M/S. Winro Commercial (India)Ltd v. Principal Commissioner Ofincome Tax-1 And Anr

OD-22 ITAT/237/2022IA No.GA/1/2022 IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE M/S. WINRO COMMERCIAL (INDIA)LTD. -Versus- PRINCIPAL COMMISSIONER OFINCOME TAX-1 AND ANR. Appearance:Mr. Subash Agarwal, Adv....for the appellant. Ms. Smita Das De, Adv....for the respondent. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE HIRANMAY BHATTACHARYYA Date : 22[nd] November, 2022. The Court : This appeal filed by the assessee underSection 260A of the Income Tax Act, is directed against theorder dated 19[th] July, 2022 passed by the Income Tax AppellateTribunal, “C” Bench, Kolkata (the Tribunal) in ITANo.1175/Kol/2019 for the assessment year 2014-15. The assessee has raised the following substantial questions of law for consideration: (i) (ii) (iii) (iv) Whether the learned Tribunal was justified indirecting the Assessing Officer to examine thefactual aspect that having furnished Tax AuditReport in Form 10CCB electronically, whetherthe same was filed on the Income Tax Portalbefore the due date of filing return of incomeprescribed under the Act ?Whether the learned Tribunal has failed toappreciate that the requirement of obtainingthe audit report in Form 10CCB before thespecified date referred to in Section 44AB andfurnishing the same by that date has beenintroduced in the statute by the Finance Act, 2020 with effect from 1.4.2020 and does notapply to the assessment year 2014-15 ? We have heard Mr. Subash Agarwal, learned Advocate forthe appellant/assessee and Ms. Smita Das De, learned standingadvocate for the respondent/revenue. The short which falls for consideration in the instantcase is that whether the assessee was required toelectronically upload the audit report in Form 10CCB before thedue date prescribed under the Act. The Assessing Officerdisallowed the deduction clamed by the assessee under Section80IA of the Act solely on the ground that such deduction wasnot claimed in the original return but was claimed in therevised return. The assessee filed appeal before the Commissioner ofIncome Tax (Appeals)-10, Kolkata, who by order dated 28[th]February, 2019 affirmed the view taken by the Assessing Officeron the self same ground. The assessee carried the matter onappeal before the learned Tribunal. The learned Tribunal tooknote of the legal position and rightly held that it is theconsistent view of all the Courts that if the assessee hasfailed to attach the audit report or claim deduction along withthe return of income, that being only a procedural lapse itshould be cured even at the stage of the assessment proceedings where such audit report can be filed or deduction can beclaimed. This issue has been decided in several decisions ofthe various High Courts and we note this issue has been decidedin several decisions of various High Courts and we note thedecision in the case of Commissioner of Income Tax, Delhi Vs.Contimeter Electricals Private Limited; 2009 178 taxmann 422(Delhi). The learned Advocate appearing for the appellant/assessee also placed reliance on the decision of this Court inthe case of Murali Export House Vs. Commissioner of Income Tax1999, 238 ITR 257 (Cal), wherein it was held that when aprovision is procedural in nature requiring the assessee tosubmit a a special audit report along with return it has heldto be derogatory and not mandatory. The decision in MoralExport House was quoted with approval by the Hon’ble DivisionBench of the High Court of the Karnataka in Commissioner ofIncome Tax Vs.A.C.E. Multi Tax Systems Pvt. Ltd. 2009 317 ITR207 (Karnataka). As pointed out earlier the Tribunal hasrightly taken note of the settled legal position and held thatif the defect be procedural it can be cured at a subsequentstage namely at the stage of filing the revised return or evenduring the course of assessment proceedings. If that was thefinding of the learned Tribunal the natural consequence thathas to flow is to allow the appeal of the assessee. However, assessee’s appeal has been dismissed on the ground that theaudit report has not been filed within the time prescribedunder the statute. The learned Tribunal though noted that suchprescription of time limit was pursuant to an amendment itfailed to take note of the fact as to whether such a amendmentwould apply to the assessment year under consideration namelyA.Y. 2014-15. The amendment to the Act was brought about bythe Finance Act 2020 (No. 12 of 2020) dated 27.3.2020. InSection 35 of the Finance Act the amendment brought out toSection 80IA of the Act in sub Section (7) has been mentioned.It has to be noted that Finance Act, 2020 came into force on1.4.2020. If that be so, the learned Tribunal without examiningas to whether such an amendment could apply to the assessee’scase had directed to the assessing officer to verify such amatter. The learned Advocate appearing for the appellantsubmitted that such an issue was never raised by the revenue atany earlier point of time. As could be seen from the materialsavailable on record the assessing officer has not taken such aview, obviously he could not have done so because theassessment order was passed on 29[th] December, 2016, muchearlier to the amendment. The CIT(A) also could not have takennote of the amendment because the order passed by the CIT(A) isdated 28[th] February, 2019. Therefore, if an issue is to be raised by the learned Tribunal suo-motu for the first time thenthe assessee is entitled to notice of such an issue beingraised and should have afforded an opportunity to the assesseeto put forth their submission. We find that such procedure wasnot adopted by the Tribunal. In any event, the learned Tribunalin paragraph 18 of its order having rightly noted the legalposition ought to have granted relief to the assessee. Failureto do so, would result in order passed by the learned Tribunalliable to be set aside. Ms. Smita Das De, learned standing Counsel submitted thatthe Tribunal in paragraph 18 though noted the correct legalposition has taken note of the subsequent amendment in the Actrequiring the audit report to be filed in prescribed mannerwithin the prescribed time. As mentioned by us above, thisissue was never an issue pointed out to the assessee at anyearlier point of time and it appears that the issue had beentaken up for consideration when the case was heard and orderswere reserved by the learned Tribunal. In any event, such pointcould not have been put against the assessee when the same wasnever the case of the revenue before the Tribunal. For all the above reasons, the appeal filed by theassessee is to be allowed. The order passed by the learnedTribunal as well as order passed by the CIT(A) are set aside and also the order passed by the assessing officer dated29.12.2016 in so far as it disallows the deduction claimedunder Section 80IA of the Act are set aside and there will bea direction to the assessing officer to allow the saiddeduction claimed by the assessee under Section 80IA of theAct. Consequently, the substantial questions of law areanswered in favour of the assessee.The applications are also disposed of. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.)