER THE PROVISIONS OF SECTION 88E ARE OR ARE NOT TO BE SOURCE TO BE RE-CO NSTRUED HAS TO DENY THE CLAIM OF THE ASSESSEE UNDER THE SAID SECTION SIMPLY BECAUSE THE FORMS 10 DB WERE NOT FILED ALONG WITH THE RETURN OF INCOME. N OW, ONCE IT IS AN ADMITTED FACT THAT FORMS 10 DB FILED BY THE ASSESSEE TO SUP PORT HIS CLAIM U/S 88E WERE FILED DURING THE ASSESSMENT PROCEEDINGS, THERE IS N O DOUBT THAT THE ASSESSEE HAS FILED THE EVIDENCE IN SUPPORT OF HIS CLAIM BEFO RE THE AO DURING THE ASSESSMENT PROCEEDINGS, EVEN THOUGH SUCH FORMS WERE NOT FILED ALONG WITH THE RETURN OF INCOME. SUCH NON FILING OF THE FORMS 10 DB ALONG WITH THE RETURN OF INCOME CANNOT, BY ANY STRETCH OF IMAGINATION, BE SA ID TO BE A VIOLATION OF THE PROVISIONS OF SECTION, THOUGH IT MIGHT BE AN IRREGU LARITY IN THE FACE OF THE FACT THAT THESE FORMS WERE FILED DURING THE ASSESSMENT P ROCEEDINGS. IN CIT V. SHIVA RICE & DAL MILL, 273 ITR 265(P&H), IT HAS BE EN HELD THAT SECTION 80 HHA(4) OF THE ACT, REQUIRING FILING OF AUDIT REPORT ALONG WITH RETURN IS NOT A ITA 1713 (DEL)09 5 MANDATORY PROVISION AND THAT AUDIT ACCOUNTS CAN BE FILED BEFORE THE ASSESSMENT IS COMPLETED. 8. IN CIT V. VALI COTTON TRADERS PVT. LTD., 288 I TR 400(MAD), IT HAS BEEN HELD THAT THE REQUIREMENT OF FILING OF AUDIT R EPORT WITH THE RETURN IS DIRECTORY; THAT OMISSION TO FILE THE AUDIT REPORT W ITH THE ORIGINAL RETURN IS TO BE TREATED AS A DEFAULT; AND THAT DEDUCTION IS NOT TO BE DENIED ON SUCH TECHNICAL GROUND. 9. IN CIT V. G. KRISHAN NAIR, 259 ITR 727 (KER), IT HAS BEEN HELD THAT THE CONDITION PRECEDENT FOR FURNISHING OF CERTIFICA TE U/S 80 HHC (4A) OF THE ACT IS MANDATORY ON THE CONDITION REGARDING THE TIM E OF FURNISHING IT IS DIRECTORY; THAT SUCH CERTIFICATE CAN BE FILED ANY T IME BEFORE THE COMPLETION OF THE ASSESSMENT. 10. SIMILARLY, IN CIT V. PANNA CHEMICAL WORKS, 29 2 ITR 147(MP), IT WAS HELD THAT WHERE THE AUDIT REPORT WAS FILED BEFO RE THE ASSESSMENT WAS COMPLETED, THOUGH IT WAS NOT FILED ALONG WITH THE R ETURN OF INCOME, THE CONDITION OF SECTION 80 I OF THE ACT WAS FULFILLED. 11. THEREFORE, IN THE PRESENT CASE, THE NON FILING OF FORMS 10DB ALONG WITH THE RETURN OF INCOME COULD AT BEST BE TREATED AS A DEFECT OR IRREGULARITY, WHICH TOO, WAS RECTIFIED BY THE ASSESSEE BY FILING THE FO RMS BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. NOW, THE AO CLEARLY ERRED IN DISALLOWING THE CLAIM ITA 1713 (DEL)09 6 OF THE ASSESSEE FOR THIS MERE IRREGULARITY. PERTI NENTLY, THERE WAS NO DISPUTE REGARDING THE PAYMENT OF SECURITY TRANSACTION TAX B Y THE ASSESSEE. IT MAY BE POINTED OUT THAT THE REBATE U/S 88E OF THE ACT IS A VAILABLE ON THE DEPOSIT OF THE SECURITY TRANSACTION TAX BY THE ASSESSEE. IT IS NO T DEPENDENT ON THE FILING OF FORMS 10 DB BY THE ASSESSEE. 12. FURTHER, IT IS ALSO PERTINENT THAT WITH EFFECT FROM ASSESSMENT YEAR 2006- 07, FILING OF DOCUMENT ALONG WITH THE RETURN OF INC OME IS NO LONGER NECESSARY. IT WOULD BE SUFFICIENT COMPLIANCE IF THE DOCUMENTS ARE FILED IN RESPECT TO A NOTICE U/S 143(2) OF THE ACT. 13. IN VIEW OF THE ABOVE, THE GRIEVANCE OF THE DEPA RTMENT BY WAY OF THE GROUND RAISED IN THE PRESENT APPEAL IS FOUND NOT TO HOLD MUCH WATER AND IS REJECTED AS SUCH. 14. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.04.2010. SD/- SD/- (R.C. SHARMA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12.04.2010 *RM ITA 1713 (DEL)09 7 COPY FORWARDED TO: ASSTT.COMMISSIONER OF INCOME TAX, CIRCLE II, FARIDABAD. 2. SH. PARVEEN JAIN, PROP. SH. PARVEEN JAIN, PROP. M/S. AIM FINANCIAL, 5D/121A, NIT FARIDABAD. 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR