Deduction under Section 80IB(11A) allowed despite late filing of Form 10CCB before assessment completion

The ITAT Delhi upheld the CIT(Appeals) decision allowing deduction u/s 80IB(11A) despite the assessee's failure to file Form 10CCB within the due date. The tribunal relied on the Delhi HC decision in Shri Bawani Power Projects Pvt. Ltd., which followed SC precedents in Wipro Limited and G.M. Knitting, establishing that deductions can be claimed even when audit reports are not filed with the original return but are submitted before assessment completion. The CIT(Appeals) had directed the AO to verify if the audit report was filed with the revised return and allow the deduction accordingly, following the ITAT Mumbai decision in Kamdhenu Builders and Developers. The tribunal found no infirmity in the CIT(Appeals) order and rejected the Revenue's grounds of appeal.

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ISSUES:

• Whether a deduction under Section 80IB(11A) of the Income Tax Act can be claimed in a revised return filed under Section 139(5) within the prescribed time, despite the original return not claiming the deduction.
• Whether the requirement under Section 80IB(7) read with Section 80IB(11A) to furnish the audit report (Form 10CCB) along with the return of income is mandatory or directory for the assessment year 2019-20.
• Whether disallowance of deduction under Section 80IB(11A) on the ground of non-filing of Form 10CCB electronically along with the original return is justified.
• Whether additions/disallowances made under Section 143(1)(a) of the Act can include contentious issues requiring detailed examination.
• Whether the Supreme Court decision in Principal Commissioner of Income Tax v. Wipro Limited applies to deductions under Section 80IB or only to exemption provisions such as Section 10B(8).
• Whether reassessment proceedings initiated under Section 148 can be sustained solely on the ground of failure to electronically upload Form 10CCB audit report.

RULINGS / HOLDINGS:

• The Court held that a revised return filed validly under Section 139(5) within the prescribed time is to be considered as having been filed originally, and the claim for deduction under Section 80IB(11A) therein is allowable. The principle that "once a revised return is filed, the original return must be taken to have been withdrawn and substituted by a fresh return" was applied.
• The requirement under Section 80IB(7) to furnish the audit report along with the return of income is a "directory requirement" and not mandatory for the assessment year 2019-20, as the mandatory pre-filing requirement was introduced only by the Finance Act, 2020 effective from AY 2020-21.
• The disallowance of deduction under Section 80IB(11A) solely on the ground of non-filing of Form 10CCB electronically with the original return is not justified where the audit report was furnished with the revised return within the prescribed time and was available before the Assessing Officer prior to completion of assessment.
• Additions/disallowances made under Section 143(1)(a) are restricted to arithmetical or apparent errors and cannot include contentious issues requiring detailed examination; thus, the disallowance made under Section 143(1)(a) was held to be illegal and without jurisdiction.
• The Supreme Court decision in Principal Commissioner of Income Tax v. Wipro Limited, which deals with exemption provisions under Section 10B(8), is not applicable to deduction provisions under Chapter VIA including Section 80IB, as exemption and deduction provisions cannot be interpreted with similitude.
• Reassessment proceedings under Section 148 initiated solely on the ground of failure to electronically upload Form 10CCB audit report, without any allegation or proof of escapement of income or failure to disclose fully and truly all material facts, are liable to be quashed as lacking jurisdiction and justification.

RATIONALE:

• The Court relied on the statutory framework of the Income Tax Act, particularly Sections 139(1), 139(5), 80IB(7), 80IB(11A), 80A(5), 80AC, 143(1), and 148, as well as Rule 12 of the Income Tax Rules, 1962 and its amendments.
• The Court applied precedents holding that filing a revised return within time substitutes the original return and that the requirement of furnishing audit reports with returns under Section 80IA/80IB is directory, not mandatory, if the audit report is filed before completion of assessment proceedings.
• The Court distinguished the Supreme Court's decision in Wipro Limited on the basis that it pertains to exemption provisions under Chapter III (Section 10B) and not deduction provisions under Chapter VIA (Section 80IB), emphasizing the different legal treatment of exemption and deduction provisions.
• The Court noted that the mandatory requirement for pre-filing audit reports before the due date of return filing was introduced only by the Finance Act, 2020, effective from AY 2020-21, and thus does not apply retrospectively to AY 2019-20.
• The Court emphasized that reassessment under Section 148 requires a valid reason such as escapement of income due to failure to disclose material facts, which was absent in the instant case where the only ground was procedural non-compliance (non-electronic filing of audit report).
• The Court followed the ratio of the jurisdictional High Court decision which held that failure to electronically upload Form 10CCB audit report does not amount to failure to furnish a return or justify reassessment, and that the audit report filed during assessment proceedings suffices.

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