TaxTMI 
TaxTMI 
2024 (5) TMI 502
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....ner's application under Section 119 of the 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 e....
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....02.2024 Respondent No. 5 erred in relying upon the findings given by it in the earlier orders dated 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 pe....
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....tor, Ministry of Corporate Affairs (MCA), Government of India, and the same was filed with the Stock Exchange by petitioner. 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 ....
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.... Gautam Thapar) in particular and other contesting respondents are very serious in nature. As it could be understood the seriousness with which the Union of India, Ministry of Corporate 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 submission....
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.... on the facts and circumstances of the case. VIII. As per the Order No. 01/116/2016-CL-II(WR) dated 06.11.2019, Government of India has already ordered for investigation by SFIO. Accordingly, this Bench hereby 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 irr....
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....rom Financial Year 2014-2015 to Financial Year 2018-2019; and c. restated financial statements of Crompton Greaves Consumer Electricals Limited for the Financial Year 2014-2015. 37. The jurisdictional Registrar of Companies of each of the aforesaid companies 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 ....
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....y of the former key managerial personnel and its impact on the assessment as well as appellate proceedings of the AYs 2015-16 to 2020-21 and the subsequent AYs; d) The new management having bid for the applicant company through an open process is logically expected to carry out due diligence of the enterprise so as to factor in all legal and financial encumbrances 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 ....
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....ted 19-12-2023], in paragraphs No. 9 and 10 held as under: "9. While considering the genuine hardship, the PCCIT was not expected to consider a solitary ground as to whether the assessee was prevented by any substantial cause from filing the corrections within a due time. Other factors also ought to have been taken into account. The phrase "genuine hardship" used in Section 119 (2) (b) of 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....
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...., the concerned I.T.O. or the Assessing Officer would have to consider the Return of Income and deal with the same on merits and in accordance with law." 5. Therefore, the phrase 'genuine hardship' used in Section 119 (2) (b) of the Act should be considered liberally. Respondent should keep in mind, while considering an application of this nature, that the power to condone the delay has been conferred to enable the authorities to do substantial justice to the parties by disposing 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 fil....
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.... restated books of accounts. f. It has been seen from the Company's past record that it is regular in filing of returns and has never defaulted in past. g. There are no undisputed tax demands outstanding from the Company. h. No search, survey or investigations are pending for the company for any assessment year, for escaping any income. i. The Company has always co-operated during the assessment proceedings and at no point of time the assessment was done u/s 144 or penalty for non-compliance of any notice was levied 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 "assess....
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....d 8th July 2022 read as under : 2.1 In this context, I am enclosing herewith the report of the ACIT Circle 6 (1) (1), Mumbai on the captioned matter and the covering letter of the Addl. CIT Rg. 6(1), Mumbai. 2.2 In para 3(i) the Hon'ble CBDT has stated that The field authorities have not examined in detail the various tax implications of recasting of books of accounts which have paramount importance in the matter of consideration of application of the petitioner for condonation of delay. It is unclear whether any enquiries were carried out in these cases either prior to assessments or during assessments. 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 ....
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....erms of prayer clauses - (a), (b) and (c) which read as under : a. this Hon'ble Court may be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ, order or direction under article 226 of the Constitution of India, calling for the records of the present case and after examining the legality and validity thereof quash and set-aside the impugned order dated 29.02.2024 (being Exhibit 'III' hereto); b. 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 the 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 ....