Tribunal Upholds Tax Adjustments & Denies Deduction

The tribunal upheld the adjustments made under section 143(1) concerning communication service and denied the deduction under section 80IB(11A) due to a delay in filing the audit report. The tribunal concluded that the communication was effectively sent, rejecting the assessee's claims of improper service. Additionally, it held that the Deputy Commissioner of Income Tax acted within his jurisdiction in disallowing the deduction, emphasizing the mandatory nature of filing the report within the due date. The appeal was dismissed, affirming the orders on 23/10/2020.

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Issues Involved:
1. Service of communication under section 143(1).
2. Powers and jurisdiction under section 143(1).
3. Allowability of deduction under section 80IB(11A) when there is a delay in filing the report of an accountant.

Issue-wise Detailed Analysis:

1. Service of Communication under Section 143(1):

The assessee contended that the intimation under section 143(1) was not effectively communicated as it was sent to an incorrect email address, which was not provided in the income tax return. The relevant law, as per the proviso to section 143(1), stipulates that no adjustments shall be made unless an intimation is given to the assessee either in writing or in electronic mode, and any response from the assessee must be considered before making adjustments. The assessee argued that the adjustments made were in violation of principles of natural justice and without jurisdiction due to improper service of communication.

The tribunal found that the communication was sent to an email address mentioned by the assessee, and there was no infirmity in the order passed under section 143(1). The tribunal upheld the CIT(A)'s decision, stating that the intimation was based on data provided by the assessee and there was no scope for using an imaginary address.

2. Powers and Jurisdiction under Section 143(1):

The assessee challenged the adjustment made under section 143(1)(a)(ii), arguing that the disallowance of the claim under section 80IB(11A) was not covered under this section and that the Deputy Commissioner of Income Tax (DCIT), CPC, Bengaluru exceeded his jurisdiction. The reasons given for the adjustment were: (a) the deduction was claimed without filling the corresponding schedule 80IB, and (b) the form 10CCB was not filed within the due date.

The tribunal noted that the form 10CCB was filed by the accountant within the due date but was approved by the assessee only on 12/12/2017, after the due date of filing the return. The tribunal held that the DCIT, CPC was within his powers to make the adjustment, as the filing of the report of the accountant is a mandatory condition under section 80IB(11B)(iv).

3. Allowability of Deduction under Section 80IB(11A) with Delay in Filing the Report:

The assessee argued that the delay in approving the report of the accountant was due to his lack of computer literacy and that the filing of the audit report along with the return is not mandatory but only directory. The assessee also contended that the deduction under section 80IB(11A) was allowed in previous and subsequent assessment years despite similar delays.

The tribunal rejected these arguments, stating that the provisions of section 80IB(11B)(iv) and rule 12(2) of the Income Tax Rules are clear that the audit report must be furnished electronically on or before the due date of filing the return. The tribunal emphasized that subsequent filing of any document cannot be considered for processing the return and intimation under section 143(1A). The tribunal further noted that the judgments relied upon by the assessee did not pertain to the era of electronic filing and thus were not applicable.

Conclusion:

The tribunal dismissed all the grounds of appeal raised by the assessee, upholding the adjustments made under section 143(1) and the denial of the deduction under section 80IB(11A) due to the failure to file the audit report in the prescribed manner within the due date. The appeal of the assessee was dismissed, and the order was pronounced in the open court on 23/10/2020.

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