DCIT, CHENNAI V. Sucram Pharmaceuticals Pvt Ltd., CHENNAI

ITA 808/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81127 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2014
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 12-06-2014
• Assessment Year: 2011-2012
• Appeal Filed On: 03-04-2014
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: N DEVANATHAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, C HENNAI . . . , ! '# , $ !%' !& BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NOS. 804 & 808/MDS/2014 ASSESSMENT YEARS: 2010-11 & 2011-12 DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-VI(4), AAYAKAR BHAVAN, NEW BLOCK, 7 TH FLOOR, 121, M.G.ROAD, CHENNAI-600 034 ( #' /APPELLANT) VS M/S.SUCRAM PHARMACEUTICALS PVT. LTD., NO.H-37/J, MANTHOPE COLONY, ASHOK NAGAR, CHENNAI-600 039 [PAN: AAFCS 1834 E] ( ()#' /RESPONDENT) REVENUE BY : SHRI GURU BHASHYAM, JCIT ASSESSEE BY : SHRI N. DEVANATHAN, ADVOCATE / DATE OF HEARING : 12-06-2014 / DATE OF PRONOUNCEMENT : 18-08-2014 %* / O R D E R PER VIKAS AWASTHY, J.M: THE APPEALS HAVE BEEN FILED BY THE REVENUE ASSAILIN G THE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-V I, CHENNAI, FOR THE ASSESSMENT YEARS (AYS) 2010-11 & 2011-12. T HE IMPUGNED ORDER FOR BOTH THE AYS ARE DATED 19-11-201 3. IN BOTH THE APPEALS, THE REVENUE HAS ASSAILED THE ALLOWABIL ITY OF DEDUCTION U/S.80-IC OF THE INCOME TAX ACT, 1961 (HE REIN AFTER I.T.A. NOS. 804 & 808/MDS/2014 2 REFERRED TO AS THE ACT) TO ASSESSEE, IN THE LIGHT OF THE FACT THAT THE ASSESSEE HAD FILED ELECTRONIC RETURN OF INCOME AFTE R THE DUE DATE AS SPECIFIED IN SECTION 139(1) OF THE ACT. 2. THE FACTS AS EMANATING FROM RECORDS ARE: THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF DRUGS AND MEDICINES. FOR THE AY.2 010-11, THE ASSESSEE HAD FILED MANUAL RETURN OF INCOME ON 09-09 -2010. SUBSEQUENTLY, THE ASSESSEE FILED RETURN OF INCOME I N ELECTRONIC MODE (E-MODE) ON 25-01-2011. THE ASSESSEE HAD CLAI MED DEDUCTION U/S.80-IC OF THE ACT. THE CASE OF THE AS SESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) WAS IS SUED TO THE ASSESSEE ON 29-08-2011. THE ASSESSING OFFICER VIDE ORDER DT.22-03-2013 HELD THAT, SINCE THE ASSESSEE HAS FAI LED TO FILE RETURN OF INCOME IN E-MODE WITHIN THE DUE DATE SPECIFIED U /S.139(1), THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S.80- IC. THE ASSESSING OFFICER ACCORDINGLY DIS-ALLOWED DEDUCTION OF ` 61,93,667/- CLAIMED BY THE ASSESSEE U/S.80-IC OF TH E ACT. SIMILARLY, FOR THE AY.2011-12, THE ASSESSEES CLAI M OF DEDUCTION U/S.80-IC WAS DIS-ALLOWED AS THE ASSESSEE FAILED TO FURNISH RETURN OF INCOME UNDER ELECTRONIC MODE ON O R BEFORE THE DUE DATE AS SPECIFIED U/S.139(1) OF THE ACT. I.T.A. NOS. 804 & 808/MDS/2014 3 AGGRIEVED BY THE ASSESSMENT ORDERS FOR THE RESPECT IVE AYS, THE ASSESSEE FILED APPEALS BEFORE THE CIT(APPEALS). THE CIT(APPEALS) VIDE IMPUGNED ORDERS HELD THAT THE FAU LT WAS ONLY TECHNICAL WHICH WAS BEYOND THE CONTROL OF ASSESSEE. THE CIT(APPEALS) ALLOWED BOTH THE APPEALS OF THE ASSESS EE. THE REVENUE HAS COME IN APPEAL ASSAILING THE FINDINGS O F CIT(APPEALS). 3. SHRI GURU BHASHYAM, APPEARING ON BEHALF OF THE R EVENUE SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED RETUR NS OF INCOME IN ELECTRONIC MODE WITHIN THE DUE DATE AS PRESCRIBED U /S.139(1) OF THE ACT. THE ASSESSEE HAS NOT COMPLIED WITH THE PROVIS IONS OF SECTION 80AC. ACCORDING TO THE PROVISIONS OF SECTION 80AC, THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S.80-IC ONLY, IF T HE RETURNS ARE FURNISHED ON OR BEFORE THE DUE DATE AS SPECIFIED U/ S.139(1). RULE 12(3)(AB) FURTHER MANDATES THE ASSESSEE TO FURNISH RETURN IN PRESCRIBED FORM ELECTRONICALLY UNDER DIGITAL SIGNAT URE. THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF TH E ACT AND RULES IN BOTH THE AYS THUS, THE ASSESSEE IS NOT ELI GIBLE TO CLAIM DEDUCTION U/S.80-IC. I.T.A. NOS. 804 & 808/MDS/2014 4 4. AU CONTRAIRE SHRI N.DEVANATHAN, APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT FOR THE AY.2010-11, THE ASS ESSEE HAD FILED RETURN OF INCOME MANUALLY ON 09-09-2010. THE DUE DATE FOR FILING OF RETURN WAS 30-09-2010. THUS, THE ASSESSE E HAD COMPLIED WITH THE SUBSTANTIVE PROVISIONS OF THE ACT IN FILIN G OF THE RETURN. ELECTRONIC FILING OF RETURN WAS MADE MANDATORY FROM THE AY.2010- 11. THE ACCOUNTANTS OF THE ASSESSEE WERE NOT AWARE THAT THE RETURN HAS TO BE FILED IN E-MODE. AS SOON AS IT CA ME TO THE KNOWLEDGE OF THE ACCOUNTANTS, THE RETURN WAS FURNIS HED IN E-MODE ON 25-01-2011. AS REGARD AY.2011-12, THE LD.COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE E-RETURN OF INCOME WAS FILED ON 12-12-2011. THE RETURN WAS FILED BEFORE THE EXPIRY OF TIME ALLOWED U/S.139(4) OF THE ACT. IN ORDER TO SUPPORT HIS SUB MISSIONS, THE LD.COUNSEL PLACED RELIANCE ON THE FOLLOWING CASE LA WS: I. ITO VS. S.VENKATAIAH REPORTED AS 52 SOT 437 (HYD); II. ACIT VS. DHIR GLOBAL INDUSTRIAL (P) LTD., REPORTED AS 43 SOT 640 (DEL); AND III. GEMINI COMMUNICATION LTD., VS. CIT REPORTED AS 19 ITR TRIB (1) CHENNAI. I.T.A. NOS. 804 & 808/MDS/2014 5 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECISIONS ON W HICH THE LD.COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE. I T IS AN UN- DISPUTED FACT THAT THE ASSESSEE HAD FILED RETURN OF INCOME ELECTRONICALLY IN BOTH THE AYS I.E., AY.2010-11 AND 2011-12 BEYOND THE DUE DATE, AS PRESCRIBED U/S.139(1) OF TH E ACT. SECTION 80AC PROVIDES THAT DEDUCTION U/S.80-IC SHALL NOT BE ALLOWED UNLESS THE RETURN OF INCOME IS FURNISHED ON OR BEFO RE THE DUE DATE SPECIFIED U/S.139(1) OF THE ACT. RULE 12(3)(AB) OF THE INCOME TAX RULES FURTHER MANDATES THAT THE RETURN OF INCOME SH OULD BE FURNISHED BY A COMPANY IN THE PRESCRIBED FORM ELECT RONICALLY UNDER DIGITAL SIGNATURE FOR AY.2010-11 AND THEREAFTER. THE ASSESSEE HAD OBTAINED AUDIT REPORT FOR THE AY.2 010-11 ON 09-09-2010 AND ON THE SAME DATE, THE RETURN OF I NCOME WAS FILED MANUALLY. THE TAX CONSULTANTS OF THE ASSESSE E M/S.MATHI & ASSOCIATES HAVE GIVEN AN AFFIDAVIT THAT THEY WERE N OT FULLY AWARE OF THE FACT THAT THE RETURN HAS TO BE FILED BEFORE 30 TH SEPTEMBER, BY E-MODE. I.T.A. NOS. 804 & 808/MDS/2014 6 6. THE MANUAL FILING OF RETURN BEFORE 30-09-2010 HA S NOT BEEN DENIED BY THE REVENUE. A PERUSAL OF RULE 12(3) SHO WS THAT CLAUSE (AB) WAS INSERTED BY THE IT (SEVENTH AMENDMENT) RUL ES 2010. THE AY.2010-11 WAS THE FIRST AY FROM WHICH FURNISHI NG OF RETURN IN ELECTRONIC MODE WAS MADE MANDATORY. THE ACCOUNTANT S/TAX CONSULTANTS OF THE ASSESSEE MAY BE DUE TO OVERSIGHT MISSED THE AMENDMENT IN THE RULES. SINCE MANUAL RETURN OF INC OME WAS FURNISHED WELL BEFORE THE DUE DATE, THE ASSESSEE HA S COMPLIED WITH THE SUBSTANTIVE PROVISIONS OF THE ACT. IN THE SE CIRCUMSTANCES, DEDUCTION U/S.80-IC CANNOT BE DENIED FOR THE REASON THAT RETURN OF INCOME IN E-MODE IS NOT FILED IN TIME. WE ARE OF CONSIDERED OPINION THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDU CTION U/S.80-IC OF THE ACT, IF OTHERWISE IT HAS COMPLIED WITH THE COND ITIONS LAID DOWN U/S.80IC. A PERUSAL OF THE ASSESSMENT ORDER AND TH E IMPUGNED ORDER SHOWS THAT THE AUTHORITIES BELOW HAVE NOT EXA MINED GENUINENESS OF THE CLAIM OF THE ASSESSEE U/S.80-IC. WE ACCORDINGLY REMIT THE FILE BACK TO ASSESSING OFFICE R TO CONSIDER THE CLAIM OF THE ASSESSEE U/S.80-IC AND ALLOW THE SAME, IF THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF THE SE CTION. 7. IN THE AY.2011-12, WE FIND THAT THE ASSESSEE HAS FILED RETURN OF INCOME UNDER E-MODE ON 12-12-2011, WHEREAS THE D UE DATE FOR I.T.A. NOS. 804 & 808/MDS/2014 7 FILING RETURN OF INCOME U/S.139(1) WAS 30-09-2011. UNLIKE AY.2010-11, THE ASSESSEE HAS NOT FILED MANUAL RETUR N OF INCOME BEFORE THE DUE DATE. NO PLAUSIBLE REASON HAS BEEN GIVEN BY THE ASSESSEE FOR FURNISHING RETURN OF INCOME AFTER THE ELAPSE OF DUE DATE. THE ONLY REASON PUT FORTH IS, THE TAX CONSUL TANTS OF THE ASSESSEE, M/S.MATHI & ASSOCIATES WERE NOT FULLY AWA RE OF THE FACT THAT THE RETURN HAS TO BE FILED BEFORE 30 TH SEPTEMBER OF EVERY YEAR. WE ARE UNABLE TO ACCEPT THE REASON GIVEN BY THE ASS ESSEE FOR DELAY IN FILING OF THE RETURN. AY.2010-11 WAS THE FIRST YEAR IN WHICH, FURNISHING OF RETURN ELECTRONICALLY UNDER DIGITAL S IGNATURE WAS MADE MANDATORY. THERE WERE CHANCES THAT THE TAX CONSULT ANTS MAY NOT BE AWARE OF THE AMENDED PROVISIONS IN THE FIRST AY. THE BENEFIT OF IGNORANCE OF TAX CONSULTANTS WAS GIVEN TO THE ASSES SEE IN AY.2010-11. AFTER COMMITTING THE MISTAKE ONCE, IF THE SAME MISTAKE IS COMMITTED AGAIN IN THE NEXT AY, IT IS UN -PARDONABLE. WE ARE OF THE OPINION THAT THE ASSESSEE DOES NOT DE SERVE ANY CLEMENCY. THE ASSESSEE HAS NOT COMPLIED WITH THE P ROVISIONS OF SECTION 80AC AND IS THUS NOT ELIGIBLE TO CLAIM DEDU CTION U/S.80-IC. 8. THE LD.COUNSEL FOR THE ASSESSEE IN SUPPORT OF HI S CONTENTIONS HAS PLACED RELIANCE ON THE DECISION OF THE HYDERABA D BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. S.VENKATAIAH (SUPRA). IN THE SAID I.T.A. NOS. 804 & 808/MDS/2014 8 CASE, THE DELAY IN FILING OF THE RETURN WAS EXPLAIN ED. THE COMPUTER IN WHICH THE ACCOUNTS WERE PREPARED GOT CORRUPTED D UE TO VIRUS. DESPITE BEST EFFORTS, THE DATA COULD NOT BE RETRIEV ED IN TIME. THE ENTIRE DATA HAD TO BE RE-ENTERED AND IT WAS THERE A FTER THAT THE ACCOUNTS WERE FINALIZED AND STATUTORY AUDIT WAS DON E. THUS, THERE WAS DELAY OF SEVENTY FOUR DAYS IN FILING OF THE RET URN OF INCOME. THE DELAY WAS BEYOND THE CONTROL OF ASSESSEE. IT W AS THE CASE OF SUPERVENING IMPOSSIBILITY. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CO-ORDINATE BENCH OF THE TRIBUNAL GRANTED EXTENSION OF TIME IN FILING THE RETURN OF I NCOME. WHEREAS, IN THE PRESENT CASE, WE DO NOT FIND ANY REASON OF S UPERVENING IMPOSSIBILITY. IT HAS BEEN MENTIONED IN THE IMPUGN ED ORDER THAT THE AUDIT REPORT WAS RECEIVED BY ASSESSEE ON 02-09- 2011. DESPITE THE FACT THAT THE AUDIT REPORT WAS RECEIVED WELL IN TIME, THE ASSESSEE/THE TAX CONSULTANTS OF THE ASSESSEE WERE S LUGGISH IN FILING RETURN OF INCOME. IT IS A CLEAR CASE OF LAC KADAISICAL APPROACH. THE LD.COUNSEL FOR THE ASSESSEE HAS FURTHER PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF THE TRI BUNAL IN THE CASE OF GEMINI COMMUNICATION LTD., VS. CIT (SUPRA). WE FIND THAT THE FACTS IN THE CASE OF GEMINI COMMUNICATION LTD., VS. CIT (SUPRA) ARE DISTINGUISHABLE FROM THE FACTS IN THE INSTANT C ASE. THE CASE ON I.T.A. NOS. 804 & 808/MDS/2014 9 WHICH THE LD.COUNSEL FOR THE ASSESSEE HAS PLACED RE LIANCE RELATES TO AY.2008-09. IN THAT AY, IT WAS NOT MANDATORY TO FILE RETURN OF INCOME ELECTRONICALLY. THE ELECTRONIC RETURNS WERE REQUIRED TO BE FILED ONLY ON THE DIRECTIONS OF CBDT DIRECTIONS. TH E CO-ORDINATE BENCH OF THE TRIBUNAL UNDER SUCH SITUATION OBSERVED : 12. ..AS ARGUED BY THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE, THE STATUTE CONSISTING OF ACT AND RULES SPEAK OF FILING OF RETURN BEFORE DUE DATE AND CONTENTS OF THAT MUST BE FURNISHED IN THAT RETURN. THE FORMAT H AS BEEN PRESCRIBED BY THE RULES AND ALSO THE CONTENTS HAVE BEEN PRESCRIBED BY THE RULES. FILING OF THE RETURN ALSO HAS BEEN PRESCRIBED BY THE ACT. NOWHERE IN THE ACT OR RULES, THERE IS A MANDATORY PROVISION THAT THE RETURN MUST BE FILED O NLY ELECTRONICALLY. THIS COMPULSION HAS BEEN MADE AS A RESULT OF THE DIRECTION ISSUED BY THE CBDT. AS RIGHTLY ARGUED BY THE LEARNED COUNSEL, THE DIRECTION OF THE CBDT CANNOT G O BEYOND THE ACT AND RULES. IT CANNOT OVERTAKE THE APPARENT WORDS OF THE STATUTE. THEREFORE, WHAT WE CAN HOLD IS THAT F ILING OF RETURN ELECTRONICALLY IS A DIRECTORY PROVISION AND IF THE RETURN IS FILED MANUALLY ON OR BEFORE DUE DATE, SUCH RETURN CANNOT BE IGNORED. THE MAXIMUM THE ASSESSING OFFICER CAN ASK THE ASSESSEE IS TO FILE THE RETURN AGAIN ELECTRONICALLY , SO THAT THE TECHNICALITY OF PROCESSING IS SATISFIED. THIS IS O NLY FOR THE ADMINISTRATIVE CONVENIENCE OF THE INCOME-TAX DEPART MENT. THE INCOME TAX RULES HAVE BEEN AMENDED THEREAFTER I N THE YEAR 2010. AS PER THE AMENDED PROVISIONS OF RULE 12(3)( AB) W.E.F. I.T.A. NOS. 804 & 808/MDS/2014 10 09-07-2010, A COMPANY IS REQUIRED TO FURNISH RETURN OF INCOME FOR AY.2010-11 AND SUBSEQUENT AYS ELECTRONICALLY UNDER DIGITAL SIGNATURE. IN VIEW OF AMENDMENT IN RULE 12 OF THE INCOME TAX RULES, THE ABOVE DECISION OF THE CO-ORDINATE BENCH WILL NOT PROVIDE ANY SUPPORT TO THE CASE OF ASSESSEE. WE F IND NO MERIT IN THE SUBMISSIONS OF THE LD.COUNSEL FOR THE ASSESSEE. ACCORDINGLY, THE FINDINGS OF THE CIT(APPEALS) IN IMPUGNED ORDER FOR AY.2011-12 ARE SET ASIDE AND THE APPEAL OF THE REVENUE IS ALLO WED. IN RESULT, THE APPEAL IN ITA NO.804/MDS/2014 IS AL LOWED FOR STATISTICAL PURPOSES AND ITA NO.808/MDS/2014 IS ALL OWED. ORDER PRONOUNCED ON MONDAY, THE 18 TH AUGUST, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( ! '# ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) / VICE PRESIDENT / JUDICIAL MEMBER /CHENNAI, /DATED: 18 TH AUGUST, 2014 TNMM !'#$ %&$ /COPY TO: 1. %'#() /APPELLANT 2. !*() /RESPONDENT 3. + (%'#) /CIT(A) 4. + /CIT 5. $./' !01 /DR 6. /23 4# /GF