NIHAL CHAND JAIN INFRA PROJECT PVT. LTD., Jaipur V. ITO, Jaipur

ITA 366/JPR/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7854 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 11-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S NEHRA JCIT DHK
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Non compliance; Bonafide mistake
• Section: 80IB

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 366/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14. M/S. NIHAL CHAND JAIN INFRA PROJECT PVT. LTD., 5, OPP. RAWAT HOTEL, STATION ROAD, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 5(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AADCN 7909 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI K.L. MOOLCHANDANI (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI A.S. NEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09.08.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 14/08/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 30 TH MARCH, 2017 OF LD. CIT (A)-2, JAIPUR FOR THE ASSESSMENT YEAR 2013-14. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED AUTHORITIES BELOW HAVE LEGALLY AND FACTUALLY ERRED IN MAKING/CONFIRMING ADDITION OF RS. 78,49,967/- BY DI SALLOWING DEDUCTION CLAIMED U/S 80 IA OF THE I.T. ACT, 1961 W ITHOUT APPRECIATING THE FACTS OF THE CASE IN RIGHT PERSPEC TIVE AND ALSO IGNORING THE EXPLANATION OFFERED BY THE ASSESSEE DU RING THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDIN GS. AS PER INSTRUCTIONS OF THE BOARD AND IN VIEW OF VARIOUS JU DICIAL PRONOUNCEMENTS ON THE SUBJECT, THE CLAIM OF SUCH DE DUCTION SHOULD NOT BE DISALLOWED FOR BONA-FIDE AND PROCE DURAL LAPSE. THUS THE DISALLOWANCE SO MADE IS BAD IN LAW AND THE ADDITION MADE AND CONFIRMED ON THIS ACCOUNT DESERVES TO BE D ELETED SUMMARILY. 2 ITA NO. 366/JP/2017 M/S. NIHAL CHAND JAIN INFRA PROJECT PVT LTD., JAIPU R. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE AUTHORITIES BELOW HAVE LEGALLY AND FACTUALLY ERRED IN MAKING/SUSTAINING FOLLOWING ADDITIONS BY DISALLOWIN G VARIOUS EXPENSES DETAILED AS UNDER ON ADHOC BASIS WITHOUT P OINTING OUT ANY SPECIFIC INSTANCE OR DISCREPANCY AND ALSO WITHO UT APPRECIATING THE FACTS OF THE CASE IN RIGHT PERSPEC TIVE. THUS THE DISALLOWANCES SO MADE/SUSTAINED ARE BAD IN LAW AND DESERVE TO BE DELETED SUMMARILY : (A) OUT OF SALES PROMOTION EXPENSES RS. 25,000/- (B) OUT OF TELEPHONE AND CONVEYANCE EXP. RS. 20,000/- (C) OUT OF PUMP REPAIR & MAINTENANCE EXP. RS. 25,000/- (D) OUT OF OFFICE, STAFF WELFARE AND VEHICLE REPAIR & MAINTENANCE EXPENSES RS. 30,000/- 3. THE APPELLANT CRAVES TO ADD, AMEND OR WITHDRAW A NY OF THE GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HE ARING OF APPEAL. GROUND NO. 1 IS REGARDING DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80IA OF THE IT ACT FOR WANT OF TAX AUDIT RE PORT IN FORM 10CCB ALONG WITH THE RETURN OF INCOME. 2. THE ASSESSEE FILED ITS RETURN OF INCOME ELECTRON ICALLY ON 30.09.2013 AND CLAIMED DEDUCTION UNDER SECTION 80IA OF RS. 78,49,9 67/-. THE AO NOTED THAT FORM NO. 10CCB IS ALSO TO BE E-FILED ALONG WITH THE RETU RN OF INCOME AND AUDIT REPORT HAS NOT BEEN DONE. ACCORDINGLY, THE AO HELD THAT IN VI EW OF THE PROVISIONS OF SECTION 80IA(7) THE DEDUCTION SHALL NOT BE ADMISSIBLE IN TH E ABSENCE OF AUDIT REPORT IN FORM NO. 10CCB FURNISHED ALONG WITH THE RETURN OF INCOME . HENCE THE AO DENIED THE DEDUCTION UNDER SECTION 80IA. THE ASSESSEE CHALLEN GED THE ACTION OF THE AO BEFORE THE LD. CIT (A) AND CONTENDED THAT THE PRIMARILY RE SPONSIBILITY TO FILE THE RETURN OF INCOME WAS DISCHARGED BY THE ASSESSEE WITHIN THE ST IPULATED TIME PERIOD. THE ASSESSEE FURTHER CONTENDED THAT FILING OF AUDIT REP ORT IS A PROCEDURAL ASPECT AND NOT 3 ITA NO. 366/JP/2017 M/S. NIHAL CHAND JAIN INFRA PROJECT PVT LTD., JAIPU R. A FUNDAMENTAL LEGAL OBLIGATION. THEREFORE, THE ASSE SSEE SUBSEQUENTLY FILED THE AUDIT REPORT IN SATISFACTION OF THE PROVISIONS OF SECTION 80IA(7) OF THE ACT. THE ASSESSEE RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DR. L.M. SINGHVI, 289 ITR 425 (RAJ.). THE LD. CIT (A) WAS NOT CONVINCED WITH THE CONTENTION OF THE ASSESSEE AND ALSO DISTINGUISHED T HE DECISION RELIED UPON BY THE ASSESSEE ON THE GROUND THAT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION E-FILING OF AUDIT REPORT IS MANDATORY AND, THEREFORE, NON-COMPL IANCE OF THE NECESSARY CONDITION IS NOT A TECHNICAL OR PROCEDURAL ASPECT BUT DISENTI TLE THE ASSESSEE TO CLAIM DEDUCTION UNDER SECTION 80IA. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS REITE RATED HIS CONTENTION AS RAISED BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE DULY EXPLAINED THE REASONS FOR NOT FILING THE FORM NO. 10CCB ALONG WIT H THE RETURN OF INCOME E-FILED. THE LD. A/R HAS REFERRED TO THE AFFIDAVIT OF THE AU THORIZED REPRESENTATIVE/CHARTERED ACCOUNTANT OF THE ASSESSEE WHO FILED THE RETURN AND SUBMITTED THAT THE TAX AUDIT REPORT WAS DULY PREPARED BY THE AUDITOR, HOWEVER, A T THE TIME OF FILING THE RETURN DUE TO OVERSIGHT FORM NO. 10CCB COULD NOT BE SENT A S THE SAME WAS MIXED UP WITH OTHER PAPERS WHILE SCANNING THEM. THUS WHEN THE REP ORT WAS READY BUT DUE TO INADVERTENCE AND BONAFIDE MISTAKE IT COULD NOT BE F ILED ALONG WITH THE RETURN, THE SAME CANNOT BE A REASON FOR DENIAL OF DEDUCTION UND ER SECTION 80IA WHEN THE ASSESSEE HAS DULY FILED THE FORM NO. 10CCB DURING T HE ASSESSMENT PROCEEDINGS. HE HAS RELIED UPON VARIOUS DECISIONS ON THIS POINT INC LUDING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DR . L.M. SINGHVI (SUPRA). 4 ITA NO. 366/JP/2017 M/S. NIHAL CHAND JAIN INFRA PROJECT PVT LTD., JAIPU R. 3.1. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT FOR THE YEAR UNDER CONSIDE RATION THE AUDIT REPORT IN FORM NO. 10CCB WAS REQUIRED TO BE FILED ALONG WITH THE R ETURN OF INCOME THROUGH E-FILING. THEREFORE, AS PER RULE 18BBB THE ASSESSEE WAS REQUI RED TO E-FILE THE FORM NO. 10CCB ALONG WITH THE RETURN OF INCOME AND NON COMPLIANCE OF THE SAID CONDITION DISENTITLE THE ASSESSEE FOR THE DEDUCTION UNDER SECTION 80IA O F THE ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THIS IS NOT THE FIRST YEAR OF CLAIM OF DEDU CTION UNDER SECTION 80IB AND, THEREFORE, IT IS NOT THE CASE OF THE A.O. THAT THE ASSESSEES UNDERTAKING IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB. HOWEVER, ONLY FO R WANT OF FILING OF FORM NO. 10CCB ALONG WITH THE RETURN OF INCOME AND THROUGH E -FILING, THE AO HAS DENIED THE CLAIM OF DEDUCTION UNDER SECTION 80IA. THE ASSESSE E SUBSEQUENTLY FILED THE FORM NO. 10CCB DURING THE ASSESSMENT PROCEEDINGS AND ALS O EXPLAINED THE REASONS FOR NOT E-FILING THE FORM 10CCB ALONG WITH THE RETURN O F INCOME. THERE IS NO DISPUTE THAT THE RETURN OF INCOME WAS FILED WITHIN THE PERI OD OF LIMITATION PROVIDED UNDER SECTION 139(1) OF THE IT ACT. HENCE ONLY BECAUSE T HE ASSESSEE COULD NOT E-FILE THE FORM NO. 10CCB ALONG WITH THE RETURN OF INCOME, THE ASSESSEE CANNOT BE DENIED THE BENEFIT OF SECTION 80IA OF THE ACT. THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DR. L.M. SINGHVI (SUPRA) WHILE CONSIDERI NG THE ISSUE OF FILING OF AUDIT REPORT ALONG WITH THE RETURN OF INCOME HAS HELD IN PARA 9 TO 15 AS UNDER :- 9. THE LAST CONDITION REMAINED TO BE FILLED, VIZ., THAT THE REPORT OF SUCH AUDIT TO BE ANNEXED WITH R ETURN BUT WAS FURNISHED DURING THE COURSE OF PROCEEDINGS. THE CLA IM TO DEDUCTION WAS DISALLOWED FOR THIS BREACH BY T HE ASSESSING OFFICER. WHETHER THE LAST OF CONDITION, VIZ., FILING OF AUDIT REPORT IS MANDATORY IN THE SENSE T HAT MERE SUBMISSION OF AUDIT REPORT LATER ON DURING THE COUR SE OF ENQUIRY RENDERS THE CLAIM VOID AB INITIO OR REQUIREMENT BEING PROCEDURAL IS ONLY DIRECTORY IN NATURE AND CO MPLIANCE IN SUBSTANCE WILL BE SUFFICIENT COMPLIANCE ? IN OTHER 5 ITA NO. 366/JP/2017 M/S. NIHAL CHAND JAIN INFRA PROJECT PVT LTD., JAIPU R. WORDS, WHERE THERE IS ANY DISTINCTION BETWEEN THE N ATURE OF SUBSTANTIVE CONDITION, PROCEDURAL CONDITIO N AND TECHNICAL CONDITION. 10. THE DISTINCTION BETWEEN THE PRESCRIPTION OF SUBSTA NTIVE CONDITION AND A PROCEDURAL AND TECHNICAL PART OF CONDITION TO AVAIL TAX EXEMPTION WAS SUCCINCTLY STA TED BY THE SUPREME COURT IN MANGALORE CHEMICALS & FERTILIZERS LTD. V. DY. COMMISSIONER OF COMMERCIAL TAXES AIR 1992 SC 152. THE CONTENTION WAS RAISED BEFORE THE SUPREME COURT THAT A CONDITION STATUTORILY PROVI DED FOR AVAILING A BENEFIT MUST BE HELD SUBSTANTIVE IN ALL CASES AND NON-COMPLIANCE OF STATUTORY CONDITION MUST RESU LT IN FORFEITURE OF EXEMPTION. THE COURT REPELLED TH IS CONTENTION AND EXPLAINED : '. . .THERE IS A FALLACY IN THE EMPHASIS OF THIS AR GUMENT. THE CONSEQUENCE WHICH SHRI NARASIMHA MURTHY SUGGESTS SHOULD FLOW FROM THE NON-COMPLIANCE WOULD, INDEED, BE THE RESULT IF THE CONDITION WAS A SUBSTANTIVE ONE AND ONE FUNDAMENTAL TO THE POLICY U NDERLYING THE EXEMPTION. ITS STRINGENCY AND MANDATORY NATURE MUST BE JUSTIFIED BY THE PURPOSE I NTENDED TO BE SERVED. THE MERE FACT THAT IT IS STAT UTORY DOES NOT MATTER ONE WAY OR THE OTHER. THERE ARE CON DITIONS AND CONDITIONS. SOME MAY BE SUBSTANTIVE, MANDATORY AND BASED ON CONSIDERATIONS OF POLICY AND SOME OTHERS MAY MERELY BELONG TO THE AREA OF PROCEDURE. IT WILL BE ERRONEOUS TO ATTACH EQUAL IMP ORTANCE TO THE NON-OBSERVANCE OF ALL CONDITIONS IRRESPECTIVE OF THE PURPOSES THEY WERE INTENDED TO SERVE.' (P.157) 11. THE COURT APPROVED THE FOLLOWING PRINCIPLE STATED BY FRANCIS BENNION IN HIS 'STATUTORY INTERPRETATION' : 'UNNECESSARY TECHNICALITY; MODERN COURTS SEEK TO CU T DOWN TECHNICALITIES ATTENDANT UPON A STATUTORY PROCEDURE WHERE THESE CANNOT BE SHOWN TO BE NECESSA RY TO THE FULFILMENT OF THE PURPOSES OF THE LEGISLATION.' 12. THE JUDGMENT OF THE HIGH COURT WAS REVERSED ON THE GROUND THAT VIEW TAKEN BY THE HIGH COURT DOES NOT ACKNOWLEDGE THE ESSENTIAL DISTINCTION BETWEEN WHAT WAS A MATTER OF FORM AND WHAT WAS ONE OF SUBSTANCE. 13. A LIKE PRINCIPLE WAS ENUNCIATED BY THE SUPREME COUR T IN CASE OF KRISHNA KUMAR MEDIRATTA V. PHULCHAND AGARWALA [1977] 2 SCC 5, WHILE CONSIDERING THE CASE UNDER MIN ERAL CONCESSIONS RULES, 1960, WHERE THE QUESTION WAS ABOUT THE VALIDITY OF ENTERTAINING THE APPLICAT ION ACCOMPANIED WITH FEES. 14. THE HIGH COURT UPHELD THE CONTENTION ABOUT INCOMPE TENCY OF SUCH APPLICATION TO BE ENTERTAINED WHILE S ETTING ASIDE THE ORDER OF CENTRAL GOVERNMENT. REVERSING THE JUDGMENT OF HIGH COURT, THE SUPREME COURT SAID : 'ON THE OTHER HAND, WE FIND THAT THE HIGH COURT ITSE LF COMMITTED AN ERROR, WHICH SEEMS TO US TO BE VERY APPARENT, IN HOLDING THAT AN APPLICATION, WHICH HAD ONLY TO BE ACCOMPANIED BY THE FEE WOULD BE CONSIDERED VALIDLY FILED ON THE DATE ON WHICH IT WA S MADE ONLY IF PROPER FEE HAD BEEN TENDERED WITH IT WHEN IT WAS FILED. A RIGHT AND REASONABLE PROCEDURE LOOKS TO SUBSTANCE RATHER THAN FORM OF A TRANSACTI ON IN ORDER TO DETERMINE ITS NATURE. THE STATUTE AND T HE RULES MADE THEREUNDER WOULD HAVE SAID SO IF THE APPLICATION ITSELF WAS TO BE DEEMED TO BE VOID AB INITIO FOR NON- COMPLIANCE WITH A PARTICULAR TECHNICAL REQUIREMENT IF THAT WAS THE INTENTION BEHIND THEM.' 15. IN COMING TO THIS CONCLUSION, THE COURT SAID : '. . .THE USE OF WORD SHALL IN IMPOSING A DUTY IS NOT CONCLUSIVE ON THE QUESTION WHETHER THE DUTY IMPOSED IS MANDATORY OR DIRECTORY. MOREOVER, THAT Q UESTION WAS ONLY INCIDENTALLY INVOLVED HERE. IT IS THE BREACH OF EVERY MANDATORY DUTY IN PERFORMING A PRES CRIBED ACT THAT COULD MAKE AN ACTION TOTALLY INEFFECTIVE OR VOID AB INITIO. THE FILING OF APPLICATION IS ONE THING AND COMPLET ION OF SOME ANNEXED DUTY, WHICH IS LEGALLY SEPARABLE, IS ANOTHER UNLESS A STA TUTE OR A RULE PROVIDES OTHERWISE.' ACCORDINGLY, IN VIEW OF BINDING PRECEDENT OF HONBL E JURISDICTIONAL HIGH COURT, WE HOLD THAT THE ASSESSEE CANNOT BE DENIED THE BENEFIT OF SECTION 80IA MERELY BECAUSE FORM NO. 10CCB WAS NOT FILED ALONG WITH THE RETURN OF INCOME WHEN IT WAS FOUND TO 6 ITA NO. 366/JP/2017 M/S. NIHAL CHAND JAIN INFRA PROJECT PVT LTD., JAIPU R. BE READY AND FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND FURTHER THE ASSESSEE HAD DULY EXPLAINED THE REASONS FOR NOT FIL ING FORM NO. 10CCB ALONG WITH THE RETURN OF INCOME BY WAY OF FILING THE AFFIDAVIT OF THE AUDITOR OF THE ASSESSEE. HENCE WE ALLOW THE CLAIM OF THE ASSESSEE AND ORDERS OF TH E AUTHORITIES BELOW ARE SET ASIDE. GROUND NO. 2 IS REGARDING ADHOC DISALLOWANCE OF CER TAIN EXPENSES. 5. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. IN VIEW OF OUR FINDING ON GROU ND NO. 1 REGARDING THE CLAIM OF DEDUCTION UNDER SECTION 80IA, THE EXPENSES TO THE E XTENT OF THE ELIGIBLE BUSINESS OF THE ASSESSEE SHALL HAVE NO REVENUE EFFECT EVEN IF A DHOC DISALLOWANCE IS MADE BY THE AO. ACCORDINGLY, THE AO IS DIRECTED TO RECONSIDER THIS ISSUE IN THE LIGHT OF THE ADJUDICATION OF GROUND NO. 1. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 14/08/ 2018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER. JAIPUR DATED:- 14/08/2018. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. NIHAL CHAND JAIN INFRA PROJE CT PVT. LTD., JAIPUR. 2. THE RESPONDENT THE ITO, WARD 5(1), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 366/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 7 ITA NO. 366/JP/2017 M/S. NIHAL CHAND JAIN INFRA PROJECT PVT LTD., JAIPU R.