DODSON LINDBLOM HYDRO POWER (P) LTD, MUMBAI V. ITO 8(1)(3), MUMBAI

ITA 3811/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1549 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 13-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 11-06-2009
• Court: TRIBUNAL
• Department Lawyers: R N JHA
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Charitable institution; Opportunity of being heard; Reasonable cause; Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D BEFORE SHRI N.V. VASUDEVAN (JM) & T.R. SOOD (AM) I.T.A.NO. 3811/MUM/2009 (ASSESSMENT YEAR : 2004-05 ) M/S. DODSON LINDBLOM HYDRO POWER (P) LTD. 6, SHIV WASTU TEJPAL SCHEME ROAD 5, VILE PARLE (EAST) MUMBAI-400 057. VS. ITO-8(1)(3) MUMBAI APPELLANT RESPONDENT PAN/GIR NO. : AAACD7612A ASSESSEE BY : SHRI VIJAY KOTHARI DEPARTMENT BY : SHRI R.N. JHA ORDER PER N.V. VASUDEVAN, JM :- THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 26.3.2009 OF LEARNED CIT-8, MUMBAI U/S. 263 OF THE ACT RELATING TO A.Y. 2004-05. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF GENERATING HYDRO ELECTRICAL POWER. THE RETURN OF INCOME DECLAR ING TOTAL TAXABLE INCOME OF RS. NIL WAS FILED ON AFTER CLAIMING LEGIT IMATE DEDUCTION U/S. 80IA OF THE ACT. THE SAID RETURNED INCOME WAS FIRST ACCEPTED U/S. 143(1) OF THE ACT. LATER ON NOTICES WERE ISSUED U/S.143(2) /142(1) OF THE ACT AND THE SAID RETURNED INCOME WAS ACCEPTED U/S. 143(3) O F THE I.T. ACT, 1961. IN EXERCISE OF POWER U/S. 263 OF THE ACT, LEARNED C IT, ON PERUSAL OF THE ASSESSMENT RECORDS FOUND THAT THE CERTIFICATE IN FO RM NO. 10CCB WAS NEITHER SUBMITTED ALONG WITH THE RETURN OF INCOME N OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ACCORDING TO THE PROVIS IONS OF SEC.80-IA(7) OF THE ACT, FILING OF A CERTIFICATE IN FORM NO.10CCB I S MANDATORY FOR ALLOWING DEDUCTION U/S. 80IA. ACCORDING TO THE LEAR NED CIT, THE M/S. DODSON LINDBLOM HYDRO POWER (P) LTD. 2 ASSESSMENT MADE BY THE ASSESSING OFFICER WAS ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IN AS MUCH AS THE DEDUCT ION U/S.80-IA HAD BEEN ALLOWED BY THE AO WITHOUT FILING OF A CERTIFIC ATE IN FORM NO.10CCB WHICH IS MANDATORY ACCORDING TO THE PROVISIONS OF S EC.80-IA(7) OF THE ACT. 3. IN RESPONSE TO THE SHOW-CAUSE NOTICE ISSUED U/S. 263 OF THE ACT, THE ASSESSEE SUBMITTED BEFORE LEARNED CIT THAT BEFO RE COMPLETING THE ASSESSMENT THE ASSESSING OFFICER HAD ASKED FOR VARI OUS DETAILS AND THE SAME WERE DULY SUBMITTED. FOR CLAIMING THE DEDUCTIO N THE ASSESSEE HAD DULY SUBMITTED THE AUDIT REPORT U/S. 80IA IN FORM N O. 10CCB DULY SIGNED BY THE AUDITOR M/S. VAST & CO. AND THE ASSES SING OFFICER BASED ON THE AUDIT REPORT ONLY HAD GIVEN US THE DEDUCTION U/S. 80IA OF THE ACT. THE ASSESSEE ALSO SUBMITTED THAT ONLY ON PERUSAL OF THE NOTICE U/S.263 IT HAS COME TO ITS NOTICE THAT THE SAID REPORT IS NOT ON THE FILE OF THE DEPARTMENT. THE ASSESSEE TOOK A PLEA THAT THE AUDI T REPORT IN FORM NO. 10CCB FILED WITH THE DEPARTMENT MIGHT HAVE BEEN EIT HER MISPLACED OR LOST FROM THE DEPARTMENTAL FILE. IT WAS REITERATED THAT THE COPY OF THE AUDIT REPORT IN 10CCB WAS FILED WITH THE ASSESSING OFFICER. IT WAS FURTHER SUBMITTED THAT THE AUDITOR WHO HAD SUBMITTED THE SA ME HAS EXPIRED AND THEREFORE IT WAS NOT POSSIBLE FOR THE ASSESSEE TO G IVE THE PROOF OF HAVING SUBMITTED. SINCE, THE ASSESSMENT HAS BEEN PASSED AF TER MAKING ENQUIRY AND EXAMINATION OF RECORDS IT CANNOT BE SAID THAT T HE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS. 4. THE LEARNED CIT, HOWEVER, HELD THAT EVEN DURING THE 263 PROCEEDINGS, THE ASSESSEE HAS NOT PRODUCED ANY EVID ENCE THAT FORM NO. 10CCB WAS ENCLOSED ALONG WITH THE RETURN OF INCOME OR THE SAME WAS FILED DURING THE ASSESSMENT PROCEEDINGS. THUS, ACCO RDING TO CIT, THE CONDITIONS LAID DOWN U/S. 80IA(7) FOR ALLOWING THE DEDUCTION WERE NOT MET AND THE DEDUCTION ALLOWED BY THE ASSESSING OFFI CER WITHOUT VERIFYING THE CONDITIONS IS PATENTLY ERRONEOUS AND THE SAME I S PREJUDICIAL TO THE INTEREST OF REVENUE AS IT HAS THE EFFECT OF REDUCIN G THE TAXABLE INCOME. ACCORDINGLY, THE ASSESSMENT MADE BY THE ASSESSING O FFICER IN AS MUCH M/S. DODSON LINDBLOM HYDRO POWER (P) LTD. 3 AS ALLOWING THE CLAIM U/S. 80IA IS CONCERNED, WAS S ET ASIDE WITH A DIRECTION THAT THE ASSESSING OFFICER SHALL VERIFY A ND SATISFY HIMSELF WHETHER FORM NO. 10CCB WAS ACTUALLY FILED OR NOT. I N CASE THE ASSESSEE FAILS TO PROVE THE FILING OF FORM NO. 10CCB, THE CL AIM U/S. 80IA SHOULD NOT BE ALLOWED. THE ASSESSING OFFICER WAS DIRECTED TO PASS ORDER AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LEARNED CIT, THE ASSESSEE HAS PREFERRED THE PRES ENT APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE SUBMISSIONS OF LEARNED COUNSEL FOR THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE REQUIRED FORM NO. 10CCB WAS FILED IN COURSE OF PROC EEDINGS BEFORE LEARNED CIT U/S. 263 OF THE ACT. IT WAS FURTHER SUB MITTED THAT FILING OF THE ABOVE FORM IS NOT MANDATORY AND IS ONLY DIRECTORY. IT WAS ALSO POINTED OUT THAT THE ASSESSEE WILL NOT BE IN A POSITION TO FILE PROOF FOR HAVING FILED CERTIFICATE BEFORE THE ASSESSING OFFICER BECAUSE OF THE DEATH OF THE CHARTERED ACCOUNTANT. RELIANCE WAS PLACE BY HIM ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. G UJARAT OIL & ALLIED INDUSTRIES, 201 ITR 325 AND ZENITH PROCESSING MILLS , 219 ITR 721 FOR THE PROPOSITION THAT FILING OF THE AUDIT REPORT ALONG W ITH RETURN OF INCOME IS ONLY DIRECTORY AND NOT MANDATORY. 6. LEARNED DR ON THE OTHER HAND RELIED ON THE ORDER OF LEARNED CIT(A) AND SUBMITTED THAT SINCE THERE WAS NO PROOF FOR THE ASSESSEE HAVING FILED NECESSARY FORM FOUND DURING THE ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER OUGHT NOT TO HAVE ALLOWED DEDUCTION U/S. 80 IA OF THE ACT. HE SUBMITTED THAT IN THE CIRCUMSTANCES, ORDER OF THE A SSESSING OFFICER WAS ERRONEOUS AND LEARNED CIT WAS JUSTIFIED IN PASSING IMPUGNED ORDER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SEC.80 -IA(7) READS AS UNDER:- (7)THE DEDUCTION UNDER SUB-SECTION (1) FROM PROFIT S AND GAINS DERIVED FROM AN UNDERTAKING SHALL NOT BE ADMISSIBLE UNLESS THE ACCOUNTS OF THE UNDERTAKING FOR THE PREVIOUS YEAR R ELEVANT TO THE M/S. DODSON LINDBLOM HYDRO POWER (P) LTD. 4 ASSESSMENT YEAR FOR WHICH THE DEDUCTION IS CLAIMED HAVE BEEN AUDITED BY AN ACCOUNTANT, AS DEFINED IN THE EXPLANA TION BELOW SUB-SECTION (2) OF SECTION 288, AND THE ASSESSEE FU RNISHES, ALONG WITH HIS RETURN OF INCOME, THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH AC COUNTANT. THE QUESTION IS WHETHER THE TIME LIMIT FOR FURNISHI NG THE AUDIT REPORT ALONGWITH THE RETURN OF INCOME IS MANDATORY? THE L AW FIXES TIME LIMITS FOR COMPLIANCE WITH VARIOUS REQUIREMENTS. SOME OF T HE TIME LIMITS LIKE STIPULATIONS REGARDING FILING OF RETURNS OR APPEALS ARE MANDATORY. IN THE CASE OF APPEALS, UNLESS THE APPELLATE AUTHORITY CON DONES THE DELAY, THE ASSESSEE DOES NOT HAVE ANY RIGHT TO HAVE THE APPEAL ADMITTED. THERE ARE PROVISIONS REQUIRING, FOR EXAMPLE, FURNISHING OF AU DIT REPORT FOR VARIOUS DEDUCTIONS AND CONCESSIONS, WHICH ARE USUALLY FOUND TO BE REGULATORY AND HENCE ADMISSIBLE EVEN AT THE APPELLATE STAGE, I F REASONABLE CAUSE FOR THE DELAY IS ADDUCED. IN RESPECT OF REQUIREMENT O F AUDIT REPORT, BOARD'S CIRCULAR F.NO.267/482/77-IT(PART) DATED FEBRUARY 9, 1978, EXTRACTED FROM A BULLETIN, APPARENTLY NOT A PUBLIC CIRCULAR, BUT ALL THE SAME TREATED AS AN INSTRUCTION FROM THE BOARD, ADVISED THE ASSES SING OFFICERS NOT TO DENY EXEMPTION MERELY FOR LACK OF THE AUDITOR'S REP ORT. THIS CIRCULAR AND A FEW OTHER DECISIONS WERE RELIED UPON BY THE PUNJA B AND HARYANA HIGH COURT IN CIT V. SHAHZEDANAND CHARITY TRUST [1997] 2 28 ITR 292 FOR CONDONING THE DELAY IN FURNISHING AUDIT REPORT BY A CHARITABLE TRUST. THIS CIRCULAR WAS RELIED UPON FOR THE SAME CONCLUSION RE GARDING ANOTHER CHARITABLE TRUST BY THE CALCUTTA HIGH COURT IN CIT V. RAI BAHADUR BISSESSWARLAL MOTILAL MALWASIE TRUST [1992] 195 ITR 825 (CAL). A SIMILAR VIEW THAT FILING OF THE AUDIT REPORT IS NOT MANDATO RY WAS TAKEN IN CIT V. GUJARAT OIL & ALLIED INDUSTRIES [1993] 201 ITR 325 (GUJ) FOR PURPOSES OF RELIEF UNDER SECTION 80J ON THE GROUND THAT AN INTE RPRETATION TO FURTHER THE OBJECT OF THE PROVISION HAS TO BE PREFERRED. IN THIS CONTEXT, SECTION 80J(1) REQUIRES THAT SUCH AUDIT REPORT 'SHALL' BE F ILED. BUT IT WAS HELD THAT THE WORD 'SHALL' MAY BE READ AS 'MAY'. 8. THE HONBLE GUJARAT HIGH COURT IN ZENITH PROCES SING MILLS V. CIT [1996] 219 ITR 721 HAVE HELD SUCH PROVISION TO BE D IRECTORY. IT IS M/S. DODSON LINDBLOM HYDRO POWER (P) LTD. 5 NECESSARY THAT WHERE AN ASSESSEE IS BONA FIDE ENTIT LED TO A CONCESSION AND THE DELAYED AUDIT REPORT IS NOT SUSPECT IN THE SENSE THAT IT WOULD AUTHORISE CONCESSION, WHICH IS NOT OTHERWISE ADMISS IBLE, THERE IS NO REASON WHY THE PURPOSE OF THE LAW SHOULD NOT BE ADV ANCED BY TREATING SUCH REQUIREMENT AS REGULATORY. 9. IN THE PRESENT CASE, WE FIND THAT PERSON WHO CLA IMS TO HAVE FILED AUDIT REPORT IS DEAD AND THE ASSESSEE HAS ALSO EXPR ESSED ITS INABILITY TO FILE PROOF FOR HAVING FILED THE REPORT BEFORE THE A SSESSING OFFICER. TAKING INTO CONSIDERATION THE JUDICIAL PRONOUNCEMENTS REFE RRED TO ABOVE, WE ARE OF THE VIEW THAT THE ORDER OF LEARNED CIT U/S. 263 REQUIRES TO BE MODIFIED. WE ACCORDINGLY MODIFY THE ORDER OF LEARNED CIT AND ALLOW OPPORTUNITY TO THE ASSESSEE TO FILE FORM NO. 10CCB BEFORE THE ASSE SSING OFFICER IN PROCEEDINGS PURSUANT TO ORDER OF LEARNED CIT U/S. 2 63. THE ASSESSING OFFICER WILL VERIFY THE CLAIM OF THE ASSESSEE IN TH E LIGHT OF SUCH CERTIFICATE AND DECIDE ON THE ELIGIBILITY OF DEDUCTION U/S. 80I A OF THE ACT. 10. FOR STATISTICAL PURPOSES, APPEAL OF THE ASSESSE E IS TREATED AS PARTLY ALLOWED. ORDER HAS BEEN PRONOUNCED ON 4 TH DAY OF JUNE, 2010. SD/- (T.R. SOOD) ACCOUNTANT MEMBER SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER DATED : 4 TH JUNE, 2010 COPY TO : 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR CONCERNED, MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI PS