RSM SAPTHAGIRI FINANCE LTD, TIRUNELVELI V. ACIT, CIRCLE-1, TIRUNELVELI

ITA 96/CHNY/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 1185 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 08-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Procedural lapse; Revised return
• Section: 143(3); 80IA; 139(1)

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI Įी महावीर ͧसंह, उपाÚय¢ एवं Įी ͬगरȣश अĒवाल, लेखा सदèय के सम¢ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos: 96/CHNY/2021 & 269/CHNY/2021 िनधाᭅरण वषᭅ /Assessment Years: 2013-14 & 2014-15 M/s. RSM Sapthagiri Finance Ltd., 65, New Poornakala Theatre, Kannamman Kovil Street, Tirunelveli – 627 001. PAN: AADCR-0931-K v. Assistant Commissioner of Income Tax, Circle -1, Tirunelveli. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri Vikram Vijayaraghavan, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri Chinthapalli Mehar Chand, JCIT स ु नवाई कȧ तारȣख/Date of Hearing : 26.05.2022 घोषणा कȧ तारȣख/Date of Pronouncement : 26.05.2022 आदेश /O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal by the assessee is arising out of the order of Commissioner of Income-tax (Appeals)-1, Madurai in ITA Nos. 101A & 265/2016-17 dated 31.01.2020 against the order of ACIT, Circle-1, Tirunelveli dated 28.03.2016 for AY 2013-14 & dated 28.12.2016 for AY 2014-15 passed u/s. 143(3) of the Income-tax Act, 1961 (herein after referred to as “the Act”). 2 M/s. RSM Sapthagiri Finance Ltd ITA Nos. 96& 269/Chny/2021 AYs: 2013-14 & 2014-15 2. At the outset, we note that there is a delay of 368 days for AY 2013-14 & 476 days for AY 2014-15 in filing the present appeals. The order of the Commissioner of Income Tax (Appeals) is dated 31.01.2020 and therefore, these appeals should have been filed by 02.04.2020 whereas, it has been filed by post on 07.04.2021 for AY 2013-14 & on 26.07.2021 for AY 2014-15. It is submitted by the assessee that the auditors were dealing with Income-tax matters and as soon as they could resume physical work, they gave the order to the Advocates who prepared the appeal and the same was filed with the delay of 368 days for AY 2013-14 & 476 days for AY 2014-15. The claim of the assessee is that the delay is attributable to Covid-19 pandemic in March, 2020. It was submitted that the Hon’ble Supreme Court in its decision in suo moto Writ Petition (Civil) No.3/2020 dated 10.01.2022 had held that the period from 01.03.2020 to 28.02.2022 should be excluded while reckoning limitation period. Further, the Hon’ble Supreme Court has allowed 90 days from 01.03.2022 to file the belated appeals. Accordingly, the Counsel claimed that this appeal is filed within the time permitted by the Hon’ble Supreme Court and thus, prayed for its admission by condoning the delay. The assessee has put on record an Affidavit explaining the reasons for the delay. We have duly considered the contentions of the ld. Counsel and gone through the record. Therefore, in terms of the directions issued by the 3 M/s. RSM Sapthagiri Finance Ltd ITA Nos. 96& 269/Chny/2021 AYs: 2013-14 & 2014-15 Hon’ble Supreme Court (supra) owning to situation of Covid-19 Pandemic, we find it proper to condone the delay, stated to be of 368 days for AY 2013-14 & 476 days for AY 2014-15 and thus admit them for adjudication. 3. Since, the issues are common in both the appeals, we are considering the facts relating to AY 2013-14 to deal with the matter before us. The grounds of appeal in ITA No. 96/Chny/2021 are reproduced as under: 1. The order of the Commissioner of Income Tax (Appeals), Madurai is contrary to law, facts and in the circumstances of the case. 2. The Commissioner of Income-tax (Appeals) erred in dismissing the appeal exparte without giving an opportunity of being heard. 3. The Commissioner of Income tax (Appeals) erred in confirming the disallowance u/s 8OIA amounting to Rs.56,21,047/-. 3.1 The Commissioner of Income tax (Appeals) ought to have appreciated that the appellant has claimed the deduction u/s 80IA in its revised return and hence eligible for deduction of profits generated from wind mills u/s 80IA. 3.2 The Commissioner of Income-tax (Appeals) ought to have appreciated that the return was filed on time permitted u/s.139(1) and the audit report as required under Section 80IA was filed in the course of assessment proceedings and hence the relief claimed should be allowed. 4. The Appellant craves leave to adduce additional grounds at the time of hearing.” 3.1 For AY 2014-15, the amount of disallowance u/s. 80IA is Rs. 28,78,442/-. 4 M/s. RSM Sapthagiri Finance Ltd ITA Nos. 96& 269/Chny/2021 AYs: 2013-14 & 2014-15 4. Brief facts of the case (in respect of AY 2013-14) are that the assessee filed its return on 24.09.2014 reporting total income of Rs. 4,72,24,650/-. Statutory notices were issued which were compiled by the assessee. The assessee had claimed deduction u/s. 80IA of the Act in respect of income from power generation and from wind mill for an amount of Rs. 56,21,047/-. Ld AO further noted that original return was filed by the assessee u/s. 139(1) of the Act on 27.09.2013 and did not claim the deduction u/s. 80IA. However, revised return was filed by the assessee on 24.09.2014, wherein the deduction u/s. 80IA was claimed. Ld. AO further observed that the assessee has not Complied with the statutory requirement under the Act and under the Income- tax Rules, 1962 (‘the Rules’) in as much as the audit report required under Form 10CCB has not been furnished along with return of income. The assessee furnished a copy of Form 10CCB in manual format during the assessment proceedings which is dated 27.06.2014. Subsequently, the audit report in Form 10CCB was e-filed by the assessee on 17.11.2015 which was more than one year later, after filing of revised return. The Ld. AO in the course of assessment proceedings sought clarification on the delayed filing of the audit report in Form 10CCB for claiming of deduction u/s. 80IA of the Act, to which the assessee complied stating that the return in Form 10CCB having name of Chartered Accountant Shri. P. Marimuthu dated 27.06.2014 5 M/s. RSM Sapthagiri Finance Ltd ITA Nos. 96& 269/Chny/2021 AYs: 2013-14 & 2014-15 was a draft one which remained in the file and was inadvertently produced in the assessment proceedings. This inadvertent mistake was corrected by submitting a correct and complete duly signed Form 10CCB which was e-filed on 17.11.2015, before the completion of the assessment proceedings. In its reply, the assessee relied upon several decisions to substantiate its claim u/s. 80IA of the Act in respect of delayed filing of audit report in Form 10CCB. The Ld. AO concluded the assessment by disallowing the claim u/s. 80IA of the Act by holding that the assessee has claimed the deduction without having audited the requirement prescribed under the Act. Aggrieved, the assessee went into appeal before the Ld. CIT(A), who upheld the view taken by the Ld. AO. Aggrieved, the assessee is in appeal before this Tribunal. 5. Before us, Mr. Vikram Vijayaraghavan, Advocate represented the assessee and Mr. Chinthapalli Mehar Chand, JCIT represented the Department. 6. Ld. Counsel of the assessee submitted that there is a delay in filing of Form 10CCB which was filed electronically on 27.11.2015 during the course of assessment proceedings which was available with the Ld. AO before completing the assessment. He further submitted 6 M/s. RSM Sapthagiri Finance Ltd ITA Nos. 96& 269/Chny/2021 AYs: 2013-14 & 2014-15 that though the audit report in Form 10CCB for the purpose of claim of deduction u/s. 80IA of the Act was not filed along with the return of income, which was subsequently filed before the Assessing Officer in the assessment proceedings ought to have been considered on merits. He also submitted that the requirements to furnish the audit report in Form 10CCB along with return is directory and not mandatory. To buttress his contentions, Ld. Counsel placed reliance on the decision of CIT vs Jayant Patel by Hon’ble High Court of Madras (2001) 248 ITR 199, wherein it was held though in the context of claim u/s. 80J of the Act, that the requirements of section 80J(6A) to furnish audit report along with return is directory and not mandatory – assessee was eligible for relief u/s. 80J even though the audit report was not filed along with return but was filed before the appellate authority. Ld. Counsel submitted that his case is on a better footing as compared to the decision of Hon’ble High Court of Madras (supra) since the audit report in Form 10CCB required u/s. 80IA of the Act was e-filed in the course of assessment proceedings as against appellate authority and was available with the Assessing Officer before completing the impugned assessment. 7. On the other hand, Ld. Sr. DR submitted that the assessee did not obtain the audit report in Form 10CCB within the time limit 7 M/s. RSM Sapthagiri Finance Ltd ITA Nos. 96& 269/Chny/2021 AYs: 2013-14 & 2014-15 prescribed and consequentially it has been rightly observed by the authorities below that it is not discernable from its audit report as to how deduction has been worked out by the assessee and therefore the disallowance has been rightly made. 8. We have duly considered rival contentions and perused the material available on record. To our mind the issue involved relates to procedural irregularity. When the disallowance of claim u/s. 80IA of the Act has been made on the basis of defect for procedural irregularity then according to the decisions referred by the ld. Counsel for the assessee, this irregularity is not fatal enough to deny the claim of deduction u/ s 80IA of the Act. More so, when in response to the first proposed disallowance, the assessee has reiterated submission of Form 10CCB. In view of the above discussion, we delete the disallowance of deduction u/ s 80IA of the Act, made by the Assessing Officer and confirmed by the ld. CIT(A) and allow the appeal of the assessee. 9. O n the strength of the decision rendered by the Hon'ble Madhya Pradesh High Court in the case of CIT vs. Panama Chemical Works reported in 292 ITR 147, we are of the view that the non- submission of Form 10CCB along with the return is a mere 8 M/s. RSM Sapthagiri Finance Ltd ITA Nos. 96& 269/Chny/2021 AYs: 2013-14 & 2014-15 procedural irregularity which is not fatal to the claim of deduction u/s. 80IA of the Act. In other words, this is an irregularity which is curable in nature. We further rely on the judgment of the Hon'ble Supreme Court in the case of CIT vs. G M Knitting Industries Pvt. Ltd. 376 ITR 456. 9.1 On the basis of these decisions, we are of the view that there is no lapse at the end of the assessee substantively because Form 10CCB was submitted before the disallowance was made by the Assessing Officer. 10. Considering the facts on record, submissions made before us and the judicial precedence relied upon, we find that it is an uncontroverted fact that Form 10CCB for claiming of deduction u/s. 80IA of the Act has been e-filed on 27.11.2015 i.e., not with the return of income, but during the course of assessment proceedings. This being the fact, does not make any difference in so far as the purpose and object of section 80IA of the Act are concerned for the purpose of claim of deduction of the assessee made u/s. 80IA of the Act, which the authorities below ought to have considered on merits. Accordingly, following the above decisions and considering the facts on record, we hold that the 9 M/s. RSM Sapthagiri Finance Ltd ITA Nos. 96& 269/Chny/2021 AYs: 2013-14 & 2014-15 claim of deduction u/s. 80IA of the Act is to be allowed. Accordingly, the grounds of the appeal are allowed. 11. In respect of ITA No. 269/CHny/2021, common grounds are involved except for the difference in amount. The observations and findings given in ITA no. 96/Chny/2021 (supra) are applicable mutatis mutandis and accordingly, this appeal is also allowed. Order pronounced on 26 th May , 2022 at Chennai. Sd/- (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT Sd/- (िगरीश अᮕवाल) (GIRISH AGRAWAL) लेखा सद᭭य /ACCOUNTANT MEMBER चे᳖ई/Chennai, ᳰदनांक/Dated, the 26 th May, 2022 JPV आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ (अपील)/CIT(A) 4. आयकर आयुᲦ /CIT 5. िवभागीय ᮧितिनिध/DR 6. गाडᭅ फाईल/GF.