TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 502
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....Income Tax Act, 1961 (the Act) for condoning the delay in filing of revised return of income for the Assessment Years (A.Y.) 2015-16 to 2020-21. 4. Petitioner is a company incorporated on 28th April 1937. Respondent No. 1 is the Assistant Commissioner of Income Tax, Circle-6(1) (1), Mumbai being the Jurisdictional Assessing Officer (JAO), Respondent No. 2 is the Chief Commissioner of Income Tax-3, Mumbai, Respondent No. 3 is the Principal Chief Commissioner of Income Tax, Mumbai, Respondent No. 4 is the National Faceless Appellate Centre, Respondent No. 5 as noted earlier is the CBDT and Respondent No. 6 is the Union of India. The issues that arose for consideration in this petition, according to Petitioner, are as under : a. Whether the fundamental principle underlying the Income-tax Act is levy of tax on correct income earned by an assessee. When the earlier returns of income filed by petitioner for the assessment years 2015-16 to 2020-21 are admittedly based on original books of account which did not reflect the correct financial position, for the purposes of proper administration of the Act, Respondent No. 5 ought to have exercised its powers under Section 119 (1) of the Act....
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....15.12.2022, 29.12.2022 and 25.01.2023? It has completely overlooked the statement made by the Ld. ASG before the Hon'ble Court on instructions that the orders impugned in Writ Petition (L) No. 4041 of the 2023 be quashed and set-aside for denovo consideration after both the parties to the petition had explained the facts of the case and the issues arising in the petition. This is because there is no merit in the stand earlier taken by the CBDT. Otherwise, there would be no occasion for him to himself urge for quashing and setting aside of the earlier orders for reconsideration. It failed to appreciate that in support of its petition, petitioner had raised various contentions and the observations as made by this Hon'ble Court that they have not made on any observations on the merits of the matter is in the context that they had not adjudicated on the grounds as raised by Petitioner. e. Whether Respondent No. 5 was justified in relying upon the fact that the proceeding before the Serious Fraud Investigation Office (the SFIO) and the Enforcement Directorate (the ED), appeals pending before the National Company Law Appellate Tribunal (the NCLAT) and the other civil suits pending aga....
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....titioner. In the report there were reference made to unauthorised and undisclosed transactions. In the report the recommendations has been made to invoke the provisions of Section 130 of the Companies Act for recasting of books of account and consequently, the financial statements. Acting on this report, the MCA, Government of India filed an application before the National Company Law Tribunal, Mumbai (NCLT) under Section 130 of the Companies Act for restatement of petitioner's books of account. There were 18 respondents to the application. Respondent No. 17 was the Principal Chief Commissioner of Income Tax, Mumbai (PCCIT), Respondent No. 3 herein. The application came to be heard and order dated 5th March 2020 came to be passed by which the NCLT was pleased to grant permission to applicant, i.e., MCA for reopening of the books of account and recasting of financial statements of Respondent No. 1, i.e., petitioner herein and its subsidiary companies for past five years. The operative part of the order reads as under : ORDER I. The present Petition has been filed by the Petitioner against the Respondent seeking relief under section 130 of the Companies Act, 2013 which is reproduc....
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....e Affairs (UoI, MCA) i.e. the Applicant is pursuing this matter speaks volumes about the alleged irregularities that have been reported by the company itself in their letter dated 19.08.2019 to the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). IV. A detailed hearing had taken placed in the above matter, the concern of the Government is that whatever irregularities have been reported, the same have to be investigated very deeply and seriously. From the beginning whenever this matter was posted before this Bench we were not very much impressed by the submissions made by the present and past management of the company. In order to bring out the truth whether any irregularities are committed or not, whether the Respondent No. 1 Company's self-declaration on the alleged irregularities are correct or not, can be ascertained only when the entire affairs of the Company are investigated by the Government or its agencies. V. As it could be understood from the submissions made by the parties while at the time of hearing that there is an internal fight between Respondent No. 2 & the present management which is at the helm of affairs and it is in this context, it a....
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....reby orders that while conducting investigation of the affairs of the Respondent No. 1 Company and its subsidiary companies, it should not base itself solely on the Vaish Report as has been done by the RD while conducting inspection. The investigating agency should also look into the involvement of Ex-Chairman, Directors, Key Managerial Persons (KMPs) and other staff of the Respondent No. 1 Company and its subsidiary companies who were involved in committing fraud or irregularities, irrespective of the fact, whether they ceased to be involved in the affairs of the Respondent No. 1 Company or its subsidiary companies, or still continuing. The report of the investigating agency be also considered while submitting the recasted accounts for suitable orders of this Bench. IX. Finally, we would like to conclude that based on the outcome of investigating Agency's Report due action be initiated against the erring/defaulting individuals found involved in fraud and irregularities committed by them while conducting the affairs of the Respondent No. 1 Company and its subsidiary companies. X. We hereby allow the prayer and order reopening of the books of account and re-casting of fina....
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.... are directed to take the above restated financial statements on record. The respective companies are also directed to make the above restated financial statements available on their respective websites along with a copy of this order. No order as to costs. (emphasis supplied) 10. Relying on this order, petitioner filed applications on 3rd November 2021 and 3rd March 2022 with the CBDT for condonation of delay under Section 119 (2) (b) of the Act in filing the revised returns of income for A.Y. 2015-16 to 2020-21. These applications were rejected by the CBDT vide orders dated 15th December 2022, 29th December 2022 and 25th January 2023. Against the said order petitioner preferred a Writ Petition being Writ Petition No. 4014/2023. The court disposed the petition by an order dated 1st November 2023 where the operative part reads as under : (a) The impugned orders dated 15th February 2022, 29th December 2022 and 25th January 2023 are hereby quashed and set aside. (b) The matter is remanded to CBDT for denovo hearing. (c) Within four weeks from today, if the petitioner wishes to file any further documents or submissions, the petitioner may do so. (d) CBDT shall give ....
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....ances associated with the deal. The petitioner cannot take advantage of the omissions and commissions done by erstwhile management by invoking the exceptional executive powers of the Board which are reserved for cases of genuine hardship only; e) The applicant company is a 'going concern' and the condonation petition need to be viewed holistically by analyzing the impact of recast financials on the tax incidence of future AYs; f) The additional submissions made by the petitioner claiming to reduce the carry forward of losses are found to be misleading. The petitioner has in effect deferred losses to a future date thereby reducing the tax incidence of future AYs and at the same time claiming a massive refund for years under review; g) The claims and counter-claims (including suits for recovery of various dues) by the petitioner and the erstwhile management against each other are pending before various statutory authorities and civil courts. The outcomes of these proceedings will impact the entries made in the recast Books of Account. The veracity of the recast Books of Account for tax purposes, therefore, still remains contested before various authorities. 12. As ....
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.... the Act should have been construed liberally. The Legislature has conferred the power to condone the delay to enable the authorities to do substantial justice to the parties by disposing the matters on merits. The expression 'genuine' has received a liberal meaning in view of the law laid down by the Apex Court and while considering this aspect, the authorities are expected to bear in mind that ordinarily the applicant, applying for condonation of delay, does not stand to benefit by lodging erroneous returns. Refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate action. xxxxxxxxxx A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. The approach of authority should be justi....
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....ing the matters on merits. While considering these aspects, the authorities are expected to bear in mind that no applicant stand to benefit by lodging delayed returns. Refusing to condone the delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when the delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. xxxxxxxxxx 14. Strangely in the impugned order the CBDT has not even bothered to discuss why according to them there was no genuine hardship. 15. We agree with Mr. Mistri that once the ROI based on these recasted accounts are allowed to be filed and taken on record can the assessment order be passed. Only after examining those accounts as filed and assessment under Section 143 (3) of the Act or return is processed under Section 143 (1) can the department even think of reopening of assessment. 16. Ld. ASG reiterated what was submitted in the impugned order dated 29th February 2024. In view of what we have recorded above, we are unable to accept the submissions made by the Ld. ASG. 17. It is also required to mention that by a letter....
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....ied on the Company. (emphasis supplied) The ACIT has also recorded that as per materials available on record, submissions made by the company and in the interest of the Revenue to assess the correct income, the company's petition is a genuine case for condoning the delay in filing revised returns of income based on the restated books of account for A.Y. 2017-18. 18. The PCIT in his communication dated 16th February 2022 addressed to the Chief Commissioner of Income Tax - 3, Mumbai (CCIT) has also recommended that the condonation of delay application filed by petitioner should be allowed. In fact, he has certified that "assessee's petition is a genuine case for condonation of delay in filing ITRs for A.Y. 2017-18." Paragraph Nos. 4 and 5 of the communication dated 16th February 2022 read as under : 4. In the instant case, the books of account was restated and reaudited by auditors appointed by the MCA due to certain irregularities done by the assessee company, hence, it is imperative that assessee entity disclose true and fair facts before the income-tax authorities based on the restated and audited books of account. 5. Considering the facts of the case and the factual rep....
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....ents. 2.3 In this context, it may kindly be noted that the re-casted books of accounts have not been made available to the Department by the assessee or by the NCLT after passing of the NCLT order dated 05.03.2020. The tax implication of the re-casted books of accounts can only be found if the assessee files the return of income in pursuance of the re-casted books of accounts which in tum is dependent on the Hon'ble CBDT condoning the delay u/s. 119(2)(b) of the Act. Further, a suo moto examination of the re-casted books of accounts by the Principal CIT is not possible because the sum involved is more than Rs. 10 lakhs. According to Para 5 of CBDT Circular No. 9/2015 dated 09.06.2015 [Copy enclosed], the power of acceptance/rejection of the application within the monetary limits delegated to the Pr. CCIT/CCIT/Pr. CIT/CIT are subject to certain conditions. Para 5 of the circular reads as under : "5. The powers of acceptance/rejection of the application within the monetary limits delegated to the Pr. CCsIT/CCsIT/Pr. CsIT/CsIT in case of such claims will be subject to hollowing conditions: i. At the time of considering the case under Section 119(2)(b), it shall be ensured....
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.... Constitution of India directing the Respondent Nos. 1 to 5 to allow the Petitioner to file revised returns of income and revised computations of income prepared in accordance with/based on the re-casted/revised books of account and financial statements for assessment years 2015-16 to 2020-21 and to assess the Petitioner's income chargeable to tax based on the same; c. this Hon'ble Court may be further pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ, order or direction under article 226 of Constitution of India directing the Respondents Nos. 1 and 4 to assess the Petitioner's income in the assessment/appellate proceedings based on the re-cased/revised books of account and financial statements; 25. Petitioner shall file physical returns of income based on books of account, revised/recasted under Section 130 (2) of the Companies Act, 2013, as taken on record by the NCLT for A.Y. 2015-16 to A.Y. 2020-21 before the JAO within 30 days from the date this order is uploaded. On or before 28th February 2025 the A.O. shall frame assessments in accordance with law considering the revised returns of income filed based on re....