M/s Kamal Trading Company, Raichur V. CIT, Kalaburagi

ITA 932/BANG/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4346 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 06-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN
• Section: 143(3); 80IA; 139(1); 48; 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N.V VASUDEVAN, VICE - PRESIDENT AND SHRI B.R.BASKARAN, ACCOUNTANT MEMBER ITA NO. 932 /BANG/2016 (ASS ESSMENT YEAR : 2011 - 12) M/S KAMAL TRADING COMPANY, PLOT NO.10, SHOP NO.80, RAJENDRA GU NJ, RAICHUR, PAN NO. AA GFK0247F APPELLANT VS THE COMMISSIONER OF INCOME TAX, ROOM NO.102, 1 ST FLOOR, AAYA KA R BHAVAN, SEDAM ROD, KALABURAGI RESPONDENT ASSESSEE BY : S HRI NARENDRA SHARMA, ADVOCATE REVENUE BY : SHRI .MUZAFFAR HUSSAIN, CIT (DR) DATE OF HEARING : 1 9 - 0 2 - 20 20 DATE OF PRONOUNCEMENT : 26 - 0 2 - 20 20 O R D E R PER SHRI N.V VASUDEVAN, VICE - PRESIDENT : THIS IS AN APPEAL BY THE ASS ESSEE AGAINST THE ORDER DATED 29 - 02 - 2016 OF PR.CIT, KALABURAGI PASSED U/S 263 OF THE I NCOME TAX ACT, 1961 (ACT) IN RELATION TO ASSESSMENT YEAR 2011 - 12. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF COTTON MERCHANDISE AND WIND POWER GENERATION. THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011 - 12 ON 23 - 11 - 2011 DECLARING A TAXABLE INCOME OF RS.1,97,430/ - . THE ASSESSEE CLAIMED DEDUCTION U/S 80IA OF THE ACT OF A SUM OF RS.17,34,048/ . THE CLAIM FOR DEDUCTION U/S.80IA OF THE ACT WAS ACCEPTED BY THE AO AND AN IT A NO. 932 /B ANG / 20 16 2 ORDER OF ASSESSMENT U/S 143(3) OF THE ACT WAS PASSED ON 29 - 01 - 2014 ACCEPTING THE INCOME DECLARED IN THE RETURN OF INCOME. 3. THE PR.C IT IN EXERCISE OF POWERS U/S 263 OF THE ACT, WAS OF THE VIEW THAT THE AFORESAID ORDER OF AO WAS ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF REVENUE. ACCORDING TO PR.CIT, AS PER THE PROVISIONS OF SEC.80 AC OF THE ACT , IF THE ASSESSEE DOES NOT FILE THE RETU RN OF INCOME WITHIN THE TIM E PRESCRIBED U/S 139(1) OF THE ACT , THEN SUCH ASSE SSEE IS NOT ENTITLED TO ANY DEDUCTION UNDER C HAPTER VIA OF THE ACT UNDER WHICH CHAPTER SEC.80IA OF THE ACT FALLS . SINCE THE A SSESS E E IN THE PRESENT C A S E HAD FILED THE RETURN OF I NCOME ON 23 - 11 - 2011 WHICH WAS BEYOND THE TIME ALLOWED U/S 39(1) OF THE ACT FOR ASSESSMENT YEAR 2011 - 12, THE AO OUGHT NOT TO HAVE ALLOWED DEDUCTION U/S 80IA OF THE ACT. ACCORDING TO PR.CIT, THE AO WHILE PASSING THE AFORESAID ORDER OF ASSESSMENT FAILED TO A PPLY HIS MIND AND MAKE PROPER VERIFICATION . A CCORDINGLY HE ISSUED A SHOW CAUSE NOTICE U/S 263 OF THE ACT DATED 27 - 0 1 - 2016 . 4 . IN REPLY TO THE ABOVE SAID SHOW CAUSE NOTICE , THE AS SESSEE BY A LETTER DATED 30 - 01 - 2016 SUBMITTED THAT THE PROCEEDINGS U/S 263 OF THE ACT WILL NOT BE MAINTAINABLE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND THAT PROVISIONS OF SEC.80AC OF THE ACT REFERRED TO IN THE SHOW CAUSE NOTICE WERE ONLY DIRECTORY AND NOT MANDATORY AND THEREFORE FAILURE TO FILE RETURN OF INCOME ON OR BE FORE THE DUE DATE U/S.139(1) OF THE ACT IS NOT FATAL TO A CLAIM BEING ALLOWED U/S.80 - IA OF THE ACT . 5 . THE PR.CIT , HOWEVER, HELD THAT THE A O WHILE PASSING THE ASSESSMENT ORDER FAILE D TO ENQUIRE AS TO WHETHER THE A SSES S EE HAD FILED THE RETURN OF INCOME BEY OND THE PERIOD PRESCRIBED U/S 139(1) OF THE ACT AND IS CONSEQUEN CE UP ON THE A SSESSEES CLAIM FOR DEDUCTION U/S 80IA OF THE ACT , IN THE CONTEXT OF PROVISIONS OF S EC.80AC OF THE ACT. THE PR. CIT , THEREFORE, PLACING DECISION ON THE HONBLE DELHI HIGH COURT I N THE CASE OF M/S GEE VEE ENTERPRISES VS ADDL.CIT & OTHERS 99 ITR 375 (DEL) CAME TO THE CONCLUSION THAT FAILURE TO MAKE IT A NO. 932 /B ANG / 20 16 3 ENQUIRY ON AN ISSUE WHICH CALLS FOR AN ENQUIRY REN D ERS THE ORDER OF AO ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 6 . ONE OF THE CONTENTION OF THE ASSESSEE BEFORE THE PR.CIT WAS THAT THE HONBLE ITAT IN THE CASE OF M/S V A NSHREE BUI L DERS & DEVELO P ERS (P)LTD., V S CI T IN ITA NO.536(B)/2011 FOR ASSESSMENT YEAR 2007 - 08 VIDE ORDER DATED 12 - 03 - 2013 WAS PLEADED TO HOLD , ON IDENTICAL FAC TS OF THE CASE AS THAT OF THE ASSESSEE IN THE PRESENT APPEAL , THAT THE PROCEEDINGS U/S 263 OF THE ACT WERE NOT APPROPRIATE. THE PR.CIT IN THE IMPUGNED ORDER DISTINGUISHED THE AFORESAID DECISION AS FOLLOWS; FURTHER, THE ASSESSEE HAS RELIED UPON THE JUDG MENT OF HONBLE ITAT IN CASE OF VANSHREE BUILDERS & DEVELOPERS (P) LTD., VS CIT. THE FA C TS OF THE CASE LAW RELIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE WITH THE PRESENT FACTS OF THE C ASE. IN CAS E OF VANSHREE BU ILDERS & DEVELOPERS (P)LTD. VS C IT, THE ASS ESSEE DID NOT FILE ANY RETURN OF I NCOME U/S 139(1) OF THE IT ACT. A SURVEY WAS CONDUCTED ON ASSESSEES PREMISES AND CONSEQUENTLY ASSESSEES CASE WAS REOPENED U/S 147 AND THEREAFTER IN RESPONSE TO NOTICE U/S 1 48 OF THE IT ACT THE ASSESSEE H AS FILED ITS RETU RN OF INCOME. HENCE, IN CASE OF VANSHREE BUILDERS & DEVELOPERS (P) L T D., THE ASSESSING OFFICER HAS ALLOWED THE CLAIM OF THE ASSESSEE A S HE WA S WELL AWARE OF THE FACT THAT THE ASSESSEE HAS FILED A BELATED RETURN. HENCE, THE ORDER PASSED U/S 263 HAS BEEN QU ASHED BY THE HONBLE ITAT. HOWEVER, IN THE PRESENT CASE, THE AO WAS NOT AT ALL AWARE OF THE FACT AS THE CASE WAS SELECTED UNDER REGULAR SCRUTINY PROCEEDINGS U/S 43(3) AND THE AO DID NOT RAISE ANY QUERY WHY THE RETURN OF INCOME FILED BELATEDLY AND WHY THE DEDUCTION U/S 80IA SHOULD NOT BE WITHDRAWN KEEPING IN VIEW OF THE PROVISIONS OF SECTION 80AC OF THE IT ACT. HENCE, THE CASE LAW RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE IN THE PRESENT CASE. FURTHER, THERE IS NO SE P ARATE CORRESPONDENCE FOUND NO RECOR D WHICH SHOWS THAT THE ASSESSEE HAS PU T THE FACT BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS THAT THE RETURN OF INCOME HAS BEEN FILED BELATEDLY. THE ASSESSEE HAS FAILED TO DO SO. THE HONBLE APEX COURT IN CA OF CIT VS CALCUTTA AGENCY LIMITED (SC) 19 IT R 191., CIT VS R.VENKATASWAMY NAIDU (SC) 29 ITR 529, AND GOPI RAM LILA VS CIT(RAJ.) 225 ITR 320 HAS HELD THAT TO CLAIM ANY EXEMPTION/DEDUCTION, DUTY OF ASSESSEE TO SUBSTANTIATE IT WITH RECORDS AND EVIDENCES. MOREOVER, THE AO HAS NO DISCRETIONARY POWER TO CONDONE THE DELAY IN FILING THE RETURN OF INCOME SO AS TO ALLOW DEDUCTION U/S 80IA R.W.80AC OF THE ACT. THE FACT OF THE MATTER IS THAT THE RETURN OF INCOME WAS FILED BELATEDLY AND AS P ER THE PROVISIONS OF SECTION 80AC, THE RETURN SHOULD IT A NO. 932 /B ANG / 20 16 4 HAVE BEEN FILED A S PER THE PROVISIONS OF SECTION 139(1) OF THE IT ACT TO CLAIM DEDUCTION U/S 80IA AND THE ASSESSEE HAS NOT COMPLIED WITH THIS PRECONDITION AND WITHOUT CONDONING THE DELAY AO COULD NOT HAVE ALLOWED THE DEDUCTION AND HE HAS NO POWER TO CONDONE THE DELAY IN FI LING THE RETURN OF INCOME. IN VIEW OF THE ABOVE, THE OBJECTION FILED BY THE ASSE S SEE ON THIS ACCOUNT IS NOT ACCEPTABLE. 6. AGGRIEVED BY THE ORDER OF PR.CIT, THE A SSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE RIVAL SUBM ISSIONS. IT IS NOT DISPUTED BEFORE US THAT IN VIEW OF THE DECISION OF THE S PECIAL BENCH , RAJKOT IN THE C A SE OF M/S SAFFIRE GARMENTS VS ITO REPORTED IN ( 2013) 151 TTJ (RAJKOT) (SB) 114, WHEREIN T HE PROVISIONS OF SECTION 80AC WERE HELD TO BE MANDATORY AND T HA T AN ASSESSEE WHO DOES NOT FILE ITS RETURN OF INCOME O N OR BEFORE THE DUE DATE PRESCRIBED U/S 139(1) OF THE ACT WILL NOT BE ENTIT L ED TO CLAIM DEDUCTION U/S 80IA OF THE ACT. THEREFORE ON MERITS OF THE CLAIM FOR DEDUCTION U/S.80IA OF THE ACT, THE ASSESSEE HAS NO CASE. 8. THE LD.COUNSEL FOR THE ASSESSEE AGAIN PLACED RELIANCE ON THE DECISION OF THE ITAT, BANGALORE BENCH IN THE CASE OF M/S VANSHREE BUILDERS & DEVELOPERS (P) LTD., (SUPRA) . W E HAVE GONE THROUGH THE AFORESAID DECISION AND WE FIND THAT THE TRIB UNAL IN THE AFORESAID DECISION, FIRSTLY HELD THAT IN VIEW OF THE DECISION OF SPECIAL BENCH IN THE C A SE OF M/S SAFFIRE GARMENTS VS ITO (SUPRA) AN ASSESSEE WHO DOES NOT FURNISH THE RETURN OF INCOME ON OR BEFORE THE DUE DATE AS PRESCRIBED U/S 139(1) OF THE AC T WILL NOT BE ENTITLED TO DEDUCTION U/S 80IA OF THE ACT. THE T RIBUNAL HOWEVER, WENT ON TO H O LD THAT ON THE FACTS OF THAT C A SE, THE AO HAD TAKEN A CONSCIOUS DECISION ON THIS ASPECT WHILE CONCLUDING THE ASSESSMENT AFTER APPLICATION OF MIND AND THEREFORE, PR OCEEDINGS U/S 263 OF THE ACT C OULD NOT HAVE BEEN INITIATED. HOWEVER, IN THE PRESENT C A SE, WE FIND THAT THE AO MADE NO ENQUIRIES WHATSOEVER ON THE QUESTION OF APPLICA BILITY OF S EC.80AC OF THE ACT (P ARA 5.7.3 OF THE TRIB U NAL S ORDER) . WE ARE THEREFORE, OF IT A NO. 932 /B ANG / 20 16 5 THE VIEW THAT THE DECISION ON WHICH THE LEARNED COUNSEL FOR THE ASSESSEE HAD PLACED RELIANCE IS NOT OF ANY USE TO THE PLEA MADE BY THE ASSESSEE. THE LD. COUNSEL ALSO PLACED RELIANCE ON THE DECISION OF THE ITAT, PUNE BENCH IN THE C A SE OF M/S SHARP DESIGNER S & ENGINEERS INDIA PVT.LTD.,VS ACIT , IN ITA NO.2263(PUN)/2014 FOR ASSESSMENT YEAR 2010 - 11 VIDE ORDER DATED 29 - 01 - 2018 WHEREI N, THE PROVISIONS OF S EC.80AC WERE HELD TO BE DIRECTORY AND NOT MANDATORY. THE AFORESAID DECISION IS CONTRA RY TO THE DECISION OF T HE SPECIAL BENCH IN THE CASE OF M/S SAFFIRE GARMENTS VS ITO (SUPRA) A ND IN THAT DECISION CITED , THER E IS NO REF E RENCE TO THE DECISION OF THE SPECIAL BENCH . THEREFORE, THE AFORESAID DECISION CITED BY THE LEARNED COUNSEL FOR THE ASSESS E E WILL ALSO NOT HEL P THE PLEA OF THE ASSESSEE. 9. WE ARE OF THE VIEW THAT IN THE PRESENT CASE , THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE FAILURE ON THE PART OF THE AO TO MAKE PROPER ENQUIRIES ON THE CLAIM OF DEDUCTION AS CLAIMED BY T HE A SSESSEE U/S 80IA OF THE ACT AND THEREFORE, AS LAID DOWN IN THE C A SE OF M/S GEE VEE ENTERPRISES VS ADDL.CIT & OTHERS (SUPRA) T HE JURISDICTION U/S 263 OF THE ACT WAS RIGHTLY INVOKED BY THE PR.CIT. WE THEREFORE, FIND NO MERIT IN THIS APPEAL FILED BY THE A SSESSEE AND ACCORDINGLY, WE DISMISS THE SAME. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSES S EE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEB.2020 . SD/ - SD/ - (B.R.BASKARAN) (N.V VASUDEVAN) ACCOUNTANT MEMBER VICE - PRESIDENT BANGALORE DATED :26 /2/2020 *AM IT A NO. 932 /B ANG / 20 16 6 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF BY ORDER ASST. REGIST RAR