Once the validity of the return has not been questioned by the revenue, the reje

[pawansingla]

Delay in filing of return should not be a reason to deny assessee's claim of exemption under section 10B(1) of Income-tax Act



Once the validity of the return has not been questioned by the revenue, the rejection of the assessee's claim under section 10B(1) at the threshold by the Assessing Officer is not justified on the ground of delay in filing of return


[2010] 7 taxmann.com 36 (New Delhi - ITAT)

ITAT, DELHI BENCH 'B', NEW DELHI

ACIT

v.

Dhir Global Industria Pvt. Ltd.

ITA No. 2317/Del/2010

July 30, 2010



RELEVANT EXTRACTS:

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We have heard both the counsel and perused the records. We find that it is undisputed that a provision has been inserted during the current year in section 10(B)(1) which provides that no deduction under this section shall be allowed to an assessee if the return of income is not furnished on or before the due date specified under section (1) of section 139. Now this section was introduced w.e.f. 1.4.2006 by Finance Act, 2006. This is the first assessment year from which the said proviso has been introduced. Now section 139(1) provides as under:-

"139(1). Every person -

(a) being a company (or a firm) or

(b) being a person other than a company (for a firm), if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed."



Now in the present case, we find that there was only a marginal delay of 1½ month in filing the return of income. The return filed was valid one. The same has also been accepted as a valid return by the Assessing Officer. The reasonable cause attributed by the assessee for the delay is that new provision of E-filing the return was introduced from the current assessment year. There was some problem under the new provisions due to which the date of filing the return had extended by the CBDT from time to time and from 31.10.2006, the same was extended to 30.11.2006. The new provision regarding E-filing of return was introduced & in this first year the software did not accept the return, if self-assessment tax was not paid. Assessee's case is that due to some financial problems it could not pay the self-assessment tax on time, as a result of which there was a delay in the payment of tax and consequent filing of return by about 18½ month. It was further claimed that subsequently the software has been modified and now returns are being accepted, even when self assessment tax is not paid. These factual aspects have not been disputed by the revenue. In these circumstances, in our considered opinion, there was genuine and valid reason for the delay in filing of return and moreover as we have already found above these provisions are directory and not mandatory. Once the validity of the return has not been questioned by the revenue, in our considered opinion, the rejection of the asseessee's claim u/s 10(B(1) at the threshold by the Assessing Officer was not justified. In this regard, the case laws relied by the assessee at germane. In this connection, we refer to the following case laws:-



- "Continental Construction Pvt. Ltd. vs. UOI 185 ITR 230 (Del)

(ii) That, however, in view of the bona fide belief entertained by the petitioner, the department ought not to stand on mer  technicalities but ought to give the petitioner an opportunity to fulfill the requirements of section 80HHB(3) and, on such compliance within a reasonable time, ought to grant the benefit of that section to the petitioner."



- Bajaj Tempo Ltd. vs. C.I.T. 196 ITR 189 (SC)

"A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally; and since a provision for promoting economic growth has to be interpreted liberally, the restriction on it too has to be construed so as to advance the objective of the provision and not to frustrate."



However, we find that Ld. Commissioner of Income Tax (Appeals) has accepted the assessee's submission, that the delay in filing of return should not be a reason to deny the assessee's claim of exemption u/s 10B(1). However, the Ld. Commissioner of Income Tax (Appeals) has not considered the factual aspects of the merits of the case. Assessing Officer also disallowed the assessee's claim by stating that the return was filed on time. He also had not gone into the other aspects of the merits of the case. In this regard, we refer the decision of the Hon'ble Apex Court decision in the case of Kapurchand Shrimal Vs. CIT, 131 ITR 451 wherein it was held that the appellate authority has jurisdiction as well as the duty to correct the errors in the proceedings under appeal and to issue of necessary, appropriate directions to the authority against whose decision appeal is preferred to dispose of the whole or any part of the mater afresh, unless forbidden from doing so by statute.