Case Law Details

Case Name : Symbiosis Pharmaceuticals (P) Ltd. Vs. Dy. CIT (ITAT Chandigarh)
Appeal Number : IT Appeal No. 501 (Chd.) of 2017
Date of Judgement/Order : 04/10/2017
Related Assessment Year : 2013-14
Courts : All ITAT (5373) ITAT Chandigarh (124)

Symbiosis Pharmaceuticals (P) Ltd. Vs. DCIT (ITAT Chandigarh)

Literal interpretation is to be given to the procedural requirements of section 80AC, as much as these provisions being machinery provisions and thus being directory, did not stand as a bar in the facts of instant case as filing of the return was delayed for reasons not attributable to the assessee and all other supporting evidences in the form of audit report under section 80-IC, balance sheet prepared for the purpose of income tax and the requirements of various regulatory authorities were prepared and filed well within time. Accordingly, considering the peculiar facts and circumstances of the case, denial of deduction under section 80-IC was not justified.

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

The present appeal has been filed by the assessee assailing the correctness of the order dated 28-10-2016 of learned Commissioner (Appeals) Panchkula pertaining to 2013-14 assessment year on the following grounds.

1. The learned Commissioner (Appeals) has erred in law and facts in not allowing deduction under section 80IC amounting Rs. 1, 16,26, 310

2. The learned Commissioner (Appeals) has erred in law and facts in confirming the addition of Rs. 93,237 on account of proportionate interest on advances,

3. The learned Commissioner (Appeals) has erred in law and facts in confirming an addition of Rs. 42,975 out of ESI and PF payments.

2. The hearing in the present appeal took place on 5-7-2017, 13-7-2017 and finally concluded on 26-7-2017. However, before we address the grounds raised by the assessee, it is pertinent to first address the delay of 21 days pointed out by the Registry in the filing of the present appeal by the assessee.

2.1 The learned Authorized Representatives inviting attention to the condonation of delay application filed by the Director submitted that the order dated 28.102016 was received by the assessee on 18-11-2016 and was handed over to the Chartered Accountant Shri Sumit Aggarwal. The said counsel advised that four months time was available for filing the appeal before the ITAT and since he was not appearing before the ITAT, he would engage some other professional for filing of the appeal. The said Chartered Accountant on his visit to a professional in Ambala for filing of the appeal, it was submitted, then learnt that the time limit for filing the appeal before the ITAT was in fact 60 days from the date of the order and not 120 days as understood by him. Acting on the said information, the assessee was accordingly advised who promptly filed the appeal. The said appeal, it was submitted, was late by 21 days solely on account of the ignorance of the counsel. Relying upon; (a) Improvement Trust Ludhiana v. Ujagar Singh Civil Appeal No. 2395 of 2008 of 9-6-2010, (b) Jayvantsinh N. Vaghela v. ITO in (Tax Appeal Nos. 853 & 854 of 2013, 22-10-2013) and (c) Paras Rice Mills Kurukshetra v. CIT ITA No. 657 of 2009 (Punj. & Har.), prayer for condoning the delay was made.

2.2 The learned Commissioner–Departmental Representative Shri Ravi Sarangal considering the condonation of delay application and the submissions and facts on record stated that he had no objection if the delay is condoned.

2.3 Considering the material available on record and the submissions of the parties before Bench, we are of the view that the delay has occurred in the peculiar facts for reasons beyond the control of the assessee. The delay, accordingly, is condoned.

3. Addressing the grounds raised in the present appeal, learned Authorized Representatives invited attention to the impugned order and submitted that the facts relatable to the first issue agitated by the assessee are brought out and discussed by the Commissioner (Appeals) in para 5. Referring to the order, it was submitted, that the submissions made before the assessing officer were reiterated, however, the Commissioner (Appeals) relying upon the decision of the Apex Court in the case of Prakash Nath Khanna v. CIT (2004) 266 ITR 1 (S.C.) and decision of the Chennai Bench of the ITAT in the case of P Bhavani v. Asst. CIT in (IT Appeal Nos. 82 & 83 (MDS.) of 2015 (assessment year 2010-11), date 1-5-2015) and other related decisions which were not applicable to the facts of the case, dismissed the ground.

3.1 It was his submission that the dismissal of the ground on facts was not justified as there was no dispute on the aspect that all the relevant documents which were required to be filed by the assessee in support of the deduction under section 80IC, admittedly were filed well within time within the restricted meaning of filing of the return. It was also his submission that the Commissioner (Appeals) wrongly relied on the case of Parkash Nath Khanna (supra). The issue for consideration in the said decision, it was submitted, was the provisions of section 276CC. Section 276CC, it was submitted, is a charging section and section 80AC read with section 80IC are procedural provisions. Relying upon CIT v. National Taj Traders (1980) 121 ITR 535 (S.C.), it was submitted that it is a well settled principle that the fiscal Statute should be construed strictly is applicable only to the taxing provisions, such as the Charging Provisions or the provisions for prosecution etc. Section 276CC, it was submitted, deals with prosecution matters. Thus, the principle that charging provisions should be strictly interpreted, was fully applicable. Hence, it was not applicable to the procedural provisions with which we are concerned. Accordingly, the view taken by the Courts while considering the requirements of section 276CC has no role to play in the present proceedings. The difference, it was submitted, has been noted by the Supreme Court itself as it takes note of the different treatments given to the returns filed under section 139(1) and 139(4) as would be evident from para 20 of the said decision wherein it has been held that, “For the purposes of assessment and losses set off, return under section 139(1) and 139(4) is taken as one. “The mere fact that for the purposes of assessment and carrying forward and to set off losses it is treated as one filed within sub-sections (1) or (2) cannot be pressed into service to claim it to be actually one such, though it is factually and really not by extending it beyond its legitimate purpose. Accordingly, it was his submission that even the judgment of the Apex Court in the case of Shri Parkash Nath Khanna recognizes the fact that different treatment has to be given to the returns filed under section 139(1) and 139(4).

3.2 In the said background, it was submitted that for reasons beyond the control of the assessee, the delay in filing of the return has occurred and since all relevant supporting documents in support of the belated return stood filed well within time, no prejudice is caused to the Revenue for filing of the return late in the peculiar facts of the present case. The occasion to interpret etc. in view of the supporting documents/requirements having already complied with within time and as such made available to the tax authorities is a consistent fact on record. To still insist on the hyper technical approach to deny the legitimate and genuine claim in the circumstances relying on principles of law not applicable to the case was assailed. Referring to the assessment order, it was submitted, that the assessing officer has required the assessee to explain why the return of income was not filed on or before the due date which was 30-9-2013 as noted in page 2 of his order. Inviting attention to page 3 of the assessment order, it was submitted, that the return had been filed on the basis of Book Profit Report in Form No. 29B submitted on 29-9-2013 and Tax Audit Report in form No. 3CA/3CD also submitted on 29-9-2013. Referring to the record, it was also submitted that 80IC deduction was submitted on 28-10-2013. Thus, the requirements which were required to be fulfilled for making the said claim were admittedly before the due date as considered by the assessing officer himself i.e., 30-9-2013. However, the return, admittedly was filed on 31-3-2014 which is also the due date under section 139 which could have been filed without attracting any penalty etc. The tax authorities in the facts of the present case have taken a literal position by recording that the contention of the assessee is not acceptable because the date of filing of audit report is not concerned with the date of filing of the return of income. Thus, it was his submission that on facts, there is no dispute.

3.3 Inviting attention to Paper Book page Nos. 105 to 107 to address the reasons for delay. Referring to the same, it was submitted that Shri Jagbir Singh, a Director of the assessee company has submitted that the return along with Audit Report etc. on the Income Tax Portal was routinely filed by their Tax Consultant who was Shri A.S. Malhotra, C.A. and as a matter of normal practice, digital signatures were also handed over to him along with the Board Resolution authorizing him to use and affix digital signatures on the documents to be submitted to the Income Tax Department. The said C.A., it was submitted, was also an Auditor of another company by the name “Saitech Medicare Private Limited” where the assessee company had 77.30% shares. Apart from that, there were two other shareholders namely Shri Rajat Bhalotia and his father Shri P.D. Bhalotia who had file a suite with Company Law Board in Delhi against the major shareholder i.e., the assessee and other shareholders. The auditor colluded with the dissenting shareholders, as a result of which the return, it appears, deliberately was filed late despite the fact that balance sheet and audit report were filed well within time, mischief was discovered later on. These facts, it was submitted, are available on record by way of an affidavit and when they are considered in the background of the judicial precedent available, it was his submission that the claim of the assessee has wrongly been rejected.

3.4 Inviting attention to the Paper Book, attention was invited to page Nos. 1 to 19 which is copy of Tax Audit Report, Balance Sheet, Profit & Loss Account along with annexures for the year ending 31-3-2013 filed on 9-8-2013. Copy of Audit Report on Form No. 10CCB for deduction under section 80IC filed on 28-10-2013, it was submitted, is at pages 20 to 23. Copy of the Audit Report in Form No. 3CEB under section 92E for the specified domestic transaction filed on 17-11-2013 available at pages 24 to 31. Copy of written submissions filed before the Commissioner (Appeals) highlighting these facts and submissions, it was submitted, is available at page 33 to 38. In the facts, as they stand, it was his submission that the Commissioner (Appeals) has incorrectly, as argued, relied upon judgment of the Apex Court which was entirely in a different context.

3.5 The reliance placed in the case of P. Bhavani (supra) relied upon by the Commissioner (Appeals), it was submitted, was wrongly applied as the facts were entirely distinguishable.

3.6 Similarly, another decision of the ITAT Chennai Bench namely Dy. CIT v. Sucram Pharmaceuticals (2015) 69 SOT 25 and Dwarkadas G Panchmatiya v. ACIT and the decision of the Chandigarh Bench in the case of Lakshmi Energy & Foods Ltd. v. Asst. CIT (2014) 63 SOT 70 (URO) relied upon were entirely distinguishable and have been wrongly applied.

3.7 In the facts considered by the Chennai Bench in the case of P. Bhavani, it was submitted, that the assessee had not claimed deduction under section 80IB. It was a case where the return processed by CPC was challenged by way of rectification and the rectification claim was rejected. On the contrary, in the facts of the present case, the Audit Report has been filed along with balance sheet on 28-9-2010 and the claim under section 80IC therein as would be evident from page 7 of the Paper Book, has correctly been mentioned at Rs. 1,16,26,310. The Audit Report under section 80IC, at the cost of reiteration, it was submitted, was also filed within the time as prescribed under section 139(1). Thus, the facts as considered in P. Bhavani’s case, where the claim of deduction itself was not made even in the return filed under section 139(4), the case was entirely distinguishable.

3.8 The reliance placed upon the another decision of the Chennai Bench in the case of Sucram Pharmaceuticals was also not warranted on facts. In the facts of the said case, the return for 2010-11 and 2011-12 assessment year’s was delayed. The delay in filing of the return by e-filing was allowed in 2010-11 assessment year. However, the delay in 2011-12 assessment year for obvious reasons was not allowed. Thus, it was submitted that it would not be a precedent for denying that the claim in cases where the claim is supported by the Balance Sheet, Audit Report under section 80IC are filed well within time under section 139(1) in the facts of that case. In fact, relying upon the proposition as considered in 2010-11 assessment year in the case of Sucram Pharmaceuticals, it was submitted that deduction has been allowed in that year holding that delay in e-filing of IT return could be said to be reasonable, as such, deduction was allowed. Thereby upholding the principle that if the delay is reasonably explained, deduction could be allowed, even in cases where return can be shown to be filed under section 139(4) with a reasonable explanation. The said proposition, in fact supports the claim of the assessee.

3.9 Similarly the decision of the Chandigarh Bench in the case of Lakshmi Energy & Foods Ltd. relied upon by the Commissioner (Appeals), it was submitted, was incorrectly applied. In the facts of that case, the due date for filing the return was 30-9-2008 and it had been filed on 31-3-2009. The shortcoming in the facts of the said case, it was submitted, would be evident on the reading of the said decision and would show that the tax audit report and the audit report under section 80IC had not been filed along with return of income nor it had been filed prior to the finalization of the return and tax audit report and the audit report under section 80IB on facts was filed during the assessment proceedings. The facts, it was submitted, were entirely distinguishable as in the facts of the present case, the balance sheet, audit report and claim under section 80IC correctly mentioned and stated, had been filed within the time under section 139(1).

3.10 The decision of the jurisdictional High Court in the case of CIT v. Jagriti Aggarwal (2011) 339 ITR 610 (Punj. & Har.) dated 3-10-2011 (copy placed at pages 39 to 42 of the Paper Book) it was submitted, in fact fully supports claim of the assessee. The ratio laid down therein clearly lays down the proposition that the provision has to be liberally construed. Specific provision invoked in the facts of the said case was claim under section 54 wherein the amount not utilized for investment up to the date of furnishing of the return under section 139(1) was to be deposited with a specific bank. The jurisdictional High Court therein considering the facts where the deposit in the specified bank was made within the time permissible under section 139(4) was pleased to hold “We find that the due date for furnishing the return of income as per section 139(1) of the Act is subject to the extended period provided under sub-section (4) of section 139 of the Act”.

3.11 Reliance was placed upon decision of the Delhi Bench of the ITAT dated 25-1-2012, copy placed at pages 43-47 in the case of Hansa Dalakoti v. Asst. CIT (2012) 50 SOT 511. In the facts of that case, it was submitted, the audit report had been filed before the due date of filing of the return and the return of income was filed on 31-3-2009. The facts were stated to be identical. The ITAT in the said decision, it was submitted, held that the assessee in the present case had filed all the necessary documents which were supporting the claim of the assessee for deduction under section 80IC before the due date of filing of the return. The mere fact that the assessee could not file the return in time on a hyper technical incorrect appreciation of law, it was submitted, had been held to be the basis for denying relief despite the availability of the supporting documents.

3.12 Reliance was also placed upon another decision of the ITAT in the case of Fiberfill Engineers v. ACIT (2016) 177 TTJ 556 (Delhi- Trib.)dated 25-2-2016, copy placed at pages 48 to 62 of the Paper Book wherein it was submitted relying upon the precedent has laid down by the Apex Court in the case of Bajaj Tempo Ltd. v. CIT (1992) 196 ITR 188 (S.C) it had been held that the incentive provision has to be interpreted in a manner so as to advance the objects of economic activities in the country and not to deny the claim merely on technical grounds. In the said case, it was submitted, as would be evident from page 62 para 55 of the said decision, it had been held that while referring to the finding of the assessment order, “ We have noted various decisions relied upon by the learned Counsel for the assessee which held that section 139(4) is to be allowed as proviso to section 139(1)” It had also been held that, “It is true that the heading of section 80AC clearly shows that deduction is not to be allowed unless return is furnished on or before the due date specified under sub-section (1) to section 139. However, it cannot be denied that section 80IC is an incentive provision and in view of various judicial pronouncements, particularly in the case of Bajaj Tempo Ltd. (supra) incentive provision has to be incorporated in a manner so as to advance the objects of economic activities in the country and not to deny the claim merely on technical grounds”. Accordingly, reliance was also placed upon the principle laid down by the Apex Court in the case of Bajaj Auto Ltd. cited supra for the proposition that the incentive provision is to be interpreted liberally and the restrictions thereon have to be so construed so as to advance the objective of the section and not to frustrate it. Reliance was also placed upon decision of the Delhi High Court.

3.12A Reliance was also placed upon decision of the Delhi High Court in the case of Poddar Pigments v. CIT (2008) 175 Taxman 302. In the facts of said case, it was submitted, claim under section 80IB had not been made in the original return and the time period for filing of the revised return had also lapsed. The assessee preferred an application under section 264 for condoning the delay. The Court held that “delay occurred due to bona fide reasons and there is no mala fide intent of the assessee in delaying in filing of the revised return”.

3.12B Reliance was also placed upon decision dated 31-5-2011 of the Hyderabad Bench of the ITAT in the case of ITO v. S. Venkatiah (2012) 52 SOT 437. Said decision, it was submitted, has been confirmed by the Hon’ble High Court of Andhra Pradesh vide order dated 26-6-2013. Attention was also invited to the order dated 30-7-2010 of the Delhi Bench of the ITAT in the case of Asst. CIT v. Dhir Global Industria (P) Ltd. (2011) 43 SOT 640, copy placed at pages 69 to 74 wherein considering the claim of deduction under section 10B, the claim had been allowed by the ITAT holding that delay in late filing the return is reasonable.

3.13 Reliance was also placed upon the decision of the Chandigarh Bench of the ITAT in the case of Rajwinder Kaur Mahal dated 28-6-2016 in ITA 771/CHD/2015 (copy placed at pages 75 to 78). It was submitted that the issue for consideration was claim of deduction under section 54 wherein the amount was not utilized by way of deposit in specified banks by the due date of filing the return under section 139(1). The ITAT in the facts of the said case, it was submitted, considering the judgment of the Apex Court in the case of Prakash Nath Khanna which had been relied upon by the Commissioner (Appeals) and considering the decision of the Hon’ble Punjab & Haryana High Court in the case of Jagriti Aggarwal which has been relied in the present proceedings also and also relying upon the decision taken in the case of Mohan Singh held that date of filing of the return for the purpose of section 54 is section 139(4) and not section 139(1). Attention was invited to page 77 para 7 on wards.

3.14 The last decision relied upon, it was submitted, is the decision of the ITAT in the case of Heera Moti Agro Industries v. DCIT, date 23-2-2017 ITA No. 740&741/CHD/2013 (copy placed at pages 108 to 126 of the Paper Book). Specific attention was invited to para 12 of the said decision wherein after considering the various decisions applied, it had held that filing of return of income on or before due date prescribed under section 139(1) is directory and not mandatory. The said legal position, it was submitted, fully supports the case of the assessee. For ready reference, the same is reproduced here under :–

“12. Considering the above discussion in the light of various orders of the Tribunal referred to above, it is proved from the facts of the case that there was a valid reason for delay in filing of return of income as the photo copies of the seized documents were not made available to the assessee and assessee could not file return of income without the same. The provisions of section 80AC of the Act are not mandatory and that the claim of the assessee cannot be denied on technicalities when assessee is legally entitled for deduction under section 80IC of the Act. Since delay in filing the return of income is not attributable to the assessee because Revenue Department did not provide photo copies of the seized documents to the assessee on time, therefore, claim of the assessee for deduction under section 80IC cannot be denied by the authorities below on the reason that return could not be filed under section 139(1) of the Act by the due date i.e., 30-9-2008. In view of the above discussion, we set aside the orders of authorities below and direct the authorities below to grant deduction under section 80IC of the Act to the assessee. Ground of appeal No. 3 of appeal of the assessee is allowed.”

3.15 Accordingly, it was his submission that claim of the assessee was fully allowable.

4. The learned Commissioner–Departmental Representative submitted that argument of the learned Authorized Representatives that the statutory requirements were fulfilled within time and only for filing of the return, there was a delay, it was submitted, was not coming out from the record. The learned Authorized Representatives intervened that he had been referring to facts and findings recorded in the assessment order itself. The learned Commissioner–Departmental Representative relying upon the decisions considered by the Commissioner (Appeals) and specifically decision of the ITAT in the case of Lakshmi Energy & Foods Ltd. submitted that the claim of the assessee was not allowable. Copy of the said decision was filed. Referring to the order of the ITAT relied upon by the learned Authorized Representatives in the case of Heera Moti group, it was his submission that it was evident from perusal of the said order itself that the reasons which prevented the assessee from filing the return in time clearly were attributable to the assessing officer, however, in the facts of the present case it was submitted that delay was not attributable to the assessing officer. If the return could not be prepared and filed within time in the facts of the present case, then it was solely because of the assessee itself, the department had no role to play. The affidavit of the assessee, it was submitted, is a self serving affidavit. There is no role of the assessing officer and thus, decisions relied upon did not help the assessee in any case. It was his submission that there is no reasonable cause in the facts of the present case and accordingly, it should be rejected.

5. The learned Authorized Representatives inviting attention to the facts on record submitted that the claims made by the assessee on facts as considered by the Chandigarh Bench in the case of Lakshmi Energy & Foods Ltd. relied upon by the Commissioner (Appeals) and also by the learned Commissioner–Departmental Representative, it was submitted is a decision rendered on 26-2-2014 and apart from being distinguishable on facts as pointed out in the course of the arguments, it was his submission that the said decision has been considered by the Chandigarh Bench itself in the case of Heera Moti Agro Industries which is a decision more latest in point of time as it is dated 23-2-2017. Being the latest decision in point of time and also having considered the earlier decision, it was submitted, it has higher precedence value. Inviting attention to page 114 para 9, it was submitted, that the learned Commissioner–Departmental Representative was correct in stating that he has argued the said case before the ITAT and reliance had been placed by him on the aforesaid decision i.e., Lakshmi Energy & Foods (P) Ltd. as would be evident from page 114 para 9(ii). However, on account of the distinctions on facts and the position of law, the reliance placed in the peculiar facts is misplaced. It was his submission that if the Chartered Accountant who had the digital signatures, failed to click the relevant document for filing of the return and admittedly the counsel did not upload the return, which fact was also not brought to the notice of the assessee, the delay in the facts, as submitted was on account of peculiar facts and there can be no proposition of law to hold that delay on account of reasonable facts can be accepted if attributable to the Department and if reasonable cause is demonstrated by an assessee, the delay cannot be condoned. The issue principally, it was submitted, has to be decided on the reasonableness of the claim.

6. We have heard rival submissions and perused the material available on record. A perusal of the record shows that the assessee e-filed its return on 31-3-2014 showing a total income of Rs. 2.71 Crores after claiming deduction under Chapter VI-A (u/s 80IC) of Rs. 1,16,26,310. The said claim was supported by audit report in form No. 10CCB under rule 18BBB of the Income Tax Rules, 1961. The assessing officer considering the fact that the return had not been filed within the time specified under section 139(1) as admittedly it had been filed within the extended period as specified under section 139(4). Accordingly, considering the statutory requirement as per provisions of section 80AC required the assessee to explain the same. The assessee as per the submissions extracted in the assessment order gave the following explanation :–

“Income Tax return along with statement of income was filed on 31-3-2014 audit report through which we can avail the 80IC deduction is submitted on 28-10-2013. Book profit report in form 29B is submitted on 29-9-2013 and Tax Audit Report in form 3CA/3CD is submitted on 29-9-2013. Moreover, end of the year i.e., March 31 of the relevant assessment year is also due date under section 139 without penalty and ITR submitted on 31-3-2014”

6.1 The record shows that the explanation was rejected by the assessing officer holding as under :–

The explanation of the assessee is perused and it shows that the assessee itself admitted that the return of income for the year under consideration was filed beyond due date of filing of return. Moreover, audit report in form no. 10CCB was also filed on 28-10-2013 which is also belated. The assessee claimed that tax audit report in form 3CA & 3CD was filed on 29-9-2013 i.e., with in time. The contention of the assessee is not acceptable because the date of filing of audit report is no concerned with the date of filing of return of income. The provision of section 80AC clearly indicates that the return of income of the assessee who claims deduction under section 80IC must be furnished on or before due date in the relevant assessment year. The assessee could not justify its claim, hence, deduction under section 80IC of Rs. 1,16,26,310 is disallowed and added to the total income of the assessee’s company.

6.2 The assessee carried the issue in appeal before the Commissioner (Appeals) who also rejected the claim relying upon the decision of the Apex Court in the case of Prakash Nath Khanna. The applicability of the said decision to the facts of the present case is disputed by the learned Authorized Representatives on the grounds that as per the settled legal position, the rule of strict interpretation is to be applied to the charging and penal provisions. It has been argued that since section 80AC and section 80IC are procedural provisions, the rule of strict and literal interpretation are not to be applied. Attention has been invited to para 20 of the aforesaid decision of the Apex Court. The learned Authorized Representatives has also sought to distinguish the decisions relied upon by the Commissioner (Appeals). Since these arguments have been elaborated in the earlier part of this order, it is deemed appropriate only to refer to the rebuttal thereof by the learned Commissioner–Departmental Representative. The learned Commissioner–Departmental Representative has placed heavy reliance upon the order of the Chandigarh Bench of the ITAT in the case of Lakshmi Energy & Foods Ltd. The learned Authorized Representatives apart from relying upon various decisions which have also been elaborated in the earlier part of this order, has sought to invite attention to the order dated 23-2-2017 in the case of Heera Moti Agro Industries (copy placed at pages 108 to 126). Before we refer to those decisions, we take note of the fact that admittedly the Tax Audit Report and the Balance Sheet along with annexures were filed within the due date i.e., 29-9-2013 and the report under section 80IC on form 10CCB was filed on 28-9-2013. These facts are coming from the record itself as extracted in the earlier part of the order from the assessment order. The return admittedly was uploaded only on 31-3-2014 and admittedly was late in terms of section 139(1), though within the extended time as set out in section 139(4) as far as the levy of penalty etc. was concerned. Section 80AC of the Income Tax Act specifically lays down that deduction is admissible or in-fact no deduction is permissible unless the return is furnished on or before the due date specified in sub-section (1) of section 139. For ready reference, said provision of law is hereby reproduced :–

“80AC -Where in computing the total income of an assessee of the previous year relevant to the assessment year commencing on the 1-4-2006 or any subsequent assessment year, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC (or section 80-ID or section 80-IE), no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub- section (1) of section 139.”

6.3 We are called upon to decide in the facts of the present case whether the benefit of deduction under section 80IC in the facts of the present case wherein the assessee admittedly did not file its return within the due date specified under sub-section (1) of section 139 of the Act and filed it only in the extended period and though within time but in the extended period as set out in sub-section (4) of section 139 of the Act. The consistent claim of the assessee which has not been disputed by the tax authorities or by the learned Commissioner–Departmental Representative is that the return of the assessee was filed well within the extended due date under section 139(4) i.e., on 29-9-2013.

6.4 We have considered the relevant findings in the assessment order and the impugned order and we find that the relevant documents in support of its claim of deduction were available before the tax authorities well within time namely Book Audit Report in Form No. 29B and Tax Audit Report in Form No. 3CA/3D on 29-9-2013, Audit Report under section 80IC along with Balance Sheet etc. Consequently, the occasion to consider the possibility and the opportunity to interpolate and fudge up the claim was admittedly not available to the assessee. We note that the respective corresponding figures qua the claim as per the Reports and Balance Sheets remain the same. The legal position referring to various case laws have been addressed by the authorities which we have elaborately discussed in the earlier part of this order. On consideration thereof, we find that the claim of the assessee that in the peculiar facts and circumstances of the present case where the filing of the return was delayed for reasons not attributable to the assessee and all other supporting evidences in the form of audit report under section 80IC, balance sheet prepared for the purpose of income tax and the requirements of various regulatory authorities were prepared and filed well within time whereas we have noted the figures and amounts in these two fully tally in the light of these facts when considered in context of the principles enunciated by the Courts and the Tribunal, we concur with the arguments that literal interpretation is to be given to the procedural requirements in as much as these provisions being machinery provisions and thus being directory, they do not stand as a bar in the facts of a case wherein it can be demonstrated that there was a justifiable and reasonable cause for delay in filing of the return. The return which is well within the extended period as considered under sub-section 4 of section 139 of the Act, it was submitted, stands on a higher footing, then the return which is filed even beyond this period. The arguments of the Revenue that return filed late can only be considered if the delay is attributable to the Revenue, cannot be concurred with. In the face of decisions which hold that the said provision is a machinery provision, then this interpretation cannot apply only to cases where delay is attributable only to the Revenue. The said interpretation would be universally available as per facts to both the sides. To hold that the cause for delay can be gone into, only if delay is attributable to the Revenue in the facts of the case would necessitate a judicial forum to first require the Department to demonstrate how it can claim itself to be on higher footing qua the tax payer because reasons for delay can be gone into and condoned for adequate reasons demonstrated by the Revenue then even where delay occurs for reasons not attributable to the Revenue also. In the absence of any other argument, we do not see how in the facts as considered by different Courts in the decisions relied upon by the learned Authorized Representatives, why they should not be applied. Once it has been held that section 80AC is a machinery provision, then the issue is to be considered in the light of the facts available. The legal position that the relevant provision is a machinery provision, applying the principles that being directory in nature enables the authorities to consider the reasons, consistently on record for late filing of the return. A perusal of the record shows that the affidavit of Shri Jagbir Singh S/o Shri Om Pal, Managing Director of the assessee company is on record. Perusal of the same shows that it has been explained that on account of collusion of the tax consultant i.e., Chartered Accountant Shri A.S. Malhotra in regard to allotment of shares in another company i.e., Saitec Medical (P) Ltd. wherein the assessee company had a major share holding resulting in filing of suite before the Company Law Board etc. and in connivance of the Tax Consultant with Mr. Bhalotia and his son who were having minor shareholding in M/s. Saitech, the routine exercise normally done by the Tax Consultant without any follow up or supervision as digital signatures had been entrusted to the tax consultant for uploading of documents etc. in the Income Tax Portal, the mischief was occurred. For ready reference, the contents of the affidavit on record are reproduced here under :–

AFFIDAVIT

I, Jagbir Singh s/o Sh. Om Pal, Managing Director of Symbiosis Pharmaceuticals (P) Ltd., having its Regd. office at SCO 4, Ground Floor, 14, Raghunath Puri, Yamuna Nagar, do hereby solemnly affirm and declare as under :–

1. That I am Managing Director of the Company Symbiosis Pharmaceuticals (P) Ltd., Yamuna Nagar.

2. That, the Balance Sheet along with annexures of Symbiosis Pharamaceuticals (P) Ltd. for the year ending 31-3-2013 was signed by the authorized directors and Auditors on 9-8-2013 and the said balance sheet was adopted by the Board of the company. On this very date i.e., 9-8-2013 we handed over the Digital Signatures of the Deponent to our auditor and Tax. Consultant CA A.S. Malhotra for filing Income Tax return and other reports on the Income Tax portal as returns and all audit reports had to be compulsorily e-filed. We came to know about the fact that Tax Audit report and Balance Sheet with annexures were filed on 29-9-2013 and report under section 80-IC on Form 10CCB was filed on 28-10-2013 and the return of Income was uploaded only on 31-3-2014.

3. That filing of Income Tax return, audit report etc on Income Tax portal as a matter of routine is handled by Tax Consultant and in our case CA. A.S. Malhotra and as a normal practice digital signatures were also handed over to him along with Board Resolution authorizing him to use and affix our Digital Signatures on the documents to be submitted to Income Tax Department.

4. That our aforementioned Company is having 77.30% shares in another Company “Saitech Medicare Private Limited”. CA. A.S. Malhotra was Auditor of that Company also. Besides Symbiosis Pharmaceuticals (P) Ltd. and a few other shareholders, this Company is also having two shareholders namely Sh. Rajat Bhalotia and his father Sh. P.D. Bhalotia with 12.66% and 3.82% shares respectively. These shareholders have filed a suit with Company Law Board, Delhi against the major shareholder i.e., Symbiosis Pharmaceuticals (P) Ltd. and other shareholders including the Deponent.

We suspected collusion of our Auditors with these two dissenting shareholders as our Auditor was also Auditor and tax consultant of Wonder Products, Nahan Road, Moginand, Kal Amb, Distt. Nahan; a firm of these two persons/their family members. The suspicion is on account of the fact that return of Income for the year under consideration was filed late when balance sheet and audit report was filed in time and also he has guided the other directors for filing a suit against the company.

5. That when we received the order of the DC!T in our case for the assessment year 2013-14 on 16-1-2016; we consulted another CA who told us the intricacies of the order and thereafter we confronted the same with our Tax Consultant CA. A.S. Malhotra; who did not give any satisfactory reply for delay in filing of Income Tax return and we asked for his resignation and changed our consultants as well as Auditors of both the Companies. ‘His replies confirmed our suspicions that he is in hand with glove with Mr. Bhalotia and the mischief i.e., non filing of ITR in time was carried on us at the behest of Mr. Bhalotia.

6. That we would also like to add that Bhalotias had filed the case only in July 2015 after we issued Seventy six lakh shares of “Saitech Medicare Private Limited” to Symbiosis Pharmaceuticals (P) Ltd. He was showing his grievances against the allotment since last more than one year before the allotment on some technical grounds which only a professional like a Chartered Accountant is in position to guide. Due to the case filed with Company Law Board; which case has since been transferred to National Company Law Tribunal, Chandigarh Bench in February, 2017; we had not been able to hold AGM of “Saitech Medicare Private Limited” since 2015. Whenever we tried to hold AGM; Mr. Bhalotia invoked CLB which restrained us from holding AGM and ultimately we had to give an undertaking to the CLB of not holding any AGM without its permission.

7. That we are not conversant with the Income Tax Act, 1961 hence we had to rely on our consultants. As is a normal practice; Income Tax Consultant prepares and file ITRs on behalf of the assessee. We were also following the instructions of our Tax Consultant and late filing of ITR was not due to any fault of any of the officer of the Company but due to our Tax Consultant.

6.5 Accordingly, in the peculiar facts and circumstances of the case, as we have discussed at length and seen from the record, we are of the view that the delay in filing of the return in the facts of the present case was for reasons beyond the control of the assessee and in fact, there was reasonable cause in the late filing of the return within the extended period as statutorily available under sub-section (4) of section 139 of the Act. The decision rendered in the case of P. Bhavani, we find, on facts is not applicable and is entirely distinguishable since we concur with the arguments advanced by the learned Authorized Representatives thereon same are not being repeated here. Similarly, we find that the decision in the case of Lakshmi Energy & Foods Ltd. also has no role to place as in the facts of that case, not only the return was filed beyond the extended period of time statutorily available under sub-section (4) of section 139 but even otherwise, the said return was not supported by Tax Audit Report and Audit Report under section 80IC prior to the filing of the return and in fact they were filed during the assessment proceedings.

6.6 In the facts of the present case, as is evident from the assessment order itself, the supporting documents for the claim under section 80IC was filed well within the extended time prescribed under section 139(4). The said fact is evident from a reading of the assessment order itself. We also note that the principle of law as applicable to claim of exemption under section 54 as considered by the Hon’ble jurisdictional High Court in the case of Jagriti Aggarwal is fully applicable to the case at hand also and in fact the decision of the Delhi Bench of the ITAT in the case of Hansa Dalakoti and Fiberfill Engineers (cited supra) relying upon the decision of the Apex Court in the case of Bajaj Tempo Ltd. (cited supra) and decision of the Hon’ble Delhi High Court in the case of Poddar Pigments Ltd. (cited supra) fully supports the claim of the assessee. Mention may also be made of the order of the Hyderabad Bench of the Tribunal in the case of S. Venktiah, (cited supra) and another order of the Delhi Bench in the case of Dhir Global Industries (P) Ltd. (cited supra) also support the view taken. Support may also be drawn by making reference to the order of the Chandigarh Bench of the Tribunal in the case of Rajwinder Kaur Mahal (stated supra) wherein considering the claim of deduction under section 54 after considering the decision of the Apex Court in the case of Prakash Nath Khanna and also considering the decision of the jurisdictional High Court in the case of Jagriti Aggarwal, the claim made in the extended period available under sub-section (4) of section 139 was allowed. The order in the case of Heera Moti Agro Industries (cited supra) also deserves a mention.

6.7 Accordingly, considering the peculiar facts and circumstances of the case and position of law as canvassed by the parties before the Bench, we hold that the claim of the assessee could not be ousted on the fact that the return was filed within the extended period of sub-section (4) of section 139. Accordingly, we hold that the assessee deserves to succeed in principle. The matter is remanded to the assessing officer for the purposes of verification. Needless to say that the assessee shall be given a reasonable opportunity of being heard.

7. Addressing ground No. 2 raised in the present appeal, the learned Authorized Representatives submitted that the assessing officer considering the fact that assessee had taken interest bearing loans and was also paying interest to the bank was required the assessee to explain why proportionate interest @ 13% should not be made in the hands of the assessee. The explanation of the assessee that the advance of Rs. 5,19,000 to Shri Shatrughan Sinha noticed by the assessing officer was for sales promotion and of Rs. 1,27,210 to Mr. Adil Latif Khan was towards advance as he was the Sales Manager and was given for work to be adjusted later for no stated reasons, the explanation was rejected leading to the addition of Rs. 93,237. The addition was confirmed in appeal. In the said background, reliance was placed upon the decision of the Hon’ble Punjab & Haryana High Court in the case Bright Enterprises (P) Ltd. v. CIT (2016) 381 ITR 107 (copy placed at pages 93 to 104) for the proposition that no interest under section 36 is to be disallowed if assessee is having capital/free reserve and interest free deposits more than the interest free advances.

7.1 The learned Commissioner–Departmental Representative relies upon the orders of the Tax Authorities.

7.2 We have heard the parties and perused the material available on record. We note that though the assessee had canvassed before the assessing officer as per the relevant extract in page 8 of the said order that the loans were advanced for business purpose namely to Shri Shatrughan Sinha as a sale promotion exercise and to Shri Adil Latif Khan who was a Sales Manager as advance to be adjusted against work, however, in the discussion in the assessment order or the impugned order, there is no finding of fact given thereon. Moreover, the impugned order denies the claim on the reasoning that evidence of availability of interest bearing funds was not filed and commercial expediency was also not demonstrated. Considering the fact that the issue is to be decided on the basis of facts and evidences and not on the basis of decisions as decisions can be applied only to admitted facts and in the facts of the present case, we note that there is no finding whether Shri Shatrughan Sinha to whom an advance of Rs. 5,90,000 was given, was entrusted with any sales promotion exercise or not and whether Shri Adil Latif Khan was the sales Manager of the company and the advance was adjusted against the work which he was stated to be performing. Accordingly, we deem it appropriate to set aside the issue back to the assessing officer directing the said authority to first address the facts and thereafter consider the applicability of decisions thereon. Accordingly, in the absence of any relevant discussion in the order or the material fact, ground No. 2 of the assessee is set aside and restored back to the file of assessing officer.

8. Addressing the issue in ground No. 3, the learned Authorized Representatives has relied upon the decision of Sagun Foundry (P) Ltd. v. CIT (2017) 291 CTR 557 (Allahabad) (copy placed at pages 79 to 92) for the proposition even if PF ESI has been paid after due as in the respective Act but before the due date of filing of the return, no dis allowance can be made. The learned Commissioner–Departmental Representative has relied upon orders of the tax authorities. We find that though the issue is addressed before the Commissioner (Appeals), however, there is no specific finding coming out from the order. Since the issue is first to be considered on facts, it is also, accordingly, set aside back to the file of the assessing officer with the direction to first address facts and thereafter pass a speaking order thereon in the light of the provisions of the Act and settled legal position thereon.

9. In the result, appeal of the assessee is allowed for statistical purposes.

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