Section 80-IB(10) deduction could not be denied for Genuine delay due to error on Income Tax website

This appeal by the assessee is arising out of the order of Commissioner (Appeals)-26, Mumbai, in Appeal No. Commissioner (Appeals)-26/IT/405/13-14, date 20-12-2016. The intimation was issued by Central Processing Center, Bangalore, under section 143(1) of the Income Tax Act 1961 (hereinafter ‘the Act’) dated 9-5-2011 by ACIT (CPC).

2. The only issue in this appeal of assessee is against the order of Commissioner (Appeals) confirming the action of the assessing officer in not allowing deduction under section 80IB of the Act on account of genuine delay due to error on the website for filing of the return of income. For this assessee has raised following ground No. 1: –

“1. The learned Commissioner (Appeals), 26 Mumbai has erred in not allowing deduction under section 80IB available to the assessee on account of genuine delay due to error on the website to file return of income.”

3. Brief facts are that the assessee is a Partnership Firm engaged in the business of Redevelopment of Properties in the name M/s. Meera Enterprises. The Firm’s Redevelopment Project i.e., “Mahaveer Symphony” was approved on 17-1-2008 under Slum Rehabilitation Scheme on Plot bearing C.T.S. No. 1200(pt), 1200/1 to 12 of Village Mulund, Tal. Kurla, Mumbai Suburban District, situated at Zaver Road, Mulund (West), Mumbai, for “Mulund Siddhivinayak Co-op. Housing Society Ltd.”. The return of income for assessment year 2010-11 was filed declaring total income as NIL after claiming deduction of Rs. 15,06,377 under section 801B(10) of the Act. As the assessee’s turnover till assessment year 2009-10 was below the prescribed limit under section 44AB of the Act, the assessee was not liable for Tax Audit and therefore filing of Income Tax return was manual. While filing the manual income tax return the basic requirement was the PAN. Date of Birth/ Formation/ Incorporation was not mandatory in case of assessee other than Individual. As the assessee’s turnover exceeded the limit prescribed under section 44AB of the Act 1961 for assessment year 2010-11, the assessee was liable for Tax Audit and hence filing of Income Tax return through electronic mode was mandatory. The Chartered Accountant had prepared the return along with the necessary annexures on 15-10-2010 but due to heavy pressure on computer server of the Centralized Processing Center (CPC) Income Tax Department, Bangalore, the return filing was slow till 8 p.m. Thereafter the Chartered Accountant tried to upload the income tax return, but the same could not he uploaded due to the mismatch between the date of formation with the income tax database and date as per the data available with the Chartered Accountant. He tried to obtain the date of formation from Income Tax Helpline, but the Helpline Assistance was not able to provide the same due to technical difficulties. As it was late in the evening the correct date of formation could not be obtained from the office of the assessee. Hence, the return could not be filed on 15-10-2010. Copy of the screenshot explaining the reason of error occurred while registering with e-filing Portal of Income Tax Department was filed in the assessee’s paper book. As soon as the Counsel received the date of formation from the Helpline of the Income Tax Department the same was filed at 11 AM on 16-10-2010.

4. In view of this there is a delay of one day but delay was not deliberated and this was due to heavy pressure on computer server of the centralized processing center of Income Tax Department, Bangalore and the return filing was slow till 8PM on 15-10-2010. To support his contention, he filed the ‘screen shot’ of e-filing which is enclosed at assessee’s paper book 12, where I find that the Centralized Processing Center, Bangalore refused to accept with an error i.e., “Your Date of birth does not match with the data you entered”. The Commissioner (Appeals) confirmed the action of the assessing officer and Commissioner (Appeals) specifically observed that the assessee was not vigilant and also not explained the reasons for delay and for this he observed in Para 6.1 as under: –

“6.1 It is pertinent to mention here that the case laws relied upon by the appellant are not squarely applicable in the appellant’ own case. In those cases, the concerned appellants have filed application for condonation of delay in filing ROl under section 119(2) of the Act before the CBDT. In the instant case, appellant has not made any such effort. Moreover, appellant has submitted that as the appellant’s turnover till assessment year 2009-10 was below the prescribed limit under section 44AB of the Act, he was not liable for Tax Audit and therefore filing of Income Tax Return manually. While filing the manual Income Tax Return the basic requirement was the PAN. Date of Birth/ Formation/ Incorporation was not mandatory in case of appellant other than individual. As the appellant’s turnover exceeded the limit prescribed under section 44AB of the Act for assessment year 2010-11, he was liable for Tax Audit and hence filing of Income Tax return through electronic mode was mandatory. The Chartered Accountant has prepared the return along with the necessary annexure on 15-10-2010. Due to heavy pressure on computer server of the Centralized Processing Center (CPC) Income Tax Department, Bangalore, the return filing was slow till 8pm. Thereafter, the CA tried to upload the Income Tax Return, but the same could not be uploaded due to the mismatch between the date of formation with the income tax database and date as per the data available with the Chartered Accountant. He tried to obtain the date of formation from Income Tax Helpline, but the helpline assistance was not able to provide the same due to technical difficulties. As it was late in the evening the correct date of formation could not be obtained from the office of the appellant. Hence, the return could not be filed on 15-10-2010. As soon as we received the date of formation from the helpline of the Income Tax Department the same was filed at 11am on 16-10-2010.There may be variety of circumstances in which the delay may be occasioned for no fault of appellant. At para 5 at page no. 5 of the written submission filed in paper book on 26,08.2015 appellant AR himself mentioned that “When a substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay. In the present case, the assessee is not vigilant and also not explained the reasons for delay.” As the Chartered Accountant, has tried his level best to file the Income Tax return on due date but could not file due to exceptional circumstances beyond the control of the appellant, hence the delay in filing the return should be condoned and the deduction under section 80113(10) of the Income Tax Act, 1961 be allowed. It is clear that appellant was not vigilant enough to provide all the details to his AR for filing ROl online that too at the fag-end of due date of filing of ROl. The Authorized Representative also has not shown due diligence to obtain all the details from the Appellant regarding the correct date of formation. All these facts and circumstances lead to the conclusion that appellant has shown “Culpable Negligence” by not filing ROl on or before the due date. The same has been accepted by the AR of the appellant supra. Moreover, appellant could not prove, presence of any genuine hardships, with documentary evidence that filing of ROl within time was not feasible. Hence, I find no infirmity in the rectification order of the assessing officer. Ground of appeal is dismissed.”

5. I have heard the rival contentions and gone through the evidences and documents filed during the course of hearing, I find that the assessee has filed screen shot of error in E-filing registration with the Centralized Processing Center, Bangalore wherein the return of income was refused acceptance for the reason ‘your Date of Birth does not match with the data you entered” it means that assessee genuinely tried to file the return of income within the due date of filing under section 139(1) of the Act i.e., by 15-10-2010 but could not file. Genuinely, the assessee filed the return of income with Centralized Processing Center, Bangalore only on 16-10-2010 by 11AM. Accordingly, I allow the claim of the assessee and this issue of the assessee’s appeal is allowed.

6. In the result, the appeal of assessee is allowed.