OSWIN PLASTICS PVT. LTD., MUMBAI V. D.C.I.T. CIRCLE 7(1), MUMBAI

ITA 2624/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79073 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 07-11-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 18-04-2012
• Result in Favour of: Set Aside
• Court: TRIBUNAL
• Assessee Lawyers: JIGNESH R SHAH
• Keywords: Procedural lapse
• Section: 263; 154; 143(3); 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . , , , BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUD ICIAL MEMBER . / ITA NO. 2624/MUM./2012 ( / ASSESSMENT YEAR : 2004 05 ) OSWIN PLASTICS PVT. LTD. 142/48, GHASWALA INDUSTRIAL ESTATE OPP. 24 KARAT THEATRE, S.V. ROAD JOGESHWARI (W), MUMBAI 400 102 .. / APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CIRCLE 7 ( 1 ), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAA CO0802H / ASSESSEE BY : MR. J IGNESH R. SHAH / REVENUE BY : MR. SANJEEV JAIN / DATE OF HEARING 09 .0 6 .201 4 / DATE OF ORDE R 13.06.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HA S BEEN PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER DATED 15 TH OCTOBER 2010 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) XIII , MUMBAI, FOR THE QUANTUM OF M/S. SAI DEVELOPERS 2 ASSESSMENT PASSED UNDER SECTION 143(3) R/W SECTION 263 R/W SECTION 25 4 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) , FOR THE ASSESSMENT YEAR 2004 05 . 2 . THE ASSESSEE IS MAINLY AGGRIEVED BY THE DISALLOWANCE OF DEDUCTION OF ` 24,16,480, UNDER SECTION 80IB, WHICH WAS MADE ON THE GROUND THAT THE REQUISITE AND CORRECT AUDIT REP ORT UNDER SECTION 10CCB WAS FILED SUBSEQUENT TO THE ORIGINAL ASSESSMENT PROCEEDINGS. 3 . FACTS IN BRIEF : THE ASSESSEE IS HAVING AN INDUSTRIAL UNDERTAKING AT DAMAN, WHEREIN IT I S MANUFACTURING PLASTIC CORRUGATED HOSES AND PIPES . O N THE PROFITS DERIVED FROM TH E INDUSTRIAL UNDERTAKING, T HE ASSESSEE HAS BEEN CLAIMING DEDUCTION UNDER SECTION 80IB, WHICH HAS BEEN ALLOWED BY THE REVENUE IN THE EARLIER YEARS EVEN UNDER SCRUTINY ASSESSMENT PASSED UNDER SECTION 143(3). FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IB, AMOUNTING TO ` 24,16,480, IN TUNE WITH THE EARLIER YEARS. THE ASSESSEE, ALONG WITH THE RETURN OF INCOME, HAD FILED AN AUDIT REPORT DATED 25 TH OCTOBER 2004, IN THE FORM 10CCB. SUCH A REPORT WAS BASED ON OLD FORMAT AND DID NOT CONTAIN THE ENTIRE REQUISITE INFORMATION AS REQUIRED UNDER RULE 18BBB . THE ASSESSING OFFICER ALLOWED THE DEDUCTION AS CLAIMED BY THE ASSESSEE , VIDE ORDER DATED 28 TH DECEMBER 2006, PASSED UNDER SECTION 143(3). THEREAFTER, THE ASSESSING OFFICER ISSUE D A NOTICE M/S. SAI DEVELOPERS 3 UNDER SECTION 154, HIGHLIGHTING THE FOLLOWING NATURE OF MISTAKES WHICH WAS PROPOSED TO BE RECTIFIED. NATURE OF MISTAKE PROPOSED TO BE RECTIFIED IT IS SEEN THAT SECTION 80IA OF THE INCOME TAX ACT, 1961 PROVIDES THAT THE DEDUCTION U/S 80IA WIL L NOT BE ADMISSIBLE UNLESS THE ACCOUNTS OF THE UNDERTAKING FOR THE RELEVANT PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR FOR WHICH THE DEDUCTION IS CLAIMED HAVE BEEN AUDITED BY AN ACCOUNTANT AND THE ASSESSEE FURNISHES, ALONG WITH HIS RETURN OF INCOME, THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT. RULE 18BB PRESCRIBES THAT THE AUDIT REPORT SHOULD BE IN FORM 10CCB AS PER NOTIFICATION NO.240/2002 DATED 6.9.2002. THE ASSESSEE COMPANY HAD FURNISHED THE AUDIT REPORT FOR CLAIMING DEDUCTION NU/S 80IB WHICH WAS NOT IN THE FORM AND DID NOT CONTAIN THE CRUCIAL DETAILS WHICH WERE REQUIRED FOR THE PURPOSE OF ALLOWING THE CLAIM AND ALSO WAS NOT ACCOMPANIED BY THE AGREEMENT. HENCE, THE ASSESSEE COULD NOT HAVE BEEN GRANTED THE DEDUCTIONS IN THE ABSENCE OF THE CRUCIAL FORM AND DETAILS. WHILE COMPUTING DEDUCTION U/S 80IB, THERE HAS BEEN AN INCORRECT GRANT OF DEDUCTION OF ` 24.16 LAKHS WHICH NEEDS TO BE CORRECTED. THE COPY OF THE AFORESAID NOTICE IS PLACED IN THE PAPER BOOK PG 6 . 4 . IN RESPONSE TO THE SAME, THE ASSESSEE, VIDE LETTER DATED 8 TH OCTOBER 2007, SUBMITTED TH E NEW AUDIT REPORT IN FORM NO.10CCB IN THE PRESCRIBED FORM REPLACING THE EARLIER AUDIT REPORT WHICH WAS ON OLD FORM. A COPY OF THE NEW AUDIT REPORT HAS BEEN PLACED I N THE PAPER BOOK PAGE 7 TO 14. APART FROM THAT, THE ASSESSEE ALSO FILED A DETAIL REPLY, VIDE LETTER DATED 6 TH OCTOBER 2007, GIVING FACTUAL AND LEGAL REASONS FOR M/S. SAI DEVELOPERS 4 ACCEPTING THE SAID AUDIT REPORT. THEREAFTER, THE ASSESSING OFFICER SEEMS TO HAVE ACCEPTED THE N EW AUDIT REPORT AND THE CLAIM OF DEDUCTION ALLOWED EARLIER , VIDE ASSESSMENT ORDER DATED 28 TH DECEMBER 2006, WAS NOT DISTURBED. ON 15 TH NOVEMBER 2007, THE LEARNED COMMISSIONER ISSUED SHOW CAUSE NOTICE UNDER SECTION 263, MAINLY ON THE GROUND THAT THE AUDIT R EPORT FOR CLAIMING DEDUCTION UNDER SECTION 80IB WAS NOT FILED IN THE PRESCRIBED FORM AND DID NOT CONTAIN THE CRUCIAL DETAILS WHICH WERE REQUIRED FOR THE PURPOSE OF ALLOWING THE CLAIM AND, THEREFORE, THE DEDUCTION COULD NOT HAVE BEEN ALLOWED. ACCORDINGLY, T HE LEARNED COMMISSIONER DIRECTED THE ASSESSING OFFICER TO RE COMPUTE THE TOTAL INCOME WITHOUT ALLOWING THE DEDUCTION UNDER SECTION 80IB. THE ASSESSEE, A GAINST THE SAID ORDER PASSED BY THE LEARNED COMMISSIONER, PREFERRED AN APPEAL BEFORE THE TRIBUNAL , WHERE IN THE TRIBUNAL CONFIRMED THE SAID ORDER OF THE LEARNED COMMISSIONER VIDE ORDER DATED 28 TH AUGUST 2009. 5 . IN THE SECOND ROUND OF PROCEEDINGS, IN PURSUANCE OF THE DIRECTIONS OF THE LEARNED COMMISSIONER, THE ASSESSING OFFICER DISALLOWED THE CLAIM UNDER SECTI ON 80IB, MAINLY ON THE GROUND THAT THE TRIBUNAL HAS CONFIRMED THE ORDER OF THE LEARNED COMMISSIONER WHEREIN IT WAS DIRECTED THAT THE DEDUCTION UNDER SECTION 80IB CANNOT BE ALLOWED TO THE ASSESSEE AND AGAINST THE SAID ORDER OF THE TRIBUNAL, THE ASSESSEE HAS M/S. SAI DEVELOPERS 5 NOT FILED ANY MISCELLANEOUS APPLICATION. IN THE FIRST APPEAL, THE ASSESSEE BROUGHT ALL THE FACTS AND MATERIAL ON RECORD STATING THAT THE AUDIT REPORT IN NEW FORMAT GIVING ENTIRE DETAILS HAVE ALREADY BEEN FURNISHED. HOWEVER, THE LEARNED COMMISSIONER (APPEA LS) HELD THAT NO AUDIT REPORT WAS FILED BEFORE THE COMPLETION OF THE ORIGINAL ASSESSMENT PROCEEDINGS, THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 80IB. 6 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE, NARRATING THE ENTIRE FACTS, SU BMITTED THAT ONCE THE ASSESSEE HAS FILED THE REVISED AUDIT REPORT IN THE NEW FORMAT GIVING ALL THE REQUISITE DETAILS FOR THE CLAIM OF DEDUCTION IN PURSUANCE OF THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 154, THEN THE SAID AUDIT REP ORT SHOULD BE TAKEN INTO COGNIZANCE FOR ALLOWING THE CLAIM. HE FURTHER SUBMITTED THAT THE REQUIREMENT OF FILING OF AUDIT REPORT IS DIRECTORY AND NOT MANDATORY AND EVEN IF THE AUDIT REPORT HAS BEEN FILED SUBSEQUENTLY BEFORE THE ASSESSING OFFICER, THE DE DUCTION SHOULD BE GRANTED. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON CATENA OF CASE LAWS WHICH ARE MENTIONED BELOW: I ) CIT V/S VALLI COTTON TRADERS P. LTD . [2007] 288 ITR 400 (MAD) ; II ) CIT V/S MEDICAPS LTD. [2010] 323 ITR 554 (MP); III ) CIT V/S G . KRISHNAN NAIR [2003] 259 ITR 727 (KER) ; IV ) MURALI EXPORT HOUSE V/S CIT[1999] 238 ITR 257 (CAL); V ) CIT V/S PANDIAN HOTELS LTD. [2006] 281 ITR 446 (MAD); M/S. SAI DEVELOPERS 6 VI ) CIT V/S PUNJAB FINANCIAL CORPN. [2002] 254 ITR 16 (P & H); VII ) CIT V/S GUPTA FABS [2005] 274 ITR 620 (P & H); VIII ) CIT V /S PRINT SYSTEMS & PRINTS [2006] 285 ITR 260 (MAD); IX ) CIT V/S MANHARLAL BHARDWAJ [2007] 164 TAXMAN 59 (P & H) ; X ) CIT V/S SHIVANAND ELECTRONICS [1994] 209 ITR 63 (BORN) ; XI ) EAGLE SYNTHETICS PVT . LTD. V/S ITO [2011] 8 ITR (TRIB) 211 (AHD) AND XII ) CIT V/S MEDICAPS LTD. [2010] 323 ITR 554, 557 (M.P) LASTLY, HE SUBMITTED THAT ONCE IN THE EARLIER YEARS, THE ASSESSEES CLAIM FOR DEDUCTION HAS BEEN ALLOWED, THEN IN THIS YEAR, MERELY ON ACCOUNT OF PROCEDURAL IRREGULARITY OF NOT FILING THE AUDIT REPORT IN THE NEW FORM, THE CL AIM FOR DEDUCTION UNDER SECTION 80IB, CANNOT BE DENIED. 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT THE LEARNED COMMISSIONER, IN HIS ORDER PASSED UNDER SECTION 263, HAS GIVEN A CATEGORICAL DIRECTION FOR DISALLOWING THE DEDU CTION AS THE REQUISITE AUDIT REPORT WAS NOT THERE BEFORE THE ASSESSING OFFICER. THIS ORDER OF THE LEARNED COMMISSIONER HAS ALSO BEEN CONFIRMED BY THE TRIBUNAL. THUS, THERE IS NO SCOPE OF ALLOWING DEDUCTION UNDER SECTION 80IB IN THIS ROUND OF PROCEEDINGS. H E THUS, STRONGLY RELIED UPON THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE LEARNED COMMISSIONER (APPEALS). M/S. SAI DEVELOPERS 7 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB ON THE PROFITS DERIVED FROM ITS INDUSTRIAL UNDERTAKING HAS BEEN ALLOWED TO THE ASSESSEE SINCE LAST SEVERAL YEARS. IN THIS YEAR ALSO, THE ASSESSEE HAS MADE A CLAIM UNDER SECTION 80IB, IN FORM NO.10CCB, VIDE AUDIT REPORT DATE D 25 TH OCTOBER 2004. SUCH AN AUDIT REPORT WAS NOT IN CONFORMITY WITH THE NEW FORMAT OF FORM NO.10CCB, BROUGHT IN STATUTE, V IDE NOTIFICATION NO.240 OF 2002, DATED 6 TH SEPTEMBER 2002 , AND CONSEQUENTLY, IN RULE 18BBB, WHEREIN, NEW FORM OF AUDIT REPORT HAS BEE N PRESCRIBED. THE ASSESSING OFFICER, VIDE ORDER DATED 28 TH DECEMBER 2006, ALLOWED THE ASSESSEES CLAIM BASED ON OLD FORMAT AUDIT REPORT. SUBSEQUENTLY, HE NOTICED THAT THE AUDIT REPORT WHICH WAS FURNISHED , WAS NOT IN THE PRESCRIBED FORM, HE ACCORDINGLY, ISS UED A NOTICE UNDER SECTION 154 / 155 DATED 28 TH SEPTEMBE R 2007. THE CONTENTS OF THE SAID NOTICE HAVE ALREADY BEEN REPRODUCED IN THE FOREGOING PARAGRAPH. IN RESPONSE TO THE SAME, THE ASSESSEE NOT ONLY FURNISHED THE REVISED AUDIT REPORT DATED 6 TH OCTOBER 200 7, WHICH WAS IN THE NEW FORM PRESCRIBED UNDER RULE 18BBB BUT ALSO FILED DETAILED EXPLANATION , AS TO WHY SUCH AN AUDIT REPORT SHOULD BE ADMITTED FOR ALLOWING CLAIM AT THIS STAGE . THEREAFTER, THE ASSESSING OFFICER ACCEPTED THE SAME AND NO CHANGES WERE MADE I N THE CLAIM FOR DEDUCTION UNDER SECTION 80IB, WHICH IS EVIDENT FROM THE FACT THAT NO M/S. SAI DEVELOPERS 8 ORDER WAS PASSED THEREAFTER. IN ALL THE SUBSEQUENT PROCEEDINGS , WHICH ENTAILED THEREAFTER, LIKE REVISION PROCEEDINGS UNDER SECTION 263 AND THE APPEAL BEFORE THE TRIBUNAL A GAINST THE SAID ORDER, THIS VITAL FACT HAS EITHER NOT BEEN BROUGHT TO THE NOTICE OF ANY OF THE AUTHORITIES OR HAD NOT BEEN CONSIDERED . HAD IT BEEN SO, THE CONTROVERSY WOULD NOT HAVE BEEN DRAGGED UP TO THIS STAGE. WE AGREE WITH THE CONTENTION OF THE LEARNED COUNSEL THAT IF THE AUDIT REPORT FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 80IB, HAS BEEN FILED SUBSEQUENTLY BEFORE THE ASSESSING OFFICER OR EVEN AT THE APPELLATE STAGE, THE SAME SHOULD BE TAKEN INTO COGNIZANCE FOR EXAMINING THE ALLOWABILITY OF CLAIM FOR DEDUCTION. THIS VIEW IS SUPPORTED BY VARIOUS JUDICIAL PRONOUNCEMENTS AS CITED ABOVE. HOWEVER, UNDER THE PECULIAR FACTS AND CIRCUMSTANCES OF THE PRESENT CASE , WHERE NEITHER THE ASSESSING OFFICER NOR THE LEARNED COMMISSIONER (APPEALS) IN THE IMPUGN ED PROCEEDINGS, HAS TAKEN COGNIZANCE OF THE AUDIT REPORT FILED BEFORE THE ASSESSING OFFICER IN THE RECTIFICATION PROCEEDINGS, WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE, THIS MATTER SHOULD BE RESTORED BACK TO THE FILE FO THE ASSESSING OFFICER , ONLY FOR THE LIMITED PURPOSE OF EXAMINATION THAT IF THE REVISED AUDIT REPORT HAS BEEN FILED BEFORE THE ASSESSING OFFICER IN PURSUANCE OF NOTICE UNDER SECTION 154, AS STATED IN THE FORGOING PARAGRAPHS, EVEN THOUGH IT IS AFTER THE DATE OF PASSING OF THE ASS ESSMENT ORDER, THEN THE SAME SHOULD BE TAKEN INTO COGNIZANCE FOR EXAMINING THE ALLOWABILITY OF M/S. SAI DEVELOPERS 9 THE CLAIM UNDER SECTION 80IB. WITH THESE OBSERVATIONS, THE GROUNDS RAISED BY THE ASSESSEE ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 9 . 9 . IN THE RESULT, ASSESSEES APPEAL IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. 13 TH JUNE 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 13 TH JUNE 2014 SD/ - . D. KARUNAKARA RAO ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 13 TH JUNE 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI