Sri Venkateswara Pipes Ltd, Hyderabad V. DCIT, Hyderabad

ITA 437/HYD/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5962 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-02-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 02-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VASUNDHARA SINHA
• Section: 80IB; 148; 263

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL HYDERABAD BENCH 'B' BEFORE SHRI N.R.S.GANESAN AND SHRI AKBER BASHA I.T.A.NO.437/HYD/2009 ASSESSMENT YEAR 2004-05 SRI VENKATESWARA PIPES LTD., SECUNDERABAD. .. APPELLANT (PAN AAECS1639L) VERSUS DY. CIT, CIRCLE 3(2), HYDERABAD. ..RESPONDENT APPELLANT BY : SHRI A.SRINIVAS RESPONDENT BY : SMT. VASUNDHARA SINHA O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE WAS DISMISSED EARLIER BY AN ORDER DATED 10-7- 2009. HOWEVER, ON APPLICATION OF THE ASSESSEE IN M. A.NO.126/HYD/2009, THIS TRIBUNAL RECALLED ITS ORDER DATED 10-7-2009 AND RES TORED THE APPEAL ON FILE. ACCORDINGLY, THE APPEAL WAS POSTED AGAIN FOR FINAL DISPOSAL BEFORE THIS BENCH. 2. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL IS NON-FILING OF AUDIT REPORT IN FORM 10CCB ALONG WITH RETURN OF INC OME. THE ADMINISTRATIVE COMMISSIONER FOUND THAT THE NON-FILING OF THE AUDIT REPORT IN FORM 10CCB WOULD AMOUNT TO ERRONEOUS GRANTING OF RELIEF TO THE ASSES SEE AND PREJUDICE THE INTERESTS OF THE REVENUE. SHRI A.SRINIVAS, LEARNED REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE FILING OF THE AUDIT RE PORT IS ONLY DISCRETIONARY. THE AUDIT REPORT WAS FILED BEFORE THE ADMINISTRATIVE CO MMISSIONER AS SOON AS HE INITIATED THE REVISION PROCEEDINGS IN EXERCISE OF H IS POWER UNDER SEC. 263 OF THE INCOME-TAX ACT, 1961. IN SPITE OF FILING OF AUDIT R EPORT IN FORM 10CCB BEFORE THE 2 ADMINISTRATIVE COMMISSIONER ON 22-1-2009, THE COMMI SSIONER FOUND THAT THE NON-FILING OF AUDIT REPORT WOULD PREJUDICE THE INTE RESTS OF THE REVENUE. REFERRING TO THE ASSESSMENT ORDER, THE LEARNED REPR ESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER COMPUTED THE ELIGIBLE DEDUCTI ON UNDER SEC. 80IB AND FOUND THAT THE INCOME FROM OTHER SOURCES WAS NOT EL IGIBLE FOR DEDUCTION SINCE THE SAME WAS NOT DERIVED FROM INDUSTRIAL UNDERTAKIN G. ACCORDINGLY, THE AO RE- COMPUTED THE ELIGIBLE DEDUCTION UNDER SEC. 80IB AT RS.22,10,058. THE LEARNED REPRESENTATIVE SUBMITTED THAT THE AO NEVER RAISED T HE ISSUE OF NON-FILING OF AUDIT REPORT IN FORM 10CCB AT THE TIME OF ASSESSMEN T. REFERRING TO THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT V. SH REE MANJUATHESWARE PACKING PRODUCTS AND CAMPHOR WORKS (1998) 231 ITR 5 3, THE LEARNED REPRESENTATIVE SUBMITTED THAT 'RECORD' MEANS THE MA TERIAL WHICH CAME INTO THE POSSESSION OF THE COMMISSIONER ALSO. THEREFORE, WHE N FORM 10CCB WAS FILED BEFORE THE ADMINISTRATIVE COMMISSIONER, IT WAS A NE W MATERIAL WHICH CAME INTO THE POSSESSION OF THE COMMISSIONER DURING THE COURS E OF ENQUIRY IN THE REVISION PROCEEDING. THEREFORE, THE ADMINISTRATIVE COMMISSIO NER HAS TO CONSIDER THE AUDIT REPORT IN FORM 10CCB WHICH WAS FILED BY THE A SSESSEE IN THE COURSE OF REVISION PROCEEDING. IN VIEW OF THIS JUDGMENT OF TH E APEX COURT, ACCORDING TO THE LEARNED REPRESENTATIVE, THE ADMINISTRATIVE COMM ISSIONER IS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SEC. 80IB.. 3. ON THE CONTRARY, SMT. VASUNDHARA SINHA, LEARNED DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT VARIOUS JUDICIAL DEC ISIONS HELD THAT FILING OF AUDIT REPORT IN FORM 10CCB IS MANDATORY. HOWEVER, THE TIM E OF FILING IS DISCRETIONARY. HOWEVER, THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. HEMSONS 3 INDUSTRIES (2001) 251 ITR 693, HELD THAT MERELY BEC AUSE THE AUDIT REPORT WAS NOT FILED ALONG WITH THE RETURN OF INCOME, IT WOULD NOT DISENTITLE THE ASSESSEE TO CLAIM THE BENEFIT. HOWEVER, THE AUDIT REPORT HAS TO BE FILED BEFORE PASSING OF THE ASSESSMENT ORDER. IN VIEW OF THIS JUDGMENT OF T HE JURISDICTIONAL HIGH COURT, ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIV E, THE AUDIT REPORT HAS TO BE FILED BEFORE THE PASSING OF THE ASSESSMENT ORDER . SINCE IN THIS CASE ADMITTEDLY THE AUDIT REPORT WAS NOT FILED BEFORE TH E PASSING OF THE ASSESSMENT ORDER BY THE AO, THE COMMISSIONER RIGHTLY DISALLOWE D THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SEC. 80IB. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. NO DOUBT, FOR THE PUR POSE OF CLAIMING DEDUCTION UNDER SEC. 80IB, THE ASSESSEE HAS NECESSARILY TO FI LE THE AUDIT REPORT IN FORM 10CCB. AS RIGHTLY POINTED OUT BY THE LEARNED DEPART MENTAL REPRESENTATIVE, VARIOUS JUDICIAL DECISIONS INCLUDING THE JUDGMENT O F THE ANDHRA PRADESH HIGH COURT CONSIDERED THIS ISSUE AND FOUND THAT MERE FAI LURE OF THE ASSESSEE TO FILE THE AUDIT REPORT ALONG WITH THE RETURN OF INCOME WO ULD NOT DISENTITLE THE ASSESSEE TO CLAIM THE RELIEF. IN FACT, THE ANDHRA P RADESH HIGH COURT HELD THAT THE ASSESSEE HAS TO FILE THE AUDIT REPORT BEFORE CO NCLUSION OF THE ASSESSMENT PROCEEDING. THE ANDHRA PRADESH HIGH COURT HAS OBSER VED AS FOLLOWS AT PAGES 701 AND 702 OF THE REPORT:- 'FROM THE ABOVE OBSERVATION OF THIS COURT, IT IS Q UITE CLEAR THAT THE MERE FACT THAT THE ASSESSEE FAILED TO ENCLOSE THE A UDIT REPORT ALONG WITH THE RETURN ITSELF WOULD NOT DISENTITLE HIM TO CLAIM THE BENEFIT, AND, ON THE OTHER HAND, IF HE FILES THE AUDIT REPORT BEFORE THE ASSESSMENT ORDER IS PASSED, HE WILL BE ENTITLED TO THE DEDUCTION. ADMIT TEDLY, IN THIS CASE, THE PETITIONER FILED THE AUDIT REPORT BEFORE CONCLUSION OF THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEARS 1981-82 AND 19 84-85. AS REGARDS 4 THE ASSESSMENT YEAR 1979-80 ALSO, IT WAS FILED IN T HE REASSESSMENT PROCEEDING IN RESPONSE TO THE SHOW CAUSE NOTICE UND ER SECTION 148 OF THE ACT.' 5. NOW, THE QUESTION ARISES WHETHER THE ASSESSMENT PROCEEDING WAS CONCLUDED IN THE CASE BEFORE US. THE ASSESSMENT PRO CEEDING WILL BE CONCLUDED AS SOON AS THE TIME LIMIT FOR FILING OF APPEAL/REVI SION EXPIRES IN CASE THE ASSESSEE HAS NOT FILED ANY APPEAL AND NO REVISION P ROCEEDING IS INITIATED. IN THIS CASE THE ADMINISTRATIVE COMMISSIONER INITIATED REVI SION PROCEEDING. IT IS WELL SETTLED PRINCIPLE OF LAW THAT APPEAL/REVISION PROCE EDING IS A CONTINUATION OF THE ASSESSMENT PROCEEDING. THEREFORE, WHEN THE ASSESSEE FILED THE AUDIT REPORT IN FORM 10CCB BEFORE THE ADMINISTRATIVE COMMISSIONER I N THE REVISION PROCEEDING, IT NEEDS TO BE CONSIDERED. MOREOVER, THE APEX COURT IN THE CASE OF SHREE MANJUNATHESWARE PACKING PRODUCTS (SUPRA) CONSIDERED THIS ISSUE ELABORATELY AND FOUND THAT 'RECORD' INCLUDES THE MATERIAL WHICH CAME INTO THE POSSESSION OF THE COMMISSIONER IN THE COURSE OF ENQUIRY DURING TH E REVISION PROCEEDING. IN FACT, THE APEX COURT OBSERVED AS FOLLOWS AT PAGES 6 2 AND 63 OF THE REPORT:- 'IT, THEREFORE, CANNOT BE SAID, AS CONTENDED BY TH E LEARNED COUNSEL FOR THE RESPONDENT, THAT THE CORRECT AND SETTLED PO SITION, WITH RESPECT TO THE MEANING OF THE WORD 'RECORD' TILL JUNE 1, 1988, WAS THAT IT MEANT THE RECORD WHICH WAS AVAILABLE TO THE INCOME-TAX OFFICE R AT THE TIME OF PASSING OF THE ASSESSMENT ORDER. FURTHER, WE DO NOT THINK THAT SUCH A NARROW INTERPRETATION OF THE WORD 'RECORD' WAS JUST IFIED, IN VIEW OF THE OBJECT OF THE PROVISION AND THE NATURE AND SCOPE OF THE POWER CONFERRED UPON THE COMMISSIONER. THE REVISIONAL POWER CONFERR ED ON THE COMMISSIONER UNDER SEC. 263 IS OF WIDE AMPLITUDE. I T ENABLES THE COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THE ACT. IT EMPOWERS THE COMMISSIONER TO MAKE OR CA USE TO BE MADE SUCH ENQUIRY AS HE DEEMS NECESSARY IN ORDER TO FIND OUT IF ANY ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. AFTER EXAMINING THE R ECORD AND AFTER MAKING OR CAUSING TO BE MADE AN ENQUIRY IF HE CONSIDERS TH E ORDER TO BE ERRONEOUS THEN HE CAN PASS THE ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY. OBVIOUSLY, AS A RESULT OF THE ENQUIRY HE MAY COME INTO 5 POSSESSION OF NEW MATERIAL AND HE WOULD BE ENTITLED TO TAKE THAT NEW MATERIAL INTO ACCOUNT. IF THE MATER, WHICH WAS NOT AVAILABLE TO THE INCOME-TAX OFFICER WHEN HE MADE THE ASSESSMENT COUL D THUS BE TAKEN INTO CONSIDERATION BY THE COMMISSIONER AFTER HOLDIN G AN ENQUIRY, THERE IS NO REASON WHY THE MATERIAL WHICH HAD ALREADY COME O N RECORD THOUGH SUBSEQUENTLY TO THE MAKING OF THE ASSESSMENT CANNOT BE TAKEN INTO CONSIDERATION BY HIM. MOREOVER, IN VIEW OF THE CLEA R WORDS USED IN CLAUSE (B) OF THE EXPLANATION TO SECTION 263(1), IT HAS TO BE HELD THAT WHILE CALLING FOR AND EXAMINING THE RECORD OF ANY PROCEED ING UNDER SECTION 263(1) IT IS AND IT WAS OPEN TO THE COMMISSIONER NO T ONLY TO CONSIDER THE RECORD OF THAT PROCEEDING BUT ALSO THE RECORD RELAT ING TO THAT PROCEEDING AVAILABLE TO HIM AT THE TIME OF EXAMINATION.' IN VIEW OF THIS JUDGMENT OF THE APEX COURT, THE ADM INISTRATIVE COMMISSIONER IS BOUND TO CONSIDER THE RECORD WHICH CAME INTO HIS PO SSESSION DURING REVISION PROCEEDING ALSO. IN OTHER WORDS, THE ADMINISTRATIVE COMMISSIONER CANNOT IGNORE THE AUDIT REPORT FILED BY THE ASSESSEE IN FO RM 10CCB BEFORE HIM. IN VIEW OF THIS JUDGMENT OF THE APEX COURT, IN OUR OPINION, THE MATTER NEEDS TO BE RE- CONSIDERED BY THE ASSESSING OFFICER IN THE LIGHT OF THE AUDIT REPORT FILED BY THE ASSESSEE IN FORM 10CCB BEFORE THE ADMINISTRATIVE CO MMISSIONER. A SIMILAR VIEW WAS TAKEN BY A CO-ORDINATE BENCH OF THIS TRIBUNAL I N THE CASE OF SALZGITTER HYDRAULICS P. LTD. V. DCIT, I.T.A.NO.436/HYD/2009 D ATED 13-8-2009, AND IN THE CASE OF SIDDALINGESHWARA COLD STORAGE PVT. LTD. V. CIT-III, I.T.A.NO.352/HYD/2009 DATED16-9-2009. IN VIEW OF TH E ABOVE DISCUSSION, IN OUR OPINION, THE AO HAS TO RE-CONSIDER THE CLAIM OF DED UCTION UNDER SEC. 80IB IN THE LIGHT OF THE AUDIT REPORT FILED BY THE ASSESSEE IN FORM 10CCB. ACCORDINGLY, WE MODIFY THE ORDER OF THE ADMINISTRATIVE COMMISSIONER AND DIRECT THE AO TO CONSIDER THE CLAIM OF THE ASSESSEE FOR DEDUCTION UN DER SEC. 80IB IN THE LIGHT OF THE AUDIT REPORT FILED BEFORE THE ADMINISTRATIVE CO MMISSIONER AND DECIDE THE 6 ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 5-2-2010. SD SD (AKBER BASHA) (N.R.S.GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, 5TH FEBRUARY, 2010. RRRAO. COPY OF THE ORDER FORWARDED TO:- 1. V.SRIDHAR & CO., 12-2-823/A/78, GEETHA APARTMENTS, SANTOSH NAGAR COLONY, MEHIDIPATNAM, HYDERABAD 500 028. 2. DCIT, CIRCLE 3(2), HYDERABAD. 3. CIT III, HYDERABAD. 4. DR, ITAT, HYDERABAD. 1. DATE OF DICTATION : 3-2-2010 2. DATE ON WHICH TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER: 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER: 4-2-10 AND OTHER MEMBERS: 5. DATE ON WHICH THE FAIR ORDER GOES TO THE SR. P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR: 9. DATE OF DESPATCH OF THE TRIBUNAL ORDER: