Gujarat High Court
Panasonic Energy India Co. Ltd vs Asst. Commissioner Of Income Tax Circle ... on 7 January, 2014
Author: Akil Kureshi
Bench: Akil Kureshi, Sonia Gokani
O/TAXAP/596/2013 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 596 of 2013
With
CIVIL APPLICATION NO. 585 of 2013
In
TAX APPEAL NO. 596 of 2013
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PANASONIC ENERGY INDIA CO. LTD....Appellant(s)
Versus
ASST. COMMISSIONER OF INCOME TAX CIRCLE FOUR....Opponent(s)
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Appearance:
MR MANISH J SHAH, ADVOCATE for the Appellant(s) No. 1
MR KM PARIKH, ADVOCATE for the Opponent(s) No. 1
NOTICE SERVED for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MS JUSTICE SONIA GOKANI
Date : 07/01/2014
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The assessee is in appeal against the judgment dated 30.11.2012 of the Income Tax Appellate Tribunal, ("the Tribunal" for short). Following question has been presented for our consideration:-
" Whether on the facts and in the circumstances of the case, the Tribunal was right in law in disallowing totally section 80IB claim of the appellant only because Form 10CCB was not submitted during the course of assessment proceedings?"
2. The appellant assessee is a company registered under the Company's Act and is engaged in manufacturing activity. For the Assessment Year 2003-04 the return of the company was taken in scrutiny. The Assessing Officer examined the various claims put-forth by the assessee during the course of Page 1 of 14 O/TAXAP/596/2013 ORDER the assessment proceedings. One such claim pertained to deduction under 80IB of the Income Tax Act, 1961 ("the Act"
for short). The Assessing Officer passed the order of assessment on 27.3.2006 disallowing such claim making following observations:-
" During the year under consideration the assessee company has claimed deduction under section 80IB of the I.T. Act at Rs.1,30,09,683/- in respect of its alleged new 3D line unit at Pithampur. It was noted that the assessee company has failed to file the required mandatory form no.10CCB with the return of income. As per provision u/s 80IB(13) r.w.s.80IA(7)., this audit report is a mandatory criterion for availing this deduction. This fact was brought to the notice of assessee company vide order sheet noting dated 16-9-05. Till the passing of this order, the assessee company has failed to submit form No.10CCB. As this is clear violation of provision of section 80IB(13) r.w.s. 80IA(7), the assessee company claim of deduction amounting to Rs.1,30,09,683/- is disallowed."
3. The assessee carried the matter in appeal. Before CIT(Appeals) the assessee contended that in the earlier years such claim was granted by CIT(Appeals). CIT(Appeals) accepted the request making following observations:-
"5.3 I have considered the submissions of the counsel and facts of the case. This ground has two limbs. First limb is against disallowance of deduction u/s.80IB, which was held to be allowable by CIT(A) from A.Y. 1998-99 till A.Y.2002-03. Respectfully following the orders of my learned predecessors for the Assessment Years 1998-99 to 2002-03, the Assessing Officer is directed to allow deduction under section 80IB to the appellant."Page 2 of 14
O/TAXAP/596/2013 ORDER
4. The Revenue carried the matter in appeal before the Tribunal. The Tribunal allowed the Revenue's Appeal and reversed the decision of CIT(Appeals) making following observations:-
" This disallowance was deleted by Ld.CIT(A) as per para 5.1 of his order. We find that there is no decision of Ld.CIT(A) on this aspect of the matter i.e. non filing of mandatory form 10CCB with the return of income. Regarding this argument of the Ld.A.R. that this is a procedural lapse, we find that in various cases, it was held by the tribunal and various High Courts that if such procedural lapse is rectified and made good before completion of assessment proceedings, no adverse inference should be drawn but in the present case, even before completion of the assessment proceedings, the mandatory form 10CCB was not submitted by the assessee and hence, in our humble considered opinion, this order of Ld.CIT(A) cannot be sustained because even if it was a procedural requirement and the assessee could not submit the same along with return of income for any reason, there could not be any reason for non submission of the same before the completion of the assessment proceedings and the assessee in the present case has not submitted the same even during assessment proceedings. We are of the considered opinion that disallowance was rightly made by A.O. and the deletion of disallowance by Ld.CIT(A) cannot be sustained. We, therefore, reverse the order of ld.CIT(A) on this issue and restore that of the A.O. This ground of the revenue is allowed."
5. The assessee is, therefore, in appeal before us. Learned counsel Mr. J.P.Shah for the appellant vehemently contended that the Tribunal committed a serious error in allowing the Revenue's Appeal and disallowing the claim of deduction under section 80IB of the Act on the ground that the Audit Report in Form 10CCB was not filed before completion of the Page 3 of 14 O/TAXAP/596/2013 ORDER assessment. He submitted that this view is contrary to the decisions of this Court as well as the Supreme Court.
6. Counsel contended that even if the Audit Report in Form 10CCB was furnished at the appellate stage, the same should be seen as sufficient compliance of the requirement of claiming deduction under section 80IB of the Act since the appeal must be seen as continuation of the assessment proceedings.
7. In support of his contentions, counsel relied on the following decisions:-
1) In the case of Commissioner of Wealth-Tax vs. Vimlaben Vadilal Mehta reported in [1984]145 ITR 0011, in which the Supreme Court observed that rectification of the assessment must be treated on the same basis as an original assessment for the purpose of claim of deduction of liabilities towards income-tax, Wealth-tax or gift-tax.
2) In the case of Commissioner of Wealth-tax vs. Vadilal Lallubhai (Supreme Court of India) reported in [1984] 145 ITR 0007 in which the Apex Court observed that when in the course of a wealth-tax assessment, the assessee makes a claim for deduction on account of the income-tax, wealth-tax and gift-tax liabilities, owed by him on the Page 4 of 14 O/TAXAP/596/2013 ORDER valuation date, it is the final quantification of the particular tax which must be taken into account.
3) In case of Commissioner of Wealth-tax vs. K.S.N.Bhatt (Supreme Court of India) reported in [1984] 145 ITR 0001, wherein the Apex Court observed that in computation of the net wealth of the assessee for wealth-tax liabilities towards, income tax, wealth tax and gift-tax, which crystallise on the relevant valuation date as determined in the respective assessment orders as liabilities, are to be deducted even though those assessment orders are finalised after the valuation date.
4) Reliance was also placed on the decision of the Apex Court in the case of Commissioner of Income-tax vs. Ace Multitaxes Systems Pvt. Ltd.(Karnataka High Court) reported in [2009] 317 ITR 0207 in which the Apex Court held that section 80-IA(7) does not cast any obligation on the assessee that the return must be accompanied by the audit report. In the said case, audit report was filed at an appellate stage, which was accepted by the High Court for the purpose of examining deduction under section 80IA of the Act.
5) Heavy reliance was placed on the decision of the Division Bench of this Court in the case of Commissioner of Income-tax vs. Mayur Foundation (Gujarat High Court) Page 5 of 14 O/TAXAP/596/2013 ORDER reported in [2005] 274 ITR 0562 in which it was observed that appeal would be continuation of the assessment proceedings. The Court approved the decision of the Tribunal where the assessee was held entitled to benefits under section 11(2) of the Act when necessary support for the claim was presented at the appellate stage before the Tribunal.
6) Reliance was also placed in the case of Commissioner of Income-tax vs. Medicaps Ltd. (Madhya Pradesh High Court) reported in [2010] 323 ITR 0554 in which the High Court of Madhya Pradesh held that furnishing of audit report for claim of deduction under section 80IA of the Act was not mandatory and the same can be filed even at the appellate stage.
7) Reliance was placed in the decision of the Apex Court in the case of Aurangabad Electricals Ltd. vs. Commissioner of Central Excise & Customs, Aurangabad reported in 2011(1) SCC 121 in which it was observed as under:-
"11)...Keeping in view the well settled principles laid down by this Court that technicalities should not defeat rendering of complete justice to a litigant, we think it appropriate to remand the matter to the Tribunal to verify and consider whether the Certificate which is already placed on record by the appellant, would assist them in support of their defence."
8. On the other hand, learned counsel Mr. Parikh for the Revenue opposed the appeal contending that since the Page 6 of 14 O/TAXAP/596/2013 ORDER assessee failed to produce the report in Form 10CCB till the completion of the assessment, the same cannot be produced at any stage thereafter. The Tribunal therefore committed no error in allowing the Revenue's Appeal.
9. It is true that the Tribunal has made observations, which may suggest that if report in Form 10CCB is not filed before the Assessing Officer before completion of the assessment, the entire claim under section 80IB of the Act, necessarily has to fail. Had this been the sole factual matrix, we would have certainly examined the question further and as prima facie advised, also would have accepted the assessee's contention that even at the appellate stage, such report could be furnished if valid grounds are made out for doing so. However, we enquired with the counsel for the appellant whether and at what stage, the report was presented before the Appellate Commissioner or the Tribunal. We may recall that the Commissioner allowed the appeal of the assessee and granted deduction by merely referring to his own orders in the earlier years without commenting on whether at least before him such report was filed by the assessee or not. Likewise, the Tribunal merely proceeded on the footing that such report not having been furnished before the Assessing Page 7 of 14 O/TAXAP/596/2013 ORDER Officer till the assessment was completed, the claim should be disallowed. It was, therefore, that we had raised the said question to the counsel. Counsel candidly said that there is nothing on record to suggest that any such report was furnished on record either before the Commissioner(Appeals) or before the Tribunal. He, therefore, urged us to examine the question on the admitted premise that no such report was presented till the Tribunal decided the appeal of the Revenue. We have accordingly proceeded on such factual basis.
10. In the application filed by the appellant for taking the report on record also, same facts emerge. The applicant has not stated that the report was submitted earlier before the lower authorities. Only request is to take the same on record. Why such report was not filed earlier is not stated. No grounds are made out to permit the applicant to produce the same at third appellate stage.
11. If this be the question, a serious consideration must be bestowed on whether the assessee, who had not previously furnished the report either before the Assessing Officer before completion of the assessment proceedings, failed to do so before the Appellate Commissioner or before the Tribunal till the second appeal was finally decided, at the appellate Page 8 of 14 O/TAXAP/596/2013 ORDER stage before the High Court can present a report requesting that the claim be granted. We have serious difficulty in accepting such a situation. Before giving our reasons we must record the opposition of learned counsel Mr. Shah to take this factor into consideration. He urged that the question must be decided as framed in view of the conclusion of the Tribunal. We are afraid we cannot be pinned down to answering the question only as raised by the appellant. Section 260A of the Act itself gives sufficient scope and liberty to the Court to frame such question as may be found necessary. Section 260A(1) provides for an appeal before the High Court from an order passed by the Tribunal "if the High Court is satisfied that the case involves a substantial question of law." Section 260A(3) provides that where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. As per section 260A(4), the appeal has to be heard only on the question so formulated, the proviso however clarifies that nothing in this sub-section shall be deemed to take away or abridge the prower of the Court to hear the appeal on any other substantial question of law not formulated if the Court is satisfied that the case involves such a question. Thus at all stages the High Court has to judge if any substantial question of law arises at all and if it Page 9 of 14 O/TAXAP/596/2013 ORDER does arise, decide the same. Further the admitted fact being that no such report was ever filed till the stage of Tribunal, it would be futile to decide the question framed by the appellant which completely ignores this factual aspect. The issue can be looked from a slightly different angle. The Tribunal's order can be supported by the respondent independently of the grounds mentioned by the Tribunal. Therefore, if the report was never filed till the Tribunal decided the appeal, surely, the Revenue had to succeed. Simply because the Tribunal mentioned this for allowing the appeal would not mean that we must also ignore the same.
12. In that view of the matter, we have considered whether the appellant can claim deduction under section 80IB of the Act having previously not filed the audit report under Form 10CCB. In the present case, the appellant has not made out any ground why such report could not be filed earlier. In the application filed for taking into account the additional document on record also, no valid grounds are made out. Even before the first appellate stage before the Commissioner, though the rules permit production of additional evidence, the same is hedged with certain conditions. Rule 46A of the Income Tax Rules, 1962 in this regard provides as under:-
Page 10 of 14
O/TAXAP/596/2013 ORDER
"46A.(1) The appellant shall not be entitled to produce
before the Deputy Commissioner(Appeals) or, as the case may be, the Commissioner(Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances, namely:-
(a) where the Assessing Officer has refused to admit evidence which ought to have been admitted; or
(b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer; or
(c) where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal; or
(d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.
(2) No evidence shall be admitted under sub-rule(1) unless the Deputy Commissioner(Appeals) or, as the case may be, the Commissioner(Appeals) records in writing the reasons for its admission.
(3) The Deputy Commissioner (Appeals) or, as the case may be, the Commissioner(Appeals) shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity-
(a) to examine the evidence or document or to cross- examine the witness produced by the appellant, or
(b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant.
(4) Nothing contained in this rule shall affect the power of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner(Appeals) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer under clause (a) of sub-section(1) of section 251 or the imposition of penalty under section 271."
13. It can thus be seen that even to be able to produce additional evidence before the appellate Commissioner, the Page 11 of 14 O/TAXAP/596/2013 ORDER assessee has to satisfy the conditions of sub-Rule (1) thereof and further the Rule requires the appellate authority to record his reasons in writing for admitting such additional evidence.
14. Under the circumstance, without any justification and without any indication of reasons why such report could not be presented earlier, the assessee simply cannot for the first time present such document before the High Court and seek benefit of the deduction on the basis of such document. The appellate jurisdiction of the High Court under section 260A of the Act permits taking into account the substantial question of law and not examine the factual disputes. Further a mere presentation of report under Form 10CCB would not enable the assessee to claim deduction under section 80IB. The form and the report would enable the Assessing Officer to examine the claim and different calculations on the basis of which the claim is sought to be substantiated. Such question, surely cannot be gone into in the Tax Appeal before the High Court under section 260A of the Act.
15. In the case of Commissioner of Income-tax vs. Nagpur Hotel Owners' Association reported in [2001] 247 ITR 201, the Apex Court observed that it is necessary that the assessing authority must have an information at the time Page 12 of 14 O/TAXAP/596/2013 ORDER when he completes the assessment in absence of any information for excluding particular part of the income from the net taxation under section 11. It will not be possible for the assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, it would be futile to find fault with the Assessing Officer for having included such income in the assessable income of such assessee. It is reasonable to presume that the intimation required under section 11 has to be furnished before the Assessing Officer to complete the concerned assessment because such requirement is mandatory and without particulars of this income, the assessing authority cannot entertain the claim under section 11 of the Act.
16. We are conscious that this decision was explained by this Court in the case of Commissioner of Income-tax vs. Mayur Foundation (supra) observing that since appeal would be continuation of the assessment proceedings, filing of the material at an appellate stage would satisfy the requirement of presenting the same before completion of the assessment. In the present case, however, as noted above, we are concerned with peculiar facts. We do not see any reason for interference in the order of the Tribunal though for reasons somewhat different from those recorded by the Page 13 of 14 O/TAXAP/596/2013 ORDER Tribunal. Hence, the Tax Appeal is dismissed. Civil Application No. 585 of 2013 in Tax Appeal No. 596 of 2013 In view of the order passed in Appeal, Civil Application is disposed of .
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) SUDHIR Page 14 of 14