ACIT, New Delhi V. M/s. Dhir Global Industries Pvt. Ltd., New Delhi

ITA 2317/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3470 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 17-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Question of law; Reasonable cause; Bonafide mistake
• Section: 10B; 139(1); 139

Judgement Text

ITA NO. 2317/DEL/2010 A.Y. 2006-07 1 FIT FOR PUBLICATION IN ITD. (JM) (AM) IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2317/DEL/2010 A.Y. : 2006-07 ACIT CIRCLE 10(1), NEW DELHI VS. M/S DHIR GLOBAL INDUSTRIA PVT LTD, 207, OKHLA INDL. ESTATE, PHASE-III, NEW DELHI (PAN: AAACD7431P) (APPELLANT ) (RESPONDENT ) ASSEESSEE BY : C.A., R.S. SINGHVI DEPARTMENT BY : SH. STEPHEN GEORGE, C.I.T. (D.R.) PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 03.03.20 10 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BY D IRECTING ASSESSING OFFICER TO ALLOW THE STATUTORY DEDUCTION U/S 10B I NSPITE OF THE FACT THAT INCOME TAX ACT, 1961 CLEARLY SPEAKS THAT NO SUCH DE DUCTION SHALL BE ALLOWED TO AN ASSESSEE WHO DOES NOT FURNISH A RETUR N ON OR BEFORE THE DUE DATE AS SPECIFIED UNDER SUB-SECTION (1) OF SECTION 139. ITA NO. 2317/DEL/2010 A.Y. 2006-07 2 3. THE ASSESSING OFFICER IN THIS CASE OBSERVED TH AT DURING THE YEAR CONSIDERATION, THE ASSESSEE HAS CLAIMED EXEMPTION U/S 10B OF THE INCOME TAX ACT OF RS. 2,06,36,797/-. HE FOUND THAT AS PER THE PROV ISO TO SECTION 10B(1), WHICH HAS BEEN INSERTED BY THE FINANCE ACT, 2006, W.E.F. A.Y. 2006-07, NO DEDUCTION UNDER THE PROVISIONS OF SECTION 10B SHALL BE ALLOWE D TO AN ASSESSEE IF THE RETURN OF INCOME IS NOT FURNISHED ON OR BEFORE THE DUE DAT E SPECIFIED UNDER SUB-SECTION (1) OF SECTION 139 OF THE INCOME TAX ACT, I.E. 30.1 1.2007 IN THE CASE OF THE ASSESSEE. 3.1 ASSESSING OFFICER REFERRED TO THE RELEVANT CLA USE OF SECTION 10B AS APPLICABLE FOR ASSESSMENT YEAR 2006-07 AS UNDER:- SPECIAL PROVISIONS IN RESPECT OF NEWLY ESTABLISHED HUNDRED PER CENT EXPORT, ORIENTED UNDERTAKINGS. 10B(1). SUBJECT TO THE PROVISIONS OF THIS SECTION, A DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY A HUNDRED PER C ENT EXPORT- ORIENTED UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF TEN CONSECUTIVE A SSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT T O THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MA NUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE, SHALL BE ALLOWED FROM THE TOTAL INCOME OF T HE ASSESSEE: PROVIDED THAT WHERE IN COMPUTING THE TOTAL INCOME O F THE UNDERTAKING FOR ANY ASSESSMENT YEAR, ITS PROFITS AN D GAINS HAD ITA NO. 2317/DEL/2010 A.Y. 2006-07 3 NOT BEEN INCLUDED BY APPLICATION OF THE PROVISIONS OF THIS SECTION AS IT STOOD IMMEDIATELY BEFORE ITS SUBSTITU TION BY THE FINANCE ACT, 2000, THE UNDERTAKING SHALL BE ENTITL ED TO THE DEDUCTION REFERRED TO IN THIS SUB-SECTION ONLY FOR THE UNEXPIRED PERIOD OF AFORESAID TEN CONSECUTIVE ASSESSMENT YEAR S : PROVIDED FURTHER THAT FOR THE ASSESSMENT YEAR BEGIN NING ON THE 1 ST DAY OF APRIL, 2003, THE DEDUCTION UNDER THIS SUB- SECTION SHALL BE NINETY PER CENT OF THE PROFITS AND GAINS D ERIVED BY AN UNDERTAKING FROM THE EXPORT OF SUCH ARTICLES OR THI NGS OR COMPUTER SOFTWARE. PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SECTION SHALL BE ALLOWED TO ANY UNDERTAKING FOR THE ASSESSMENT YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 2012 AND SUBSEQUENT YEARS. PROVIDED ALSO THAT NO DEDUCTION UNDER THIS SECTION SHALL BE ALLOWED TO AN ASSESSEE WHO DOES NOT FURNISH A RETUR N OF HIS INCOME ON OR BEFORE THE DUE DATE SPECIFIED UNDER SU B-SECTION (1) OF SECTION 139. 3.2 CONSIDERING THE ABOVE ASSESSING OFFICER OBSERV ED THAT DUE DATE OF FILING THE RETURN OF INCOME IN THIS CASE U/S 139(1) WAS 30.11.2006, HOWEVER, THE RETURN OF INCOME WAS FILED ON 18.1.2007. HE OPINED THAT I N VIEW OF THE STATUTORY PROVISIONS OF SECTION 10B OF THE INCOME TAX ACT, NO DEDUCTION U/S 10B IS ALLOWABLE TO THE ASSESSEE. HENCE HE DISALLOWED THE CLAIM OF DEDUCTION U/S 10B. ITA NO. 2317/DEL/2010 A.Y. 2006-07 4 4. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) IT WAS SUBMITTED THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF EXPORT OF GARMENTS. THERE IS NO DISPUTE THAT COMPANY IS ELIGIBLE FOR BENEFIT U/S. 1 0B AND SAME BENEFIT HAS BEEN CONSIDERED AND ALLOWED IN THE PRECEDING YEARS AND E VEN IN SUBSEQUENT YEARS ALSO. HOWEVER, IN THE YEAR UNDER REFERENCE, THE ASSESSING OFFICER HAS DISALLOWED THE STATUTORY CLAIM ON THE GROUND THAT REQUISITE CONDIT IONS WERE NOT SATISFIED AND REFERENCE WAS MADE TO THE PROVISO TO SEC. 10B WHICH WAS INTRODUCED W.E.F. 1.4.2006. IT WAS FURTHER SUBMITTED THAT VALIDITY O F RETURN FILED IS ALSO NOT IN DISPUTE AS THE ASSESSMENT HAS BEEN COMPLETED ON THE BASIS OF SAME RETURN. IT WAS FURTHER CLAIMED THAT SECTION 10B HAS BEEN INTRO DUCED TO PROMOTE EXPORT AND CONSEQUENTLY BENEFIT IS REQUIRED TO ALLOW, AS PER T HE SCHEME OF THE ACT. IT WAS ARGUED THAT THE WORD SHALL HAS NOT BEEN CORRECTLY INTERPRETED BY THE ASSESSING OFFICER AND THE SAME HAS BEEN APPLIED IN THE MECH ANICAL MANNER. IT WAS FURTHER ARGUED THAT THE WORD SHALL HAS NOT BEEN USED IN ABSOLUTE TERMS AS IN APPROPRIATE CASES, WHERE THERE IS GENUINE REASONS, THE DELAY HAS TO BE TAKEN INTO CONSIDERATION. IT WAS CLAIMED THAT IN THE YEAR UNDE R CONSIDERATION, THE DATE FOR FILING THE RETURN AS PER SECTION 139(1) IS 31.10.20 06, BUT ON THE BASIS OF EXTENSION ALLOWED FROM TIME TO TIME, THE DUE DATE WAS EXTENDE D TO 30.11.2006. IT WAS FURTHER CLAIMED THAT THE YEAR UNDER CONSIDERATION NEW PROVISION REGARDING E FILING OF RETURN WAS INTRODUCED AND THERE WERE P ROBLEMS IN SOFTWARE AND FOR OTHER VARIOUS TECHNICAL REASONS, THE TIME WAS EXTEN DED FROM TIME TO TIME BY THE CBDT. IT WAS FURTHER SUBMITTED THAT ALL THE AUDI T REPORT INCLUDING THE TAX AUDIT REPORT WERE PREPARED WELL IN TIME AND THE DELAY I N FILING THE RETURN WAS ON ACCOUNT OF THE CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT UNDER THE SCHEME OF THE ACT, AN AS SESSEE IS ENTITLED TO THE LEGAL ITA NO. 2317/DEL/2010 A.Y. 2006-07 5 AND STATUTORY CLAIM AT ANY STAGE OF THE PROCEEDIN GS AND THIS PRINCIPLES IS WELL SUPPORTED IN THE CASE OF CONTINENTAL CONSTRUCTION P VT. LTD. 185 ITR 230. HERE THE HONBLE DELHI HIGH COURT FOR THE FIRST TIME RECOG NIZED THE CLAIM OF THE APPELLANT U/S. 80HHB AND MATTER WAS RESTORED TO ASSESSING OFF ICER TO CONSIDER THE STATUTORY CLAIM AFTER ALLOWING THE NECESSARY OPPORT UNITY TO COMPLY WITH THE REQUISITE CONDITIONS FOR SUCH CLAIM. 4.1 RELIANCE WAS FURTHER SUBMITTED TO THE FOLLOWIN G CASE LAWS:- - CONTINENTAL CONSTRUCTION PVT. LTD. VS. UOI 185 I TR 230 (DEL) - ITO VS. VXL INDIA LTD. 312 ITR 187 (GUJ) - BAJAJ TEMPO LTD. VS. C.I.T. 196 ITR 189 (SC) - C.I.T. VS. MU-CORK PRODUCTS PVT. LTD. 160 TAXMAN 220 4.2 ASSESSEE FURTHER REFERRED TO THE CIRCULAR NO. 1 4 DATED 11.4.1955 FOR THE PROPOSITION THAT THE ASSESSING OFFICER CANNOT TAK E ADVANTAGE OF ASSESSEES IGNORANCE OR BONAFIDE MISTAKE AND TO COLLECT THE HI GHER RATE TAX THAN WHATEVER IS DUE UNDER THE LAW. IT WAS FURTHER POINTED OUT THAT BECAUSE OF THE FINANCIAL PROBLEMS THE ASSESSEE WAS NOT IN A POSITION TO PAY THE SELF ASSESSMENT TAXES BEFORE THE DUE DATE OF FILING OF RETURN AND IN THE ABSENCE OF THE SAME THE RETURN WAS NOT ACCEPTED, AS PER THE STIPULATED SOFTWARE PR OGRAMME. IT WAS SUBMITTED THAT IMMEDIATELY AFTER PAYMENT OF TAX, THE E FILIN G WAS FILED. 4.3 CONSIDERING THE ABOVE, LD. COMMISSIONER OF INCO ME TAX (APPEALS) ACCEPTED THE ASSESSEES SUBMISSIONS. HE FOUND THAT THE WHO LE CASE OF THE ASSESSING OFFICER WAS BASED ON TECHNICALITY AS THERE IS NO O THER GROUND FOR DISPUTING THE ITA NO. 2317/DEL/2010 A.Y. 2006-07 6 CLAIM OF THE STATUTORY BENEFIT. HE OBSERVED THAT IT IS NOT THE CASE OF INVALID RETURN AND ASSESSMENT HAS BEEN COMPLETED AS PER THE PROVISION OF THE ACT. HE OPINED THAT THE ASSESSING OFFICER IS UNDER OBLIGAT ION TO ALLOW STATUTORY BENEFIT AS AVAILABLE. HE FURTHER OBSERVED THAT IN THE IDENTI CAL CIRCUMSTANCES AND IN THE CONTEXT OF PROVISIONS OF SEC. 10(5), WHEREIN ALSO S IMILAR CONDITION OF FILING OF PRESCRIBED FORM WAS LAID DOWN, THE HONBLE DELHI HI GH COURT HAS CONCLUDED THAT THESE CONDITIONS ARE DIRECTORY AND NOT MANDATORY. I N THIS REGARD, LD. COMMISSIONER OF INCOME TAX (APPEALS) REFERRED THE C ASE LAWS OF C.IT. VS. INREGRATED DATABASE INDIA LTD. 178 TAXMAN 432 AND C .I.T. VS. WEB COMMERCE (INDIA) PVT. LTD. 318 ITR 135 (DEL). 4.4 CONSIDERING THE ABOVE LD. COMMISSIONER OF INCOM E TAX (APPEALS) HELD THE ASSESSING OFFICER WAS DIRECTED TO ALLOW THE STATUT ORY BENEFIT U/S 10B. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. LD. DEPARTMENTAL REPRESENTATIVE POINTED OUT THA T IN SECTION 10(B)(I) BY FINANCE ACT, 2006 A PROVISO HAS BEEN INSERTED FROM 1.4.2006 WHICH SPECIFICALLY PROVIDES THAT NO DEDUCTION UNDER THIS SECTION SHA LL BE ALLOWED TO ASSESSEE WHO HAS NOT FURNISHED ANY RETURN OF INCOME ON OR BEFORE THE DUE DATE SPECIFIED UNDER SUB-SECTION (1) OF SECTION 139. HE CLAIMED THAT TH E SAID PROVISO WAS VERY MUCH APPLICABLE IN THE YEAR UNDER CONSIDERATION. HE ARG UED THAT THE LANGUAGE OF THE ACT WAS VERY CLEAR AND SINCE THE ASSESSEE HAS NOT F URNISHED THE RETURN ON OR BEFORE THE DUE DATE, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S 10B(I). HE ARGUED THAT HOWSOEVER GENUINE, THE ASSESSEES HA RDSHIP MAY BE UNDER SUCH SITUATION, THE REMEDY LIES UNDER THE PROVISION 119( 2)(B) WHICH PROVIDES THAT THE BOARD MAY, IF IT CONSIDERS IT DESIRABLE OR EXPEDIE NT SO TO DO FOR AVOIDING GENUINE ITA NO. 2317/DEL/2010 A.Y. 2006-07 7 HARDSHIP IN ANY CASE OR CLASS OF CASES, BY GENERAL OR SPECIAL ORDER, AUTHORISE ANY INCOME TAX AUTHORITY, NOT BEING A COMMISSIONER (AP PEALS) TO ADMIT AN APPLICATION OR CLAIM FOR ANY EXEMPTION, DEDUCTION, REFUND OR ANY OTHER RELIEF UNDER THIS ACT AFTER THE EXPIRY OF THE PERIOD SPECI FIED BY OR UNDER THIS ACT FOR MAKING SUCH APPLICATION OR CLAIM AND DEAL WITH THE SAME ON MERITS IN ACCORDANCE WITH LAW. HENCE HE ARGUED THAT ASSESSEE SHOULD SE EK REDRESSAL OF ITS GRIEVANCE BY MAKING APPLICATION BEFORE THE CBDT AND NO RELIE F CAN BE GRANTED AGAINST THE SPECIFIC PROVISION OF THE ACT BY THE TRIBUNAL IN T HIS REGARD. 6.1 LD. COUNSEL OF THE ASSESSEE ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE THE LD. COMMISSIONER OF INCOME TAX (APP EALS). HE PLEADED THAT THE ASSESSEE HAS BEEN ALLOWED THE RELIEF IN PRECEDING Y EAR AS WELL AS IN THE SUBSEQUENT YEAR. IN THE PRESENT YEAR, FOR THE FIRS T TIME FILING OF E RETURN WAS INTRODUCED AND THERE WAS SOME PROBLEM IN THE SOFTWA RE OF THE SAME AND CBDT HAS ITSELF INCREASED THE DATE OF FILING OF RETURN FROM 30.10.06 TO 30.11.06. HE FURTHER CLAIMED THAT UNDER THE EXISTING SOFTWARE, THE RETURN COULD NOT HAVE BEEN ACCEPTED WITHOUT PAYMENT OF SELF-ASSESSMENT TAX AND THE ASSESSEE DUE TO CERTAIN FINANCIAL PROBLEMS WAS NOT IN A POSITION TO PAY THE TAXES DUE. ONLY WHEN THE TAXES WERE PAID, AFTER THE MARGINAL DELAY OF 1 M ONTH, THE RETURN WAS DULY FILED. HE ARGUED THAT SUBSEQUENTLY THIS LACUNA IN THE SAI D E RETURN SOFTWARE HAS BEEN REMOVED BY THE CBDT. HE ALSO CLAIMED THAT IN ALL OTHER ASPECTS OF THE CLAIM VIZ. FINALIZATION OF THE ACCOUNTS AND OBTAINING AUDIT RE PORT, THERE WAS NO DELAY. ITA NO. 2317/DEL/2010 A.Y. 2006-07 8 6.2 WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IT IS UNDISPUTED THAT A PROVISION HAS BEEN INSERTED DURI NG THE CURRENT YEAR IN SECTION 10(B)(1) WHICH PROVIDES THAT NO DEDUCTION UNDER THI S SECTION SHALL BE ALLOWED TO AN ASSESSEE IF THE RETURN OF INCOME IS NOT FURNISHE D ON OR BEFORE THE DUE DATE SPECIFIED UNDER SECTION (1) OF SECTION 139. NOW THI S SECTION WAS INTRODUCED W.E.F. 1.4.2006 BY FINANCE ACT, 2006. THIS IS THE FIRST ASSESSMENT YEAR FROM WHICH THE SAID PROVISO HAS BEEN INTRODUCED. NOW SECTION 139(1) PROVIDES AS UNDER:- 139(1). EVERY PERSON - (A) BEING A COMPANY (OR A FIRM) OR (B) BEING A PERSON OTHER THAN A COMPANY (FOR A FIRM), I F HIS TOTAL INCOME OR THE TOTAL INCOME OF ANY OTHER PERSON IN R ESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PR EVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX, SHALL ON OR BEFORE THE DUE DATE, FURNISH A RETURN O F HIS INCOME OR THE INCOME OF SUCH OTHER PERSON DURING THE PREVI OUS YEAR, IN THE PRESCRIBED YEAR, IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED. 6.3 WE FURTHER THAT ANOTHER PROVISO HAS BEEN INSER TED IN SECTION 139(1) W.E.F. 1.4.2006 BY FINANCE ACT, 2005 WHICH READS AS UNDER: - PROVIDED ALSO THAT EVERY PERSON, BEING AN INDIVIDU AL OR A HINDU UNDIVIDED FAMILY OR AN ASSOCIATED OR AN ASSOCIATIO N OF PERSONS OR A BODY OF INDIVIDUALS, WHETHER INCORPORATED OR NOT, O R AN ARTIFICIAL ITA NO. 2317/DEL/2010 A.Y. 2006-07 9 JURIDICAL PERSON, IF HIS TOTAL INCOME OR THE TOTAL INCOME OF PREVIOUS YEAR, WITHOUT GIVING EFFECT TO THE PROVISIONS OF S ECTION 10A OR SECTION 10B OR SECTION 10BA OR CHAPTER VI-A EXCEEDED THE MA XIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOMETAX, SHALL, ON OR BEFORE THE DUE DATE, FURNISH A RETURN OF HIS INCOME OR THE INCOME OF SUCH PERSON DURING THE PREVIOUS YEAR, IN THE PRESCRIBED FORM AN D VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PART ICULARS AS MAY BE PRESCRIBED. 6.4 A READING OF THE ABOVE MAKES IT CLEAR THAT SEC TION 139(1) MANDATED AN ASSESSEE TO FILE A RETURN IN HIS TOTAL INCOME ASSES SABLE UNDER THE ACT IN THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO TAX. ADMITTEDLY, WHEN EXEMPTION IS BEING GRANTED U/S 10 , THE INCOME WOULD NOT FORM PART OF THE TOTAL INCOME AND THUS THE TOTAL INCOME WOULD NOT EXCEED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME TA X. TO TAKE CARE OF THIS SITUATION THE PROVISO MENTIONED ABOVE MANDATES THAT IF THE TOTAL INCOME OF A PERSON, WITHOUT GIVING EFFECT TO THE PROVISIONS OF SECTION 10A OR SECTION 10B OR SECTION 10BA EXCEEDED THE MAXIMUM AMOUNT WHICH IS N OT CHARGEABLE TO INCOME- TAX, TO FURNISH A RETURN OF INCOME. 6.5 NOW CORRESPONDING PROVISION IS THERE IN SECTIO N 10B(1) WHICH PROVIDES THAT NO DEDUCTION SHALL BE ALLOWED TO AN ASSESSEE UNDER THIS SECTION UNLESS RETURN IS FURNISHED, ON OR BEFORE THE DUE DATE SPEC IFIED UNDER SUB-SECTION (1) OF SECTION 139. ITA NO. 2317/DEL/2010 A.Y. 2006-07 10 6.6 IN THE BACKGROUND OF THE AFORESAID SCHEME OF A CT AND THE DISCUSSION, WE FIND THAT THIS PROVISO IN 10(B)(1) IS DIRECTORY AND NOT MANDATORY. FURTHER WHEN WE CONSIDER THE PROVISION OF SECTION 10(5) WHICH R EADS AS UNDER:- THE DEDUCTION UNDER SUB-SECTION(1) SHALL NOT BE AD MISSIBLE FOR ANY ASSESSMENT YEAR BEGINNING ON OR AFTER THE 1STY DAY OF APRIL, 2001, UNLESS THE ASSESSEE FURNISHES IN THE PRESCRIBED FORM, ALON GWITH THE RETURN OF INCOME, THE REPORT OF AN ACCOUNTANT, AS DEFINED IN THE EXPLANATION BELOW SUB-SECTION (2) OF SECTION 288, CERTIFYING THAT TH E DEDUCTION HAS BEEN CORRECTLY CLAIMED IN ACCORDANCE WITH THE PROVISION S OF THIS SECTION. 6.7 HONBLE JURISDICTIONAL HIGH COURT HAD AN OCCASI ON TO CONSIDER THIS PROVISION OF SECTION 10(5) IN THE CASE OF C.I.T. VS. INTEGRAT ED DATA BASE INDIA LTD. 178 TAXMMAN 432 AND WEB COMMERCE INDIA PVT. LTD. 318 IT R 135. THE HONBLE COURT IN THE CASE OF WEB COMMERCE INDIA (SUPRA) HA S HELD AS UNDER:- THIS COURT HAS ALREADY INTERPRETED THE LATTER PROV ISIONS AND HAS HELD THE SAME TO BE DIRECTORY AND NOT MANDATORY. THE CONTEN TION OF THE REVENUE WAS THAT UNLESS AND UNTIL THE AUDIT REPORT IS FILED ALONG WITH THE RETURN, THE BENEFIT OF SECTION 10A CANNOT B AVAILABLE TO THE AS SESSEE. RECENTLY, WE HAVE CONSIDERED THE IDENTICAL PROVISIONS OF SECTIO N 80-IA(7) IN THE CASE OF C.I.T. VS. CONTIMETERS ELECTRICALS P. LTD. (2009) 3 17 ITR 249 (DELHI) I.T.A. 1366/2008 DECIDED ON DECEMBER 2, 2008, AND HELD THA T AS LONG AS THE AUDIT REPORT IS FILED BEFORE THE FRAMING OF THE ASSESSME NT, THE PROVISIONS OF SECTION 80-IA(7) WOULD BE COMPLIED WITH INASMUCH A S THE SAME ARE DIRECTORY AND NOT MANDATORY. A SIMILAR VIEW WOULD HAVE TO BE TAKEN IN THE PRESENT CASE ALSO INASMUCH AS THE PROVISIONS ARE THE SAME. CONSEQUENTLY, WE DO NOT FIND ANY FAULT WITH THE CONCLUSIONS ARRIV ED AT BY THE TRIBUNAL. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSID ERATION. THE APPEAL IS DISMISSED. ITA NO. 2317/DEL/2010 A.Y. 2006-07 11 6.8 WE FIND THAT THE PROVISO IN SECTION 10(B)(1) WHICH HAS BEEN INSERTED REGARDING FILING OF RETURN WHICH WE ARE CONSIDERIN G NOW IS AKIN TO THE PROVISION OF SECTION 10(5) CONSIDERED BY THE HONBLE HIGH COURT AS ABOVE. HONBLE HIGH COURT HAD CLEARLY HELD THAT SUCH PROVISION IS DIRECTORY A ND NOT MANDATORY. 6.9 NOW IN THE PRESENT CASE, WE FIND THAT THERE WAS ONLY A MARGINAL DELAY OF 1 MONTH IN FILING THE RETURN OF INCOME. THE RETU RN FILED WAS VALID ONE. THE SAME HAS ALSO BEEN ACCEPTED AS A VALID RETURN BY T HE ASSESSING OFFICER. THE REASONABLE CAUSE ATTRIBUTED BY THE ASSESSEE FOR TH E DELAY IS THAT NEW PROVISION OF E-FILING THE RETURN WAS INTRODUCED FROM THE CURR ENT ASSESSMENT YEAR. THERE WAS SOME PROBLEM UNDER THE NEW PROVISIONS DUE TO W HICH THE DATE OF FILING THE RETURN HAD EXTENDED BY THE CBDT FROM TIME TO TIME AND FROM 31.10.2006, THE SAME WAS EXTENDED TO 30.11.2006. THE NEW PROVISION REGARDING E-FILING OF RETURN WAS INTRODUCED & IN THIS FIRST YEAR THE SOFTWARE D ID NOT ACCEPT THE RETURN, IF SELF- ASSESSMENT TAX WAS NOT PAID. ASSESSEES CASE IS THAT DUE TO SOME FINANCIAL PROBLEMS IT COULD NOT PAY THE SELF-ASSESSMENT TAX O N TIME, AS A RESULT OF WHICH THERE WAS A DELAY IN THE PAYMENT OF TAX AND CONSEQU ENT FILING OF RETURN BY ABOUT 1& MONTH. IT WAS FURTHER CLAIMED THAT SUBSEQUENTL Y THE SOFTWARE HAS BEEN MODIFIED AND NOW RETURNS ARE BEING ACCEPTED, EVEN WHEN SELF ASSESSMENT TAX IS NOT PAID. THESE FACTUAL ASPECTS HAVE NOT BEEN D ISPUTED BY THE REVENUE. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, TH ERE WAS GENUINE AND VALID REASON FOR THE DELAY IN FILING OF RETURN AND MOREO VER AS WE HAVE ALREADY FOUND ABOVE THESE PROVISIONS ARE DIRECTORY AND NOT MANDAT ORY. ONCE THE VALIDITY OF THE RETURN HAS NOT BEEN QUESTIONED BY THE REVENUE, IN OUR CONSIDERED OPINION, THE REJECTION OF THE ASSEESSEES CLAIM U/S 10(B(1) A T THE THRESHOLD BY THE ITA NO. 2317/DEL/2010 A.Y. 2006-07 12 ASSESSING OFFICER WAS NOT JUSTIFIED. IN THIS RE GARD, THE CASE LAWS RELIED BY THE ASSESSEE AT GERMANE. IN THIS CONNECTION, WE REFER TO THE FOLLOWING CASE LAWS:- - CONTINENTAL CONSTRUCTION PVT. LTD. VS. UOI 185 ITR 230 (DEL) (II) THAT, HOWEVER, IN VIEW OF THE BONA FIDE BEL IEF ENTERTAINED BY THE PETITIONER, THE DEPARTMENT OUGHT NOT TO STAND ON ME RE TECHNICALITIES BUT OUGHT TO GIVE THE PETITIONER AN OPPORTUNITY T O FULFILL THE REQUIREMENTS OF SECTION 80HHB(3) AND, ON SUCH COMPL IANCE WITHIN A REASONABLE TIME, OUGHT TO GRANT THE BENEFIT OF THA T SECTION TO THE PETITIONER. - BAJAJ TEMPO LTD. VS. C.I.T. 196 ITR 189 (SC) A PROVISION IN A TAXING STATUTE GRANTING INCENTIVE S FOR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUED LIBERALL Y; AND SINCE A PROVISION FOR PROMOTING ECONOMIC GROWTH HAS TO BE I NTERPRETED LIBERALLY, THE RESTRICTION ON IT TOO HAS TO BE CONS TRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISION AND NOT TO FR USTRATE. 6.10 NOW WE DEAL WITH THE LD. DEPARTMENTAL REPRESE NTATIVES SUBMISSION THAT ASSESSEES REMEDY LIED IN APPLYING TO THE CBDT UNDE R SECTION 119(2)(B). THE SAID SECTION READS UNDER:- THE BOARD MAY, IF IT CONSIDERS IT DESIRABLE OR EXP EDIENT SO TO DO FOR AVOIDING HARDSHIP IN ANY CASE OR CLASS OR CASES, BY GENERAL OR SPECIAL ORDER, AUTHORIZE [ANY INCOME TAX AUTHORITY, NOT BEING A CO MMISSIONER (APPEALS)] TO ADMIT AN APPLICATION OR CLAIM FOR ANY EXEMPTION, DEDUCTION, REFUND OR ANY OTHER RELIEF UNDER THIS ACT AFTER THE EXPIRY OF THE PERIOD SPECIFIED BY OR UNDER THIS ACT FOR MAKING SUCH APPLICATION OR CLA IM AND DEAL WITH THE SAME ON MERITS IN ACCORDANCE WITH LAW. 6.11 THE SAID PROVISION MAKES IT CLEAR THAT THE BOA RD CANNOT GIVE DIRECTION TO APPELLATE AUTHORITIES. FURTHER THE ACT DOES NOT PRO HIBIT THAT, RELIEF IN THIS REGARD WHEN GENUINE HARDSHIP IS FACED, CANNOT BE GRANTED B Y APPELLATE AUTHORITY. WE ITA NO. 2317/DEL/2010 A.Y. 2006-07 13 HAVE ALREADY GIVEN A FINDING IN PRECEDING PARAGRA PH THAT THERE WAS GENUINE HARDSHIP ON THE PART OF THE ASSESSEE, UNDER WHICH CIRCUMSTANCES THE RETURN WAS FILED AFTER A MARGINAL DELAY. 6.12 FURTHER THE VERY FACT THAT THE ACT ENVISAGES T HAT RELIEF REGARDING EXEMPTION SHOULD BE CONSIDERED AND GRANTED WHEN APPLICATION IS MADE AFTER THE SPECIFIED PERIOD IN CASES OF GENUINE HARDSHIP CLEARLY INDICAT ES THAT PROVISION IN THIS REGARD IS DIRECTORY AND NOT MANDATORY. HENCE IN CASE OF GE NUINE HARDSHIP THE RELIEF CAN BE GRANTED BY THE APPELLATE AUTHORITY. 6.13 HOWEVER, WE FIND THAT LD. COMMISSIONER OF INCO ME TAX (APPEALS) HAS ACCEPTED THE ASSESSEES SUBMISSION, THAT THE DELAY IN FILING OF RETURN SHOULD NOT BE A REASON TO DENY THE ASSESSEES CLAIM OF EXEMPTI ON U/S 10B(1). HOWEVER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT CO NSIDERED THE FACTUAL ASPECTS OF THE MERITS OF THE CASE. ASSESSING OFFICER ALSO DISALLOWED THE ASSESSEES CLAIM BY STATING THAT THE RETURN WAS FILED ON TIME. HE A LSO HAD NOT GONE INTO THE OTHER ASPECTS OF THE MERITS OF THE CASE. IN THIS REGARD , WE REFER THE DECISION OF THE HONBLE APEX COURT DECISION IN THE CASE OF KAPURCHA ND SHRIMAL VS. CIT, 131 ITR 451 WHEREIN IT WAS HELD THAT THE APPELLATE AUTHORITY H AS JURISDICTION AS WELL AS THE DUTY TO CORRECT THE ERRORS IN THE PROCEEDINGS U NDER APPEAL AND TO ISSUE OF NECESSARY, APPROPRIATE DIRECTIONS TO THE AUTHORITY AGAINST WHOSE DECISION APPEAL IS PREFERRED TO DISPOSE OF THE WHOLE OR ANY PART OF THE MATER AFRESH, UNLESS FORBIDDEN FROM DOING SO BY STATUTE. 6.14 IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, WE REMIT THIS ISSUE TO THE FILES OF THE ASSESSING OFFICER. HE SHA LL EXAMINE THE MERITS OF THE ASSESSEEES CLAIM OF EXEMPTION U/S 10B. WE MAKE IT CLEAR THAT WE HAVE ALREADY ITA NO. 2317/DEL/2010 A.Y. 2006-07 14 ADJUDICATED THE ISSUE REGARDING DELAY IN FILING OF RETURN OF INCOME IN ASSESSEES FAVOUR IN THE FORGOING PARAGRAPHS, THE SAME SHALL N OT AGAIN FORM PART OF ADJUDICATION BY THE ASSESSING OFFICER. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30/07/2010. SD/- SD/- [A.D. JAIN] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 30/07/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES