Income Tax Appellate Tribunal - Chandigarh
M/S Elecon Packpet, Solan vs Assessee on 15 November, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH 'A', CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER AND Ms.SUSHMA CHOWLA, JUDICIAL MEMBER ITA No.421 /Chd/2011 Assessment Year : 2007-08 M/s Elecon Packpet, Vs. The Income-tax Officer, Village Naryal, Sector 4, Parwanoo. Parwanoo, Distt. Solan. PAN: AABFE9079Q (Appellant) (Respondent) Appellant by : Shri Rakesh Gupta Respondent by : Shri N.K.Saini,DR Date of hearing : 15.11.2011 Date of Pronouncement : 17.11.2011 O R D E R PER SUSHMA CHOWLA, J.M, :
The appeal filed by the assessee is against the order of the Commissioner of Income-tax(Appeals), dated 10.2.2011 relating to assessment year 2007-08 against the order passed u/s 143 (3) of the I.T. Act, 1961.
2. The ground of appeal raised by the assessee reads as under :
"1. The ld. CIT(A) is wrong in confirming the addition of Rs.31,43,965/- by disallowing the deduction u/s 80IC is not allowable to the appellant unless return of income is filed on or before the due date specified u/s 139(1) i.e. original return. Since the appellant has failed to claim the deduction in the original return, no deduction is allowable to him ignoring the fact that there was a technical error while uploading the return on e-filing system and subsequently revised return within time had been filed to rectify the error."
3. The brief facts of the case are that the assessee is engaged in the manufacture of pet bottles and pre form. During the course of assessment proceedings the assessee explained the manufacturing process carried on by it which is incorporated under para 4.1 at pages 2 & 3 of the assessment order. The Assessing Officer vide para 5.1 observed that the assessee had e-filed its original return of income at Rs.31,43,965/- on 28.10.2007. In the said return of income no deduction under section 80IC of the Act was claimed. As per the Assessing Officer the said deduction was claimed in the revised return filed on 10.3.2008. The explanation of the assessee in this regard was that it had claimed the deduction under section 80IC of the Act in the original return of income but due to system error, the same was not reflected in the return and a request was made to verify the same from the original return of income. The Assessing Officer noted that the original return of income filed by the assessee was down loaded and the same was available on record. In the said return of income no deduction under section 80IC was claimed. The Assessing Officer was of the view that under the provisions of section 80AC of the Act no deduction under section 80IC of the Act shall be allowed to the assessee unless it furnishes the return of income on or before the due date specified under section 139(1) of the Act. The Assessing Officer made a reference to the provisions of section 80A(5) of the Act and pointed out that where the assessee fails to make a claim in its return of income for deduction under section 80IC of the Act, no deduction is to be allowed to the assessee. In view of the above said provisions of the Act the deduction claimed under section 80IC of the Act was held to be not admissible to the assessee even though it had revised the return of income on 10.3.2008.
4. The CIT (A) upheld the order of the Assessing Officer.
5. The assessee is in appeal against the order of the CIT (A). The learned A.R. for the assessee pointed out that though deduction under Chapter VI-A was claimed in the original return of income but due to some system error the same was not reflected in the computation of income. Our attention was drawn to the acknowledgment of the original return of income filed by the assessee on 13.12.2007. The learned A.R. for the assessee pointed out that the gross total income vide the said return was Rs.31,43,965/-, whereas the deduction under Chapter VI-A were reflected at nil and the balance total income was Rs.31,43,965/- on which net tax payable was zero. The assessee had paid certain taxes and refund of Rs.10,761/- was reflected as payable in the said return of income. The plea of the learned A.R. for the assessee was that in the e-filing system where the return of income is uploaded on the computer the tax payable is automatically generated by the computer. It was further pointed out by the learned A.R. that even otherwise the assessee filed revised return in which the aforesaid deduction under Chapter VI-A was claimed and the revised return filed by the assessee is deemed to be filed on the date of original return. It was further pointed out by the learned A.R. for the assessee that no interest under section 234A of the Act was levied in this case.
6. The learned D.R. for the Revenue placed reliance on the order of the authorities below.
7. We have heard the rival contentions and perused the record. The assessee is carrying on the manufacture of pet bottles and pre form and had claimed deduction under section 80IC of the Act. The assessee had claimed deduction under section 80IC of the Act relating to assessment year 2006-07 which was allowed to the assessee vide order passed under section 143(3) of the Act. The year under appeal is the second year of the production and the assessee claimed aforesaid deduction under section 80IC of the Act. The requirement of section 80A of the Act is that where any deduction is admissible under section 80IA/80IB/80IC/80ID and 80IE of the Act, no such deduction shall be allowed to the assessee unless the assessee furnishes the return of income for such assessment year on or before the due date specified under section 139(1) of the Act. The requirement of section 139(1) of the Act is a burden upon the assessee to furnish return of income in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and such return shall furnished on or before the due date. Under Explanation-2 the due date in relation of various classes of persons are enumerated. Every person who had furnished a return under sub-section (1) or in pursuance to notice issued under section 142(1) of the Act, if discovers, any omission or wrong submission therein, may furnish revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.
8. Under section 139D of the Act the Board is authorized to make rules for filing of return in electronic form. As per the provisions of the said section the Board is authorized to make rules providing for the classes of persons who shall be required to furnish the return in electronic form; the form and manner in which the return in electronic form is to be furnished and the documents, statements, certificates, audited reports, etc., which may not be furnished alongwith the return in electronic form but shall be produced before the Assessing Officer on demand. As per section 139D(d) of the Act, the Board is to frame rules providing for the computers resources or the electronic record to which the return in electronic form may be transmitted. The above said provisions of section 139D of the Act were inserted by the Finance Act 2007 with retrospective effect from 1.6.2006. The year under appeal is assessment year 2007-08. The assessee is a partnership firm whose accounts were audited. This is the second year of claiming deduction u/s 80IC of the Act. The assessment for the preceding year i.e. assessment year 2006-07 was completed u/s 143(3) of the Act and the deduction claimed u/s 80IC of the Act was allowed to the assessee. The assessee had e-filed its return of income on 28.10.2007 i.e. within the time limit prescribed u/s 139(1) of the Act. The copy of the acknowledgement of filing the return of income is filed on record by the learned A.R. for the assessee. The perusal of the said acknowledgement reveals that while e-filing the return of income the gross total income was reflected at Rs.31,43,695/- and the total income was also reflected at the same figure of Rs.31,43,965/- with the deduction under Chapter-VIA which reflected at nil. However, on the aforesaid total income of Rs.31,43,965/- the net tax payable, which as per the assessee, was generated by the system itself worked out to nil. The claim of the assessee is that due to computer system error the return of income reflected total income of Rs.31,43,965/- as against nil. On detecting the abovesaid error in its return of income, the assessee claimed to have filed a revised return of income through e-filing under which the deduction under Chapter-VIA was reflected at Rs.31,43,965/- and total tax payable was determined at nil.
9. The filing of return of income through e-filing system was introduced by the Finance Act, 2007 with retrospective effect from 1.6.2006. The Board vide Circular No.9/2006 dated 10.10.2006 introduced the new return form/s for assessment year 2006-07 and also formulated the procedure for e-filing of the return of income. The option was given to the assessee to file the e-return in accordance with two Schemes i.e. electronic furnishing of return of income Scheme, 2004 (notified vide SO No. 1073(E) dated 30.9.2004) or furnishing of return of income Internet Scheme, 2004 (notified vide SO No. 1074(E) dated 30.9.2004). All the corporate taxpayers were necessarily required to furnish the return for the assessment year 2006-07 electronically after 24.7.2006. However, for other classes of tax payers the scheme to furnish e-return was optional. The said return was to be filed without any attachment/annexure or the audit report. It has been further clarified vide clause-6 by the said Circular that the report of audit u/s 44AB of the Act is not to be attached with the return of income and is neither to be furnished separately before or after the due date. However, an assessee is to get the report of audit from an accountant under the said section before the due date of furnishing the return and to fill out all the relevant columns of these forms on the basis of such report. In case audit report has not been obtained before the due date, the provisions of section 271B shall be attracted. Another Circular No.3/2007 dated 25.5.2007 was issued by the CBDT under which it amended the Income Tax Rules i.e. substituting rule 12 by a new rule 12 and notifying new return forms for assessment year 2007-08. Sub-rule (3) of the new rule 12, provided that a firm to whom provisions of section 44AB are applicable, was required to furnish the return of income/fringe benefits in form ITR-5 and/or company was required to furnish the return of income/fringe benefits in form ITR-6, shall furnish the return electronically in any of the following manners:
(i) furnishing the return electronically under digital signature; or
(ii) furnishing the date in the return electronically and thereafter submitting the verification of the return in Form ITR-V.
10. Vide the said Circular it was further clarified that for furnishing the return electronically in any of the manner mentioned above, the necessary software is not yet ready. The last date for filing returns for the above categories of asessees was 31.10.2007. The CBDT allowed certain companies who wanted to file their applications in the Settlement Commission before 31.5.2007 to furnish the same manually in paper form with the condition that they would supplement the return by e-filing when the software is ready.
11. The system of e-filing the return of income was introduced from assessment year 2006-07 for corporates tax payers and from assessment year 2007-08 for both the companies and the firms to whom provisions of section 44AB are applicable. As referred to by us under paras hereinabove the particulars of the audit obtained by the assessee prior to the date of filing of return of income are to be incorporated in the new return form. The perusal of the assessment order reveals that the assessee had declared total sale of Rs.3.02 crores and as such the provisions of section 44AB of the Act are attracted in this case. As such the assessee was compulsorily required to e-file its return of income for the year under consideration, which was the first year of e-filing of the return of income by firms to whom the provisions of section 44AB were applicable i.e. the firms having turnover of more than Rs.40 lacs for the financial year in question. The assessee is also to furnish the audit report in connection with its claim of deduction u/s 80IC of the Act. From the perusal of the assessment order we find that the Assessing Officer has not pointed out any default in furnishing of the audit report u/s 44AB of the Act. No reference is made to non-fulfillment of conditions for claiming deduction u/s 80IC of the Act by non-furnishing of details of the audit report. Further the assessee has within the prescribed period revised its return of income and had corrected the error in the original return of income under which the deduction claimed under Chapter-VIA is reflected at nil and the total income is reflected at Rs.31,43,965/- and tax payable at nil. We find merit in the claim of the assessee that where in the original return of income the claim made by the assessee was not reflected in the e-return form filed by the assessee because of systems error, though tax payable is reflected at nil, which would be so when the total income after deductions is nil. Where, on the filing of the revised return the said error was corrected, the assessee cannot be said to have not fulfilled the provisions of section 80IC of the Act in furnishing the return of income prescribed u/s 139(1) of the Act, keeping in mind that this was first year of e-filing of return of income by the assessee. In view of the above, we allow the grounds of appeal raised by the assessee. However, the eligibility of claim of deduction u/s 80IC of the Act has not been looked into by the Assessing Officer except for making a reference to the manufacturing process given by the assessee. The Assessing Officer is thus directed to verify the claim of deduction u/s 80IC of the Act in line with the similar claim being made by the assessee in the earlier year. The Assessing Officer shall afford reasonable opportunity of hearing to the assessee. Accordingly, the ground of appeal raised by the assessee are allowed as indicated above.
12. In the result, the appeal filed by the assessee is allowed for statistical purpose.
Order Pronounced in the Open Court on 17th day of November, 2011.
Sd/- Sd/-
(D.K.SRIVASTAVA) (SUSHMA CHOWLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 17th November, 2011
Rati
Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.
True Copy
By Order
Assistant Registrar, ITAT, Chandigarh
.
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