Appellate Tribunal 'B' Bench, Chennai (For Brevity, “Thetribunal”), In I.t.a v. Dcit ( Tcano.944/2008), Wherein It Was Held That A Companywith A Team Of Financial And Legal Experts Cannotplead Ignorance Of Not Claiming Reliefs?”

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal Nos.357 and 358 of 2019and C.M.P.No.12259 of 2019 Principal Commissioner of Income Tax I,No.63, Race Course Road, Coimbatore... Appellant in both Appeals/Appeals-vs- M/s.Anugraha Valve Castings Ltd.,S.F.No.391/2, Sengods,Goundenpudur, Arasur Village, Coimbatore-641 005.PAN: .. Respondent in both Appeals/Respondent Appeals under Section 260A of the Income-tax Act, 1961against the order dated 15.10.2018 on the file of the Income TaxAppellate Tribunal 'B' Bench, Chennai in I.T.A.No.379/Chny/2018and C.O.No.62/Chny/2018 in I.T.A.No.379/Chny/2018 for theassessment year 2012-13. against the Order of the the Commissioner of Income Tax(Appeals – I), Coimbatore, dated 14/11/2017 made in 28/15-16against the Deputy Commissioner of Income Tax, Corporate Circle2, Coimbatore dated 17/03/2015 made in PAN.No. AACCA 2285aassessment Year 2012-2013. These appeals, by the Revenue filed under Section 260A ofthe Income-tax Act, 1961 (hereinafter referred to as “the Act”),are directed against the common order passed by the Income-tax https://hcservices.ecourts.gov.in/hcservices/ Appellate Tribunal 'B' Bench, Chennai (for brevity, “theTribunal”), in I.T.A.No.379/Chny/2018 and C.O.No.62/Chny/2018 inI.T.A.No.379/Chny/2018 for the assessment year 2012-13. 2.The above appeals have been filed by the Revenue raisingthe following substantial questions of law:-“(i) Whether the ITAT is correct in law inholding that the assessee is eligible to claimdeduction u/s 80IA, which was not claimed in thereturn of income, after insertion of provisionsvide Sec. 80A(5) in the Finance Act 2009?(ii) Whether the ITAT is correct in law byallowing the fresh claim of the assessee withrespect to the “Loss on Cancellation of ForwardContracts” and “M to M Loss – Provisions WrittenBack” by relying case laws which aredistinguishable to the facts of the assessee'scase.(iii) Whether the ITAT is correct in notapplying the ruling of the Hon'ble High Court inthecaseofM/s.LakshmiCardClothingManufacturing Company P Ltd. vs DCIT ( TCANo.944/2008), wherein it was held that a companywith a team of financial and legal experts cannotplead ignorance of not claiming reliefs?” 3.There are two appeals filed by the Revenue against thecommon order of the Tribunal; one against the order rejectingthe appeal filed by the Revenue; and one against the orderallowing the cross objection filed by the assessee. However,the substantial questions of law in both the appeals areidentical and therefore, we have taken up both the appealstogether. 4.We have heard Mr.T.R.Senthil Kumar, learned SeniorStanding Counsel for the appellant/Revenue; and Mrs.Sree LakshmiValli, learned counsel for the respondent/assessee. 5.The assessee, who is engaged in the manufacture and exportof steel and alloy steel castings, filed its return of income on28.09.2012 admitting a total income of Rs.29,67,24,050/- undernormal provisions; and book profit of Rs.28,15,50,064/- underSection 115JB of the Act. During the course of assessmentproceedings, the assessee filed a letter dated 24.12.2014requesting for consideration of the following three documents:-(i) Mark to Market (M to M) loss provision written back tobe reduced from the income – Rs.4,26,56,000/-;(ii) Actual loss on cancellation of forward contracts duringAY : 2011-12 to be allowed – Rs.2,56,15,530/-; and (iii) Claim for deduction u/s 80IA in respect of income from https://hcservices.ecourts.gov.in/hcservices/ Windmills. 5.The assessee, who is engaged in the manufacture and exportof steel and alloy steel castings, filed its return of income on28.09.2012 admitting a total income of Rs.29,67,24,050/- undernormal provisions; and book profit of Rs.28,15,50,064/- underSection 115JB of the Act. During the course of assessmentproceedings, the assessee filed a letter dated 24.12.2014requesting for consideration of the following three documents:-(i) Mark to Market (M to M) loss provision written back tobe reduced from the income – Rs.4,26,56,000/-;(ii) Actual loss on cancellation of forward contracts duringAY : 2011-12 to be allowed – Rs.2,56,15,530/-; and (iii) Claim for deduction u/s 80IA in respect of income from https://hcservices.ecourts.gov.in/hcservices/ Windmills. 6.The Assessing Officer did not entertain the claims byreferring to the decision of the Hon'ble Supreme Court in thecase of Goetze (India) Ltd., vs. CIT reported in (2006) 284 ITR323 (SC) and held that deduction from the total income could beclaimed only by filing a revised return of income and since theassessee did not file the revised return of income for claimingthe aforementioned three deductions, the claims are notacceptable. In respect of the claim of deduction under Section80IA of the Act, the Assessing Officer held that Statutory FormNo.10CCB having been filed only during the assessmentproceedings, the same cannot be entertained. 7.The assessee filed appeal before the Commissioner ofIncome Tax (Appeals)-1, Coimbatore (for brevity, “the CIT(A)”).Apart from raising various factual contentions, it was submittedthat the decision in Goetze (India) Ltd. (supra) would not applyto the facts of the assessee's case, as the failure to claim theaforesaid losses and deduction under Section 80IB in theoriginal return of income is not intentional but a bona fideomission. Further, it was contended that the Assessing Officerought to have taken into consideration the audit report whichwas filed in the course of assessment proceedings, which is duecompliance of the procedural requirements. The CIT(A)considered the submission made by the assessee, the stand takenby the Assessing Officer and held that even in the decision inGoetze (India) Ltd. (supra), it has been held that the appellateauthorities can allow additional grounds, if to be raised by theassessee in the appeal if it is found that those grounds werenot raised on account of any wilful omission and the assesseehas a reasonable explanation. 8.The CIT(A) relied on a decision of the Division of thisCourt in the case of CIT vs. Abhinitha Foundation (P) Ltd.,reported in [2017] 99 CCH 0037 Chen High Court, wherein, it washeld that even if the claim made by the assessee company doesnot form part of the original return or even the revised return,it could still be considered, if the relevant material wasavailable on record either by the appellate authorities, whichincludes both the CIT(A) and the Tribunal by themselves, or onremand by the Assessing Officer. The CIT(A) after consideringthe facts of the case, found that the details of provisions andthe actual loss relating to that year was on record and it wasan inadvertent omission crept in while preparing the memo ofincome. 9.With regard to the loss incurred on cancellation offorward contract, on facts, the CIT(A) found that it is an actof omission on account of erroneous belief of complex legal position. With regard to the claim of deduction under Section80IA, in respect of the income free windmills, the CIT(A) notedthat legal disputes were pending before the Hon'ble SupremeCourt and various Courts at the time of filing of returns andthere was uncertainty in the legal position which could be takenas a reasonable cause for the assessee not claiming thededuction in the return of income. Further, it noted that allthe facts are already recorded in the books and are availablefor verification. 9.With regard to the loss incurred on cancellation offorward contract, on facts, the CIT(A) found that it is an actof omission on account of erroneous belief of complex legal position. With regard to the claim of deduction under Section80IA, in respect of the income free windmills, the CIT(A) notedthat legal disputes were pending before the Hon'ble SupremeCourt and various Courts at the time of filing of returns andthere was uncertainty in the legal position which could be takenas a reasonable cause for the assessee not claiming thededuction in the return of income. Further, it noted that allthe facts are already recorded in the books and are availablefor verification. 10.The CIT(A) took note of the decision of the Tribunal inthe case of M/s.Precot Meridian Ltd. vs. ACIT, Company Circle I(1), Coimbatore in ITA No.1216/Mds/2012 and held that identicalissue was considered in the said case, wherein, belated claimwas made before the Assessing Officer in the course ofassessment proceedings. Relying on the decision of the Hon'bleSupreme Court in NTPC vs. CIT reported in [1996] 229 ITR 383(SC), it was pointed out that the purpose of assessmentproceedings before the Tax Authorities is to assess correctlythe tax liability of an assessee in accordance with law. Thus,by following the aforementioned decisions, the appeal filed bythe assessee was allowed. 11.On appeal before the Tribunal, the Tribunal agreed withthe view taken by the CIT(A), inasmuch as it followed thedecision of the Hon'ble Supreme Court in NTPC (supra) andaccordingly, dismissed the appeal filed by the Revenue andallowed the cross objection filed by the assessee. 12.Mr.T.R.Senthil Kumar, learned Senior Standing Counsel forthe appellant/Revenue strenuously contended that the AssessingOfficer rightly held that the three claims which were made bythe assessee during the course of assessment proceedings cannotbe considered without a revised return having been filed by theassessee, though the assessee had time to file the same. Inthis regard, the learned counsel submitted that the AssessingOfficer rightly followed the decision in the case of Goetze(India) Ltd. (supra) and the CIT(A) and the Tribunal erred inreversing the finding recorded by the Assessing Officer. 13.Further, in support of his contention, the learned reliedon a decision of this Court in the case of M/s.Lakshmi CardClothing Mfg. Co (P) Ltd., vs. The Deputy Commissioner of IncomeTax [T.C. (A) No.944 of 2008, dated 24.09.2018]. The Hon'bleSupreme Court in NTPC (supra) held that the purpose ofassessment proceedings before the Tax Authorities is to assesscorrectly the tax liability of an assessee in accordance withlaw. If the reason given by the assessee is reasonable and notvitiated by any mala fide reasons, we are of the view thattechnical issues should not be a bar for the assessee to place material before the Assessing Officer. Similar view has beentaken by this Court in Abhinitha Foundation (P) Ltd. (supra) inwhich, the Court noted the decision in NTPC (supra) and also thedecision of the Division Bench of this Court in Ramco CementsLimited vs. DCIT reported in (2015) 55 taxmann.com 79 (Madras);and CIT vs. Malind Laboratories P. Ltd., [T.C.(A) No.878 of2014, dated 18.11.2014]. Admittedly, claim was made by theassessee during the assessment proceedings, at the stage whennotice under Section 143(2) of the Act was issued to theassessee. material before the Assessing Officer. Similar view has beentaken by this Court in Abhinitha Foundation (P) Ltd. (supra) inwhich, the Court noted the decision in NTPC (supra) and also thedecision of the Division Bench of this Court in Ramco CementsLimited vs. DCIT reported in (2015) 55 taxmann.com 79 (Madras);and CIT vs. Malind Laboratories P. Ltd., [T.C.(A) No.878 of2014, dated 18.11.2014]. Admittedly, claim was made by theassessee during the assessment proceedings, at the stage whennotice under Section 143(2) of the Act was issued to theassessee. 14.On a reading of the assessment order dated 17.03.2015, itis evidently clear that books of accounts and all the detailswere furnished to the Assessing Officer which was perused by theAssessing Officer and the case was discussed with the authorizedrepresentative of the assessee. In such situation, theassessee's case was foreclosed solely on the ground that he hadnot filed revised return of income. This very issue wasconsidered and it was held that the appellate authorities canallow additional grounds to be canvassed, if it is found to bebona fide and the omission to seek for such relief was a bonafide omission. 15.In the instant case, the records clearly show that allthe details were available with the Assessing Officer and nofresh details were required to be filed or taken intoconsideration. In such circumstances, we agree with the viewtaken by the Tribunal in confirming the order passed by the CIT(A). 16.So far as the decision in M/s.Lakshmi Card Clothing Mfg.Co (P) Ltd. (supra) is concerned, the assessee filed a return ofincome for the assessment year 1994-95 on 2p.11.1994. A noticeunder Section 143(1)(a) of the Act, dated 01.03.1995, was issuedand the assessment was completed under Section 143(3) by orderdated 30.03.1995. The Assessment order was served on theassessee on 05.04.1995. Thereafter, on 22.04.1996, the assesseefiled a petition under Section 154 of the Act contending thatthe assessment suffers from mistake apparent on the face of therecord and it requires to be rectified. In the said petition,it was contended that for the assessment year 1995-96, i.e.,subsequent year, the claim for deduction under Section 80I ofthe Act was allowed in favour of the assessee, by order dated29.03.1996, and based on the said order, they sought forrevising/rectifying the assessment order dated 30.03.1995 forthe assessment year 1994-95. Considering these facts, the Courtheld that the assessee did not make any claim for deductionunder Section 80I of the Act for the relevant assessment yearand if the interpretation sought to be given by the assessee isto be accepted, it would mean that the Assessing Officer shouldvirtually sit in the office of the assessee and help the assessee to file the return. Apart from that, it was held thatpower under Section 154 of the Act is exercisable only whenmistake is manifest and could be identified by a mere look whichdoes not need a long drawn process of reasoning and a meremistake by itself cannot be a ground to invoke Section 154 ofthe Act. 17.The decision in the case of M/s.Lakshmi Card ClothingMfg. Co (P) Ltd. (supra) can have no application to the facts ofthe present case. 18.For the above reasons, these tax case appeals aredismissed and the substantial questions of law are answeredagainst the Revenue. No costs. //True Copy// Sd/- Assistant Registrar (CCC) abr Sub Assistant Registrar To 1.The Deputy Commissioner of Income-tax, Corporate Circle-2, Coimbatore. Corporate Circle-2, Coimbatore. 2.The Commissioner of Income Tax (Appeals)-1, Coimbatore. Coimbatore. 3.The Income Tax Appellate Tribunal 'B' Bench, Chennai. +1cc to Mr.T.R.Senthi kumar, Advocate, S.R.No. 48909 VG II(CO)GN(01/08/2019)