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Case Law Details

Case Name : S.K. Ventures Vs DCIT (ITAT Mumbai)
Appeal Number : ITA No.2173/M/2021
Date of Judgement/Order : 05/01/2024
Related Assessment Year : 2017-18

S.K. Ventures Vs DCIT (ITAT Mumbai)

Introduction: In a recent ruling, the Income Tax Appellate Tribunal (ITAT) in Mumbai has set a precedent that ensures taxpayers are not denied the benefits of Section 80IB due to technical glitches in the e-filing system. The case of S.K. Ventures Vs Deputy Commissioner of Income Tax (DCIT) for the assessment years 2010-11, 2015-16, and 2016-17, addresses a crucial aspect of modern taxation – the impact of e-filing technicalities on statutory deductions.

Detailed Analysis:

S.K. Ventures, a company engaged in real estate development, filed its return of income for the AY 2017-18, claiming a 100% deduction on profits from a housing project under Section 80IB of the Income Tax Act, 1961. However, due to technical difficulties, the assessee was unable to upload the necessary audit report and Form 10CCB within the stipulated deadline, leading to the disallowance of the deduction by the assessing officer. This action was upheld by the National Faceless Appeal Centre (NFAC), prompting the assessee to appeal to the ITAT Mumbai.

The ITAT Mumbai, after examining the case, emphasized that a taxpayer should not be penalized for delays caused by technical glitches in the e-filing system, especially when the new e-filing procedure was relatively nascent. The Tribunal noted that the assessee had indeed attempted to comply with the filing requirements and had eventually uploaded the required documents immediately after the technical issues were resolved.

By remanding the case back to the assessing officer for re-examination, the ITAT Mumbai has underscored the importance of considering the intent and efforts of the taxpayer to comply with statutory requirements. The Tribunal’s decision reflects a pragmatic approach to challenges posed by the digitization of tax filings, ensuring that taxpayers are not unduly penalized for issues beyond their control.

Conclusion: The ruling in favor of S.K. Ventures by the ITAT Mumbai is a significant development in the realm of tax law, particularly concerning the benefits under Section 80IB of the Act. It reassures taxpayers that the law can adapt to the realities of the digital age, safeguarding their rights in the face of technical difficulties. This judgment serves as a reminder of the judiciary’s role in ensuring that the transition to e-filing systems does not inadvertently harm taxpayers’ interests. Furthermore, it sets a precedent for handling similar cases in the future, promoting fairness and equity in the tax system.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

At the very outset registry by raising a defect memo brought to the notice of the Bench that this appeal is time barred by 21 days. However, during the course of argument the Ld. A.R. for the appellant M/s. S.K. Ventures (hereinafter referred to as ‘the assessee’) explained that the period of delay of 21 days from 08.11.2021 to 29.11.2021 is duly condoned by the Hon’ble Supreme Court due to Covid-19 pandemic vide order dated January 10, 2022 passed in miscellaneous application No.21 of 2022, 665 of 2021 & Suo Motu Writ Peeition (C) No.3 of 2020.

2. We are inclined to agree with the contentions raised by the assessee and hence the period of delay in filing the appeal is duly condoned by the order (supra) passed by the Hon’ble Supreme Court. Hence, the appeal is treated having been filed within limitation.

3. The assessee by filing the present appeal, sought to set aside the impugned order dated 09.09.2021 passed by passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2017-18 on the grounds inter alia that :-

“In the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the impugned action of Ld. DCIT, CPC in disallowing deduction of Rs.1,08,48,406/- u/s. 80-IB without considering the factual and legal matrix of the case.”

4. Briefly stated facts necessary for adjudication of the issues at hand are: assessee is into the business of real estate i.e. construction and sale of immovable property which is approved by the authority for the purpose of claiming deduction @ 100% of the profit from the housing project under section 80IB of the Income Tax Act, 1961 (for short ‘the Act’). So the assessee claimed deduction @ 100% from the housing project for the year under consideration but due to some technical glitches the assessee failed to furnish report in form 3CB and form 10CCB respectively within due date of filing the return of income, but ultimately uploaded the same on 07.11.2017. Assessee declared total income at Rs.Nil after claiming 100% deduction of profit under section 80IB to the extent of Rs.108,48,406/-. Consequently, a notice proposing adjustment of Rs.143(1)A of the Act was uploaded on e-portal by disallowing the entire deduction claimed by the assessee for want of report in the form 10CCB after due date.

Technical Glitch No Basis to Deny Section 80IB deduction ITAT Mumbai

5. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal. Feeling aggrieved, assessee has come up before the Tribunal by way of filing present appeal.

6. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.

7. The Ld. CIT(A) has dismissed the appeal by returning following findings:

“6.3 CA’s certificates Statements/Form 10CCB is to be filed with in the due date in order to claim the deduction under this section. The appellant himself in the statement of facts (as quoted in para 3 above) has accepted that the same was delayed. The AO has thus correctly denied the deduction claimed u/s 80 IB since the return of income was filed beyond the due date. The appeal is accordingly dismissed.”

8. The Ld. A.R. for the assessee challenging the impugned order passed by the Ld. CIT(A) contended that the assessee had duly e-filed the return of income on 07.11.2017 but audit report with form 3CB was not uploaded on 07.11.2017 due to some technical glitches rather it was uploaded on 08.11.2017 at 00 hrs.

9. We have perused the audit report under section 44AB of the Act with form 3CB available at page 1, 2 & 3 of the paper book along with return of income. Similarly, we have also perused the audit report filed by the assessee under section 80-I(7)/80-IA(7)/80-IB/80-IC/80-IAC/80-IE along with form 10CCB available at page 5 to 9 of the paper book brought on record by the assessee. These documents have not been brought on record by the assessee before the Ld. CIT(A).

11.Since the uploading of the audit report with form No.3CB and form No.10CCB could not be uploaded due to technical hitch as e-filing was newly introduced the assessee cannot be punished for that, if he is otherwise eligible to get the benefit under section 80-IB. Now the assessee has duly explained the facts, so the new evidence brought on record by the assessee is remitted back to the AO to verify and allow the deduction claimed by the assessee under section 80-IB, if admissible under law, after providing opportunity of being heard to the assessee.

12. Consequently, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 05.01.2024.

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