2012 (12) TMI 1056 - AT - Income Tax

Assessee wins deduction case despite late filing; fresh assessment ordered for additional evidence.

The tribunal found in favor of the assessee, ruling that deductions under section 80IB could be claimed despite a delayed filing of the return, as section ... Claim of deduction u/s 80IB (10) - Held that:- This issue is remitted back to the file of the AO with a specific direction to look into the merits of the assessee's claim for exemption u/s 80IB (10) of the Act afresh: (i) Whether the assessee was prevented by a reasonable cause, as attributed by it in its affidavits (above), in furnishing its return of income belatedly? & (ii) Whether the assessee has satisfied the other conditions stipulated in s. 80-IB of the Act to determine the quantum of deduction u/s 80IB of the Act? Issues Involved:1. Whether the assessment order was passed without providing reasonable opportunity to the assessee.2. Whether the assessee, being a company, was required to file a return of income under section 139(1)(b) of the Act.3. Whether the CIT (A) erred in invoking the provisions of section 80AC of the Act and confirming the disallowance of deduction under section 80IB of the Act.Detailed Analysis:I. Reasonable Opportunity to the Assessee:The assessee argued that the assessment order was passed without providing sufficient opportunity. The assessment order revealed that multiple notices were issued to the assessee for hearings, but there was no compliance except on one occasion. The AO concluded the assessment under section 144 due to non-compliance and the impending limitation period. The tribunal found no substance in the assessee's claim of inadequate opportunity and decided this ground against the assessee.II. Requirement to File Return Under Section 139(1)(b):The assessee contended that as a company with 'nil' income, it was not required to file a return under section 139(1)(b). The CIT (A) rejected this argument, emphasizing that section 80AC mandates filing a return within the due date under section 139(1) for claiming deductions under section 80IB. The tribunal upheld the CIT (A)'s decision, affirming that the return must be filed within the specified time to claim deductions.III. Invocation of Section 80AC and Disallowance of Deduction Under Section 80IB:The primary issue was whether the assessee could claim a deduction under section 80IB despite filing the return beyond the due date specified under section 139(1). The assessee filed the return on 25.4.2009, claiming a deduction under section 80IB, which was disallowed by the AO due to the delayed filing. The CIT (A) upheld this disallowance based on section 80AC.During the appeal, the assessee argued that section 139(4) allows filing a return within one year from the end of the assessment year or before the assessment completion, whichever is earlier, making the time limit flexible. The tribunal considered various judicial precedents, including the Supreme Court and High Court rulings, which advocated a liberal interpretation of beneficial provisions like section 80IB. The tribunal noted that section 80AC is directory, not mandatory, provided there is a reasonable cause for the delay.The tribunal found that the assessee had reasonable cause for the delay, including issues with the accountant and data retrieval problems. The tribunal allowed the assessee to submit additional evidence and remitted the issue back to the AO to verify the reasons for the delay and the eligibility for the deduction under section 80IB.Conclusion:The tribunal concluded that section 80AC is directory and not mandatory, allowing for deductions under section 80IB if there is a reasonable cause for the delayed filing. The case was remitted back to the AO for a fresh assessment, considering the additional evidence and the reasons for the delay provided by the assessee. The assessee's appeal was partly allowed for statistical purposes.