Madras High Court
Viswanathan Silk Centre vs Commissioner Of Income-Tax on 30 October, 1991
Equivalent citations: [1993]203ITR131(MAD)
Author: A.S. Anand
Bench: A.S. Anand
JUDGMENT Dr. A.S. Anand, C.J.
1. Eight writ petitions bearing Nos. 6095 to 6102 of 1987 came to be dismissed by a learned single judge of this court, on June 22, 1987, by a common order, and since the questions of law and fact are common, all the eight writ appeals are being disposed of in common.
2. The facts are short and simple. The writ petitioners/appellants were the assessees. They had submitted their income-tax returns for the years 1975-76 to 1983-84 every year in accordance with the provisions of law. On January 24, 1986, the appellants herein filed an application under section 264 of the Income-tax Act, 1961 (hereinafter called "the Act"), before the Commissioner of Income-tax, Madras, stating therein that, in the returns tiled by the appellants under the Act, they had omitted to claim the benefit under section 80HH of the Act since they had not been advised properly by the chartered accountant at that time and that the appellants had later on engaged the services of another chartered accountant who advised them that the benefit of section 80HH of the Act could be claimed by them. It was stated that it was due to a mistake that the benefit was not claimed for the years 1975-76 to 1983-84. Along with the application under section 264 of the Act, the appellants also filed a petition seeking condonation of delay in preferring the application under section 264 of the Act. In the application for condonation of delay, the grounds on which the condonation was sought for were detailed as under :
"(a) that the petitioner is ignorant of the provisions of law and had to act upon the advice of the auditor;
(b) that till 1983-84 assessment year, the case of the petitioner was dealt with by an auditor who had never thought of advising the petitioner regarding the admissibility of the deduction under section 80HH;
(c) that it has to be accepted that it is only the auditor who knows the provisions of the particular section as also the facts and circumstances of the petitioner's case and, therefore, he should have explained the case to the petitioner in the proper perspective;
(d) that even the return for 1984-85 had been filed as prepared by the previous auditor wherein no deduction under section 80HH was claimed;
(e) that the assessee-petitioner came to know of the correct position of law only when the case was entrusted to the present auditor who immediately advised the petitioner to file a revised return for 1984-85 claiming section 80HH benefit."
3. The Commissioner of Income-tax, Madras, by his order dated December 9, 1986, dismissed the petition filed under section 264 of the Act. While dismissing the petition, the Commissioner recorded, on the basis of the materials before him, that there was no evidence to show that the appellants/assessees were carrying on any manufacturing activity during the periods 1975-76 to 1983-84. It was found on facts that the assessees were only buying yarn, selling the same to weavers and purchasing the finished products and that no manufacturing activity was carried on by the assessees at all during the relevant period, and, therefore, the assessees were not entitled to any relief under section 80HH of the Act. Apart from recording this finding on merits, the Commissioner also found that no proper explanation has been given for the delay in preferring the application under section 264 of the Act and that no case has been made out for condonation of the delay. The application under section 264 of the Act was, therefore, dismissed on both these counts. The appellants filed writ petitions as noticed above. The learned single judge chose not to deal with the contentions on the merits of the controversy, but found that the writ petitioners had not been vigilant and, therefore, the Commissioner of Income-tax was justified in holding that there was no proper explanation for the delay and in refusing to condone the delay in preferring the petition under section 264 of the Act. The learned single judge, therefore, dismissed the writ petitions as he found no reason for interference with the order of the Commissioner of Income-tax.
4. We have heard learned counsel for the parties and perused the records. In our opinion, the order of the learned single judge does not require interference not only on the ground as given by the learned single judge, but for certain other reasons also which follow hereafter.
5. There is no dispute that the appellants, while submitting the returns, did not claim any benefit under section 80HH of the Act. There is also no dispute that, for claiming the benefit under section 80HH, certain conditions have to be satisfied as detailed in that section. One of the conditions which is required to be satisfied for claiming the benefit under section 80HH by an assessee who derives profits and gains from an industrial undertaking is that the deduction would not be available unless the accounts of the industrial undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the assessee furnishes along with his return of income the report of such audit in the prescribed form duly signed and verified by such an accountant (vide section 80HH(5)). In the present case, admittedly, the assessees/appellants had not furnished along with the returns of income or even with their application filed under section 264 of the Act any report of audit in the prescribed form duly signed and verified by the auditor. Not only this. It is seen from a perusal of the order of the Commissioner that the materials on record which were perused, examined and considered by the Commissioner of Income-tax showed that the appellants at the relevant time were not even engaged in any manufacturing activity. The appellants, therefore, could not have claimed the benefit under section 80HH of the Act for the relevant years and presumably it was on that account that no such benefit had been claimed while submitting the returns for the assessment years 1975-76 to 1983-84. The mere fact that for the assessment year 1984-85 and the subsequent years the benefit under section 80HH of the Act was claimed and granted would not show that the appellants had also satisfied the conditions for the grant of that benefit in the earlier years. The finding of fact recorded on the basis of the material on record by the Commissioner of Income-tax to the effect that, during the relevant periods, the appellants were not engaged in any manufacturing activity would disentitle them to the benefit under section 80HH of the Act. The Commissioner, therefore, rightly non-suited the appellants and refused to grant them the benefit under section 80HH for the assessment years 1975-76 to 1983-84. The order of the Commissioner, therefore, did not merit any interference by this court while dealing with the writ petitions, more particularly when, even in the affidavits filed in support of the writ petitions, necessary facts are wanting and there is no material placed on the record to show the entitlement of the appellants to the benefit under section 80HH of the Act.
6. The submission of learned counsel for the appellants that, even if the appellants had failed to claim the benefit of the deduction, it was an obligation of the Income-tax Officer to have granted the relief under section 80HH of the Act, is futile because the obligation imposed on the Income-tax Officer as per section 84 (even though since deleted with effect from April 1, 1968) of the Act to grant relief even where an assessee had omitted to claim the relief is an obligation which could be discharged provided factual materials and clear data were available on the record, sufficient to enable the Income-tax Officer to consider whether the relief could be granted to the assessee (see with advantage Anchor Pressings (P.) Ltd. v. CIT . In the instant case, as already noticed, there was no material, much less specific and clear data, furnished by the appellants to the Income-tax Officer which would have entitled them to claim the benefit of section 80HH of the Act. The Commissioner, therefore, was justified in refusing the benefit to the appellants.
7. Coming now to the question of limitation, we find that the learned single judge, in the judgments under appeal, thought that there had been "an inordinate delay of two years in claiming exemption-relief under section 80HH of the Income-tax Act". It is seen that the delay was not of two years, but much more. For the assessment year 1975-76, the delay was more than nine years, while for the assessment year 1976-77, it was eight years, and so on and so forth. The delay was, thus, inordinate and the grounds on which condonation of delay was sought in preferring the petition under section 264 of the Act before the Commissioner were not sufficient to grant the prayer of the appellants. Ignorance of law was pleaded as the first ground for claiming condonation of delay. Ignorance of law is no excuse. The appellants have failed to satisfactorily explain the cause for delay and the Commissioner of Income-tax, therefore, rightly held that, in the absence of proper explanation for the delay, the request for condonation of delay could not be granted. The learned single judge, therefore, rightly held that the exercise of discretion by the Commissioner of Income-tax in refusing to condone the delay did not merit any interference.
8. Thus, for what we have said above, we find that there is no cause to interfere. The writ appeals fail and are dismissed. There shall, however, be no order as to costs.