M/s Rachana Constructions, Nagpur V. Assistant Commissioner of Income Tax Central Circle-2(2), Nagpur

ITA 35/NAG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93441 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 24-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Search and seizure; Period of limitation; Question of law; Reasonable cause; Benefit of exemption; Revised return
• Section: 143(3); 153A; 80IB; 10B; 6

Judgement Text

1 ITA NO. 35/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T. A. NO. 35/NAG/2013 ASSESSMENT YEAR : 2009 - 10. M/S RACHANA CONSTRUCTIONS, ASSTT. COMMISSIONER OF 153 - B, SHIVAJI NAGAR, V/S. INCOME TAX, NAGPUR - 440010. CENTRAL CIRCLE - 2(2), PAN AAHFR5896C NAGPUR. (APPELLANT) RESPONDENT. APPELLANT BY : SHRI K.P. DEWANI. RESPONDENT BY : SHRI NARENDRA KANE. DATE OF HEARING : 07 - 07 - 2015. DATE OF PRONOUNCEMENT : 31 ST JULY, 2015. O R D E R PER SHRI SHAMIN YAHYA, A.M . THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 23 - 11 - 2012 AND PERTAINS TO ASSESSMENT YEAR 200 9 - 10 . THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) - I, WAS TOTALLY ARBITRARY AND UNJUSTIFIED IN REJECTING THE CLAIM OF DEDUCTION AMOUNTING TO ` .2,19,04,106/ - UNDER SECTION 80IB OF THE INCOME TAX ACT, 1961. 2 ITA NO. 35/NAG/2013 2 . THE HONOURABLE COMMISSIONER OF INCOME TAX (APPEALS) - I HAS ERRED IN MAKING THE INTERPRETATION OF PROVISIONS OF SECTION 80AC OF THE INCOME TAX ACT, 1961. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) - I , WAS TOTALLY ARBITRARY AND UNJUSTIFIED IN REJECTING THE EXPLANATION THAT THE ASSESSEE HAS FULFILLED ALL THE BASIC CONDITIONS LAID DOWN BY SECTION 80IB FOR CLAIMING THE DEDUCTION AND HAS UPHOLDING THE DISALLOWANCE THE DEDUCTION CLAIMED BY ASSESSEE ME RELY BASED ON THE PROVISIONS OF SECTION 80AC WHICH ARE PROVIDED FOR FILING OF RETURN OF INCOME ON OR BEFORE THE DUE DATE WHICH IS DIRECTIVE IN NATURE. 2. IN THIS CASE THE ASSESSEE HAS FILED RETURN OF INCOME ON 04 - 03 - 2010 OFFERING INCOME OF ` .13,43,060/ - . THE ASSESSEE IS ENGAGED IN CIVIL CONSTRUCTION BUSINESS. IT WAS OBSERVED BY THE ASSESSING OFFICER WHILE GOING THROUGH THE CASE RECORD THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IB AT ` .2,19,04,106/ - . SUBSEQUENTLY THE ASSESSING OFF ICER HAS OBSERVED THAT RETURN OF INCOME HAS NOT BEEN FILED WITHIN THE DUE DATE AS CONTEMPLATED UNDER SECTION 139(1). RETURN HAS BEEN FILED FOR ASSESSMENT YEAR 2009 - 10 ONLY ON 04 - 03 - 2010 AS AGAINST DUE DATE 30 - 09 - 200 9 . THEREFORE, ACCORDING TO THE ASSESSING OFFICER, THE PROVISIONS OF SECTION 80AC WERE REQUIRED TO BE INVOKED BY APPLICATION OF WHICH THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION UNDER SECTION 80IB. THE ASSESSING OFFICER HAS THEREFORE, PASSED AN ORDER UNDER SECTION 143(3) WITHDRAWING THE SAID DEDUC TION UNDER SECTION 80IB. 3. AGAINST THE ABOVE ORDER, THE ASSESSEE APPEALED BEFORE THE LEARNED CIT(APPEALS). THE LEARNED CIT(APPEALS) WAS NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE. SHE REFERRED TO THE PROVISIONS OF SECTION 80AC. SHE UPHELD THE ORDE R OF THE ASSESSING OFFICER BY OBSERVING AS UNDER : 6. THE EXPLANATORY NOTES TO FINANCE ACT UNAMBIGUOUSLY STATES THAT SECTION 139(1) CASTS AN OBLIGATION ON EVERY ASSESSEE TO FURNISH THE RETURN OF INCOME BY DE DATE. SECTION 80AC HAS BEEN INSERTED SO AS TO PROVIDE THAT NO 3 ITA NO. 35/NAG/2013 DEDUCTION U/S 80IA OR SECTION 80IB OR SECTION 80IC SHALL BE ALLOWED TO ASSESSEE WHO DOES NOT FURNISH A RETURN OF INCOME ON OR BEFORE THE DUE DATE SPECIFIED IN SUB SECTION (1) OF SECTION 139. THUS LEGISLATIVE INTENT WAS TO INTRODUCE A RIGOUR IN THE COMPLIANCE IN THE CASE OF ASSESSEE AVAILING OF CERTAIN INCENTIVE PROVISIONS OF THE ACT. IN THE CASE OF S.C. BARAT V/S. H.V. PATESKA AIR 1962 MP 180 THE HONBLE HIGH COURT HAS HELD THAT THE QUESTION WHETHER A STATUTORY PROVISION IS ABSOLU TE OR MERELY DIRECTORY HAS TO BE DETERMINED NOT ONLY ON THE LANGUAGE OF THE PROVISION BUT ALSO ON THE RELATION OF THAT PROVISION TO THE GENERAL OBJECT INTENDED TO BE SECURED BY IT. FROM THE LANGUAGE AND THE LEGISLATIVE INTENT IT IS CLEAR THAT FILING OF RETURN WITHIN THE TIME WAS ONE OF THE PRE - CONDITIONS BROUGHT IN TO ENSURE THAT A CLAIM U/S 80IA OR 80IB CAN BE ALLOWED. IT THUS CLEAR THAT COMPLIANCE TO THE STATUTORY OBLIGATION IMPOSED S 139(1) IS A SINE QUA NON FOR CLAIMING DEDUCTION U/S 80IB. THER E IS NO SCOPE FOR DISPENSING WITH THIS REQUIREMENT AND HOLDING THAT THESE PROVISIONS ARE NOT MANDATORY. THE HONBLE SUPREME COURT IN THE CASE OF N.C. BUDHIRAJA & CO. (204 ITR 412) HAS STATED THAT THE PRINCIPLE OF ADOPTING A LIBERAL INTERPRETATION WHICH ADVANCES THE PURPOSE AND OBJECT OF BENEFICIAL PROVISION CANNOT BE CARRIED TO THE EXTENT OF DOING VIOLENCE TO THE PLAIN AND SIMPLE LANGUAGE USED IN THE ENACTMENT. IT WOULD NOT BE REASONABLE OR PERMISSIBLE FOR THE COURT TO RE - WRITE THE SECTION OR SUBSTI TUTE WORDS OF ITS OWN FOR THE ACTUAL WORDS EMPLOYED BY THE LEGISLATURE, IN THE NAME OF GIVING EFFECT TO THE SUPPOSED UNDERLYING OBJECT. THE APPELLANTS CONTENTION THAT PROVISION IS MERELY DISCRETIONARY IS NOT SUPPORTED BY LANGUAGE OF THE STATUTE OR TH E LEGISLATIVE INTENT AS EVIDENT ABOVE. 7. IN THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAZA BULAND SUGAR CO. LTD. V/S. MUNICIPAL BOARD, RAMPUR AIR 1965 SC 895 IT HAS BEEN HELD THAT THE PROVISION IS SAID TO BE MANDATORY WHERE THE PROCEDURE PRESCRIBED BY IT, IF NOT FOLLOWED HAS THE EFFECT OF INVALIDATING ANY ACTION TAKEN CONTRARY TO IT. THEREFORE THE APPELLANTS ARGUMENT THAT PROVISIONS ARE MERELY PROCEDURAL AND THEREFORE NOT MANDATORY IS FALLACIOUS. THEY EXPLANATORY NOTES TO THE LEGISLATI VE ENACTMENT UNEQUIVOCALLY STRESSES UPON THE OBLIGATION OF APPELLANT TO FILE A RETURN WITHIN THE DUE DATE ALLOWED U/S 139(1). THUS IT IS IMPERATIVE TO ADHERE TO THE PARTICULAR PROCEDURAL REQUIREMENT TO FILE A RETURN WITHIN THE TIME ALLOWED U/S 139(1) IN ORDER TO CLAIM DEDUCTION U/S 80IB. 8. APPELLANT HAS RELIED ON THE DECISION REPORTED IN THE CASE OF ACIT V/S. DHIR GLOBAL INDUSTRIES P. LTD. 45 DTR 290 (DEL) ITAT. IN THE SAID DECISION THE HONBLE TRIBUNAL HAS ALLOWED THE ASSESSEES CLAIM U/S 10B ON THE GROUND THAT THERE WAS A REASONABLE CAUSE FOR DELAY IN FILING OF THE RETURN. 4 ITA NO. 35/NAG/2013 APPELLANT HAS ALSO STATED BEFORE ME THAT DUE TO SEARCH THAT TOOK PLACE THERE WAS A SEIZURE OF VARIOUS BOOKS AND THIS WAS THE CAUSE FOR DELAY IN FILING OF RETURN OF INCOME. HOWEVER IT CANNOT BE HELD THAT THERE WAS ANY DILIGENCE SHOWN BY APPELLANTS PART TO FILE RETURN OF INCOME BY THE DUE DATE AND THE DELAY WAS DUE TO, REASONS BEYOND ITS CONTROL. IT IS WORTH NOTING THAT SEARCH TAKEN PLACE ON 13 - 01 - 2009 ALMOST A YEAR PRIO R TO THE DUE DATE FILING OF RETURN. THEREFORE THE CONTENTION OF THE APPELLANT IS WITHOUT MERIT. CONSIDERING THE FACTS IN TOTALITY THE AO'S ACTION IS UPHELD. 4. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE COU NSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUMMARIZED HIS SUBMISSIONS AS UNDER : A. THE A.O. HAS DENIED DEDUCTION ALLOWABLE IN THE CASE OF ASSESSEE UNDER SECTION 80IB(10) OF I.T. ACT, 1961 AS RETURN OF INCOME HAS BEEN FILED ON 04 - 03 - 2010 AS AGAINST DUE DATE OF SUBMISSION OF RETURN OF INCOME ON OR BEFORE 30 - 09 - 2009. THE A.O. CONSIDERING THE PROVISION OF 80AC OF I.T. ACT, 1961 HAS NOT ALLOWED THE DEDUCTION CLAIMED. B. THE ASSESSEE IS A PARTNERSHIP FIRM BEING ONE OF THE BUSINESS ENTIT IES OF RACHNA GROUP ON WHICH ACTION UNDER SECTION 132(1) OF I.T. ACT, 1961 WAS TAKEN ON 13 - 01 - 2009. THE BOOKS OF ACCOUNT AND DOCUMENTS RELATING TO ENTIRE GROUP WERE SEIZED DURING THE COURSE OF SEARCH. IN THE GROUP NUMBER OF BUSINESS ENTITIES HAD TO SU BMIT RETURNS IN RESPONSE TO NOTICE ISSUED U/S 153A & 153C OF I.TR. ACT, 1961. C. THE COUNSEL AND STAFF OF ASSESSEE WERE OCCUPIED IN MAKING COMPLIANCE BEFORE THE INVESTIGATION WING OF THE DEPARTMENT AND SUBSEQUENTLY HAD TO OBTAIN XEROX COPIES IN ORDER TO FINALIZE THE RETURNS OF INCOME. THE GROUP RETURNS HAD TO BE SUBMITTED AFTER RECONCILING THE BALANCES OF INTER FIRM AND INTER ASSESSEE TO AVOID ANY MISTAKE. D. THE DELAY IN SUBMISSION OF THE RETURN IS ON ACCOUNT OF REASONABLE AND BONA FIDE CAUSE AS B ECAUSE OF SEARCH ACTION IT TOOK TIME FOR ASSESSEE GROUP TO COMPILE THE INCOME TAX RETURNS OF VARIOUS ENTITIES. E THE ACKNOWLEDGEMENTS OF RETURNS OF VARIOUS OTHER ASSESSEE OF GROUP WOULD SHOW THAT ALL THE RETURNS WERE SUBMITTED IN THE MONTH OF FEBRUARY MARCH, 2010. THE NOMINAL DELAY OF ABOVE FIVE MONTHS IS BONAFIDE AND REASONABLE CONSIDERING THE VOLUME AND ACTIVITIES OF ASSESSEE GROUP. 5 ITA NO. 35/NAG/2013 F. IN THE GROUP PURSUANCE TO NOTICE ISSUED U/S 153A/153C RETURNS WERE REQUIRED TO BE SCRUTINIZED AND SUBMITTED FOR BLOCK PERIOD OF SIX YEARS AND CURRENT YEAR AND SUCH RETUR NS REQUIRED LOT MANY MAN HOURS TO COMPILE AND SUBMIT THE RETURNS. ON ACCOUNT OF SEARCH DAY TO DAY ROUTINE WAS DISTURBED AND IT TOOK LITTLE MORE TIME TO COMPILE THE RETURN WHICH RESULTED IN TO NO MINAL DELAY., G. THE ASSESSEE BY FILING THE RETURN LATE BY 5 MONTHS HAS NOT DERIVED ANY ADVANTAGE AND NO MOTIVE FOR DELAY IS EVEN ALLEGED BY A.O. H. THE REGULAR RETURNS ARE SELECTED FOR SCRUTINY7 AS A PRACTICE BY REVENUE AUTHORITIES ONLY AFTER THE CL OSE OF FINANCIAL YEAR. THE ASSESSEE HAS SUBMITTED THE RETURN WITHIN FINANCIAL YEAR AND THUS NO PREJUDICE CAN BE SAID TO HAVE BEEN CAUSED TO REVENUE. THE TECHNICAL DEFAULT IS THUS VENIAL BREACH AND LEGITABLE ALLOWABLE CLAIM CANNOT BE DENIED IN THE CASE O F ASSESSEE. I. IN THE CASE OF ASSESSEE ALLOWABILITY OF DEDUCTION U/S 80IB(10) IS NOT IN DISPUTE. THE ASSESSEE HAS BEEN GRANTED DEDUCTION U/S 80IB(10) IN THE PAST ASSESSMENT YEAR. J. THE ISSUE COVERED IN FAVOUR OF ASSESSEE BY THE FOLLOWING DECISIONS: I) HONBLE AANDHRA PRADESH HIGH COURT AT HYDERABASD IN ITTA NO. 114 OF 2013. II) ITAT ORDER IN ITA NO. 2317/DEL/2010 IN THE CASE OF M/S DHIR GLOBAL INDUSTRIES PVT. LTD. DATED 30 - 07 - 2010. III) ITATS ORDER IN ITA NO. 122/MDS/2011 IN THE CASE OF M/S POLYHOSE INDIA PVT. LTD. DATED 30 - 06 - 2011. IV) ITATS ORDER IN ITA NO. 984/HYD/2011 IN THE CASE OF SRI S. VENKATAIAH DATED 31 - 05 - 2012. V) SANCHIT SOFTWARE & SOLUTION (P) LTD. V/S. CIT (2012) 349 ITR 404 (BOM.). 6. PER CONTRA, LEARNED D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT PROVISIONS OF SECTION 80AC ARE CLEARLY APPLICABLE. THE ASSESSEE HAVING NOT FILED THE RETURN ON TIME CANNOT BE GRANTED EXEMPTION UNDER SECTION 80IB. 6 ITA NO. 35/NAG/2013 7. UPON CAREFUL CONSIDERATION WE FIND T HAT THE ONLY REASON FOR DISALLOWANCE OF ASSESSEES CLAIM UNDER SECTION 80IB(10) IS THAT THE RETURN OF INCOME WAS FILED ON 04 - 03 - 2010 AS AGAINST THE DUE DATE OF SUBMISSION OF THE RETURN OF INCOME ON OR BEFORE 30 TH SEPT., 2009. THE ASSESSING OFFICER CONSIDE RING THE PROVISIONS OF SECTION 80AC HAS NOT ALLOWED THE DEDUCTION. IN THIS REGARD IT IS THE ASSESSEES CASE THAT T HERE WAS SEARCH AND SEIZURE OPERATION IN THE BUSINESS ENTITIES OF ASSESSEES GROUP ON 13 - 01 - 2009. THAT T HE BOOKS OF ACCOUNT AND DOCUMENTS R ELATING TO THE ENTIRE GROUP WERE SEIZED. THAT T HE GROUP MEMBERS OF THE ASSESSEE HAD TO SUBMIT RETURNS IN RESPONSE TO NOTICES ISSUED UNDER SECTION 153A AND 153C OF THE I.T. ACT. IT IS THE PLEA OF THE ASSESSEE THAT THE COUNSEL AND STAFF OF THE ASSESSEE WERE OCCUPIED IN MAKING COMPLIANCE BEFORE THE INVESTIGATION WING OF THE DEPARTMENT AND SUBSEQUENTLY HAD TO OBTAIN XEROX COPIES IN ORDER TO FINALIZE THE RETURNS OF INCOME. THE GROUP RETURNS HAD TO BE SUBMITTED AFTER RECONCILING THE BALANCE OF INTER - FIRM AND IN TER - ASSESSEE TO AVOID ANY MISTAKE. TO BUTTRESS THIS SUBMISSION IT HAS BEEN SUBMITTED THAT ACKNOWLEDGEMENTS OF RETURNS OF VARIOUS OTHER ASSESSEE OF GROUP WOULD SHOW THAT ALL THE RETURNS WERE SUBMITTED IN THE MONTH OF FEBRUARY - MARCH, 2010. HENCE IT HAS BEEN PLEADED THAT THE NOMINAL DELAY OF ABOUT FIVE MONTHS IS BONAFIDE AND REASONABLE CONSIDERING THE VOLUME AND ACTIVITIES OF ASSESSEE GROUP. 8. WE FIND THAT A SIMILAR ISSUE OF FILING OF LATE RETURN DUE TO WHICH BENEFIT/EXEMPTION WAS DENIED TO THE ASSESSEE WAS CONSIDERED BY THE ITAT, DELHI BENCHES IN ACIT V/S. M/S DHIR GLOBAL INDUSTRIES PVT. LTD. IN ITA NO. 2317/DEL/2010 IN WHICH VIDE ORDER DATED 30 - 07 - 2010 THE TRIBUNAL HAD CONSIDERED THE ISSUE WHETHER IN CERTAIN CIRCUMSTANCES THE DELAY IN FILING OF RETURN IN SUCH CASES CAN BE CONDONED OR NOT. ONE OF US, ACCOUNTANT MEMBER, WAS A PARTY TO THIS DECISION. THE RELEVANT ADJUDICATION IN THE SAID CASE WAS AS UNDER : 7 ITA NO. 35/NAG/2013 6.2 WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IT IS UNDISPUTED THAT A PROVISION HAS BEEN INSERTED DURING THE CURRENT YEAR IN SECTION 10(B)(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 SECTION (1) OF SECTION 139. NOW THIS SECTION WAS INTRODUCED W.E.F. 1.4.2006 BY FINANCE ACT, 2006. THIS IS THE FIRST ASSESSMENT YEAR FROM WHICH THE SAID PR OVISO 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), IF HIS TOTAL INCOME OR THE TOTAL INCOME OF ANY OTHER PERSON I N RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME - TAX, SHALL ON OR BEFORE THE DUE DATE, FURNISH A RETURN OF HIS INCOME OR THE INCOME OF SUCH OTHER PERSON DUR ING THE PREVIOUS 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 INSERTED 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 INDIVIDUAL OR A HINDU UNDIVIDED FAMILY OR AN ASSOCIATED OR AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS, WHETHER INCORPORATED OR NOT, OR AN ARTIFICIAL JURIDICAL PERSON, IF HIS TOTAL INCOME OR THE TOTAL INCOME OF PREVIOUS YEAR, WITHOUT GIVING EFFECT TO THE PROVISIONS OF SECTION 10A OR SECTION 10B OR SECTION 10BA OR CHAPTER VI - A EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME TAX, 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 AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED. 6.4 A READING OF THE ABOVE MAKES IT CLEAR THAT SECTION 139(1) MANDATED AN ASSESSEE TO FILE A RETURN IN HIS TOTAL INCOME ASSESSABLE 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 TAX. TO TAKE CARE OF THIS SITUATION THE PROVISO MENTIONED ABOVE MA NDATES 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 NOT CHARGEABLE TO INCOMETAX, TO FURNISH A RETURN OF INCOME. 6.5 NOW CORRESPONDING PR OVISION IS THERE IN SECTION 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 SPECIFIED UNDER SUB - SECTION (1) OF SECTION 139. 6.6 IN THE BACKGROUND OF THE AFORESAID SCHEME OF ACT 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 READS AS UNDER: - 8 ITA NO. 35/NAG/2013 THE DEDUCTION UNDER SUB - SECTION(1) SHALL NOT BE ADMISSI BLE FOR ANY ASSESSMENT YEAR BEGINNING ON OR AFTER THE 1STY DAY OF APRIL, 2001, UNLESS THE ASSESSEE FURNISHES IN THE PRESCRIBED FORM, ALONGWITH THE RETURN OF INCOME, THE REPORT OF AN ACCOUNTANT, AS DEFINED IN THE EXPLANATION BELOW SUB - SECTION (2) O F SECTION 288, CERTIFYING THAT THE DEDUCTION HAS BEEN CORRECTLY CLAIMED IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION. 6.7 HONBLE JURISDICTIONAL HIGH COURT HAD AN OCCASION TO CONSIDER THIS PROVISION OF SECTION 10(5) IN THE CASE OF C.I.T. VS. IN TEGRATED DATA BASE INDIA LTD. 178 TAXMMAN 432 AND WEB COMMERCE INDIA PVT. LTD. 318 ITR 135. THE HONBLE COURT IN THE CASE OF WEB COMMERCE INDIA (SUPRA) HAS HELD AS UNDER: - THIS COURT HAS ALREADY INTERPRETED THE LATTER PROVISIONS AND HAS HELD THE SAME TO BE DIRECTORY AND NOT MANDATORY. THE CONTENTION 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 ASSESSEE. RECENTLY, WE HAVE CONSIDERED THE IDENTICAL PROVISIONS OF SECTION 80 - IA(7) IN THE CASE OF C.I.T. VS. CONTIMETERS ELECTRICALS P. LTD. (2009) 317 ITR 249 (DELHI) I.T.A. 1366/2008 DECIDED ON DECEMBER 2, 2008, AND HELD THAT 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 AS 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 FIN D ANY FAULT WITH THE CONCLUSIONS ARRIVED AT BY THE TRIBUNAL. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION. THE APPEAL IS DISMISSED. 6.8 WE FIND THAT THE PROVISO IN SECTION 10(B)(1) WHICH HAS BEEN INSERTED REGARDING FILING OF RETURN WHICH WE ARE CONSIDERING 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 AND NOT MANDATORY. 6.9 NOW IN THE PRESENT CASE, WE FIND THAT TH ERE WAS ONLY A MARGINAL DELAY OF 1 MONTH IN FILING THE RETURN OF INCOME. THE RETURN FILED WAS VALID ONE. THE SAME HAS ALSO BEEN ACCEPTED AS A VALID RETURN BY THE ASSESSING OFFICER. THE REASONABLE CAUSE ATTRIBUTED BY THE ASSESSEE FOR THE DELAY IS THAT NEW PROVISION OF E - FILING 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 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 DID NOT ACCEPT THE RETURN, IF SELFASSESSMENT TAX W AS NOT PAID. ASSESSEES 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& MONTH. 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 ASPECTS HAVE NOT BEEN DISPUTED BY THE REVENUE. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THERE WAS GE NUINE AND VALID REASON FOR THE DELAY IN FILING OF RETURN AND MOREOVER AS WE HAVE ALREADY FOUND ABOVE THESE PROVISIONS ARE DIRECTORY AND NOT MANDATORY. 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) AT THE THRESHOLD BY THE ASSESSING OFFICER WAS NOT JUSTIFIED. IN THIS REGARD, 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) 9 ITA NO. 35/NAG/2013 (II) THAT, HOWEVER, IN VIEW OF THE BONA FIDE BELIEF ENTERTAINED BY THE PETITIONER, THE DEPARTMENT OUGHT NOT TO STAND ON MERE TECHNICALITIES BUT OUGHT TO GIVE THE PETITIONER AN OPPORTUN ITY TO FULFILL THE REQUIREMENTS OF SECTION 80HHB(3) AND, ON SUCH COMPLIANCE WITHIN A REASONABLE TIME, OUGHT TO GRANT THE BENEFIT OF THAT SECTION TO THE PETITIONER. BAJAJ TEMPO LTD. VS. C.I.T. 196 ITR 189 (SC) A PROVISION IN A TAXING STATUTE GR ANTING INCENTIVES FOR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUED LIBERALLY; AND SINCE A PROVISION FOR PROMOTING ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY, THE RESTRICTION ON IT TOO HAS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECT IVE OF THE PROVISION AND NOT TO FRUSTRATE. 6.10 NOW WE DEAL WITH THE LD. DEPARTMENTAL REPRESENTATIVES SUBMISSION THAT ASSESSEES REMEDY LIED IN APPLYING TO THE CBDT UNDER SECTION 119(2)(B). THE SAID SECTION READS UNDER: - THE BOARD MAY, IF IT CON SIDERS IT DESIRABLE OR EXPEDIENT 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 COMMISSIONER (APPEALS)] TO ADMIT AN APPLICATION OR CLAIM FOR ANY EXEMPTIO N, 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 CLAIM AND DEAL WITH THE SAME ON MERITS IN ACCORDANCE WITH LAW. 6.11 THE SAID PROVISION MAKES IT CL EAR THAT THE BOARD CANNOT GIVE DIRECTION TO APPELLATE AUTHORITIES. FURTHER THE ACT DOES NOT PROHIBIT THAT, RELIEF IN THIS REGARD WHEN GENUINE HARDSHIP IS FACED, CANNOT BE GRANTED BY APPELLATE AUTHORITY. WE HAVE ALREADY GIVEN A FINDING IN PRECEDING PARAGRAPH 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 THAT RELIEF REGARDING EXEMPTION SHOULD BE CONSIDERED AND GR ANTED 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. 6.13 HOWEVER, WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS A 9 . WE FURTHER FIND THAT SIMILAR ISSUE WAS CONSIDERED BY THE ITAT, HYDERABAD BENCH IN THE CASE OF ITO V/S. SRI S. VENKATAIAH IN ITA NO.984/HYD/2011 VIDE ORDER DATED 31 ST MAY, 2012 WHEREIN THE TRIBUNAL CONSIDERING THE SIMILAR ISSUE HAS HELD AS UNDER : WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE ADMITTEDLY, THE ASSESSEE FILED THE RETURN OF INCOME ON 23.12.2008. THE DUE DATE FOR FILING THE RETU RN 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 DISALL OWED BY 10 ITA NO. 35/NAG/2013 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 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 ONLY UPTO 31 ST 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 CON TROL OF THE ASSESSEE. WHEN THE SUBSTANTIAL QUESTION OF JUSTICE INVOLVED TECHNICALITIES SHOULD BE IGNORED. WE FURTHER FIND THAT THE ABOVE DECISION OF HYDERABAD TRIBUNAL WAS APPEALED BY THE REVENUE BEFORE THE HONBLE ANDHRA PRADESH HIGH COURT. THE ANDHRA P RADESH HIGH COURT DISMISSED THE REVENUES APPEAL BY HOLDING AS UNDER : THE LEARNED TRIBUNAL ON FACT - FINDING HELD THAT THERE IS A REASONABLE CAUSE FOR FILING THE RETURN OF INCOME BELATEDLY AND THIS IS BEYOND THE CONTROL OF THE ASSESSEE. ON THIS FACT - F INDING THE LEARNED TRIBUNAL HAS DISMISSED THE APPEAL FILED BY THE REVENUE. THERE IS NO ELEMENT OF LAW INVOLVED IN THE APPEAL AND THE FACT - FINDING CANNOT BE APPRECIATED BY THIS COURT. MOREOVER, THE TRIBUNAL HAS FOLLOWED ITS EARLIER ORDER IN ITA NO. 1231 & 1199/HYD DATED 31.12.2010 IN THE CASE OF DCIT V/S, M/S VEGA CONVEYORS & AUTOMATION LIMITED. 10 . WE MAY ALSO GAINFULLY REFER TO HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF SACHIN SOFTWARE & SOLUTION (P) LTD. V/S. CIT 349 ITR 404 . IN THI S CASE THERE WAS A DELAY IN REVISING THE RETURN WITHIN THE DUE DAT E . ON THIS ACCOUNT ASSESSEE WAS BEING DISENTITLED OF ITS CLAIM OF EXEMPTION. THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: 11 ITA NO. 35/NAG/2013 IN ANY CIVILIZED SYSTEM, THE ASSESSEE IS BOUND TO PAY THE TAX WHICH HE LIABLE UNDER THE LAW TO THE GOVERNMENT. THE GOVERNMENT ON THE OTHER HAND IS OBLIGED TO COLLECT ONLY THAT AMOUNT OF TAX WHICH IS LEGALLY PAYABLE BY AN ASSESSEE. THE ENTIRE OBJECT OF A DMINISTRATION OF TAX IS TO SECURE THE REVENUE FOR THE DEVELOPMENT OF THE COUNTRY AND NOT TO CHARGE ASSESSEE MORE TAX THAN THAT WHICH IS DUE AND PAYABLE BY THE ASSESSEE. IT IS IN AFORESAID CIRCUMSTANCES THAT AS FAR BACK AS IN 11/04/1955 THE CENTRAL BOAR D OF DIRECT TAX HAD ISSUED A CIRCULAR DIRECTING AO NOT TO TAKE ADVANTAGE OF ASSESSEES IGNORANCE AND/OR MISTAKE. THEREFORE THE CIRCULAR SHOULD ALWAYS BE BORNE IN MIND BY THE OFFICERS OF THE RESPONDENT - REVENUE WHILE ADMINISTERING THE SAID ACT. THE ASSESSEE ELECTRONICALLY FILED ITS RETURN FOR THE ASSESSMENT YEAR 2007 - 08. THE TOTAL INCOME OF THE ASSESSEE CONSISTED OF DIVIDEND INCOME AND LONG - TERM CAPITAL GAINS ON SALE OF SHARES. BOTH OF THEM WERE NOT TO BE INCLUDED IN THE TOTAL INCOME UNDER THE PRO VISIONS OF SECTION 10(34) AND 10(38) OF THE INCOME - TAX ACT, 1961. THE ASSESSEE CLAIMED EXEMPTION BUT BY MISTAKE INCLUDED THE DIVIDEND AND LONG - TERM CAPITAL GAINS IN THE TOTAL INCOME. AN INTIMATION WAS RECEIVED UNDER SECTION 143(1) DENYING EXEMPTION. TH E ASSESSEE FILED A REVISED RETURN RECTIFYING THE ERROR. THE REVISED RETURN WAS NOT TAKEN COGNIZANCE OF/PROCESSED BY THE ELECTRONIC SYSTEM, AS THE RETURN WAS FILED BEYOND THE PERIOD OF LIMITATION AS PROVIDED UNDER SECTION 139(5). THE ASSESSEE FILED AN AP PLICATION FOR RECTIFICATION UNDER SECTION 154. IT ALSO FILED A REVISION PETITION UNDER SECTION 264 WHICH WAS REJECTED. ON A WRIT PETITION AGAINST THE ORDER: HELD, ALLOWING THE PETITION, THAT THE COMMISSIONER COMMITTED A FUNDAMENTAL ERROR IN PROCEEDING ON THE BASIS THAT NO DEDUCTION ON ACCOUNT OF DIVIDEND INCOME AND INCOME FROM CAPITAL GAINS UNDER SECTION 10 OF THE ACT WAS CLAIMED. THEREFORE, THERE WAS AN ERROR ON THE FACE OF THE ORDER AND THE ORDER WAS NOT SUSTAINABLE. THE ASSESSING OFFICER WAS DIRE CTED TO TREAT THE APPLICATION DATED FEBRUARY 8, 2010, AS A FRESH APPLICATION AND TO DISPOSE OF THE APPLICATION AT THE EARLIEST PREFERABLY WITHIN SIX WEEKS OF THE ORDER 1 1 . ON THE BASIS OF THE ABOVE DISCUSSION AND CASE LAWS, WE FIND THAT IT IS A CONSENS US JUDICIAL VIEW THAT IF THERE IS REASONABLE CAUSE IN DELAYS AND THAT ALSO NOMINAL ONE , THE SAME CAN BE CONDONED. HENCE ONLY ON THAT ACCOUNT THE ASSESSEE SHOULD NOT BE DENIED THE BENEFIT OF EXEMPTION/DEDUCTION TO WHICH IT IS LEGITIMATELY ENTITLED . IN THE PRESENT CASE, IN OUR CONSIDERED OPINION, THE DELAY OF FIVE MONTHS 12 ITA NO. 35/NAG/2013 HAS BEEN ATTRIBUTED TO THE REASON THAT THERE WAS A SEARCH IN THE ASSESSEES GROUP AND THIS RESULTED IN THE DELAY IN FILING OF THE RETURNS OF THE ENTIRE GROUP. THE ASSESSEE HAD TO OB TAIN SEIZED RECORDS FROM THE DEPARTMENT, MAKE RECONCILIATION BETWEEN INTER - COMPANY AND INTER - ASSESSEE OF THE GROUP SO THAT ALL MISTAKES ARE IRON ED OUT. NO CASE HAS BEEN MADE OUT THAT THERE WAS ANY DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE TO DELAY THE FILING OF THE RETURN TO MAKE ANY GAIN. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION , THE DELAY OF FIVE MONTHS IN FILING THE RETURN CANNOT BE CONSIDERED TO BE F ATAL ONE DISENTITLING THE ASSESSEE FROM THE CLAIM OF EXEMPTION UNDER SECTION 80IB(10). IN THESE CIRCUMSTANCES, IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT, IN OUR CONSIDERED OPINION THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 80IB(10). ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FA VOUR OF THE ASSESSEE. 1 2 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF JULY, 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 31 ST JULY, 2015. 13 ITA NO. 35/NAG/2013 COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR