Rajkamal Healds And Reeds Pvt. Ltd v. Assistant Director Of Income Tax

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 1085 of 2022 ==========================================================RAJKAMAL HEALDS AND REEDS PVT. LTD. VersusASSISTANT DIRECTOR OF INCOME TAX ========================================================== Appearance:MR ASHUTOSH S DAVE(8865) for the Petitioner(s) No. 1MR JYOTINDRASINH J VALA(10975) for the Petitioner(s) No. 1MS NAMRATA A DOSHI(11002) for the Petitioner(s) No. 1M R BHATT & CO.(5953) for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAand HONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 20/01/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) By this writ-application under Article 226 of theConstitution of India, the writ-applicant, an assessee, hasprayed for the following reliefs : (a) Direct the respondent to permit the petitioner to file theForm 10-IC electronically as provided under Section 115BAAof the Act read with Rule 21 AE of the Rules for the A.Y 2020-21 and further be pleased to direct the respondent to re-process the return of income of the petitioner for A.Y 2020-21in accordance with the provisions of Section 115BAA of theAct by condoning the delay occurred in filing the said Form; (b) Pending admission, hearing and final disposal of thepetition, the Hon’ble Court be pleased to stay the operation,execution implementation of the demand of Rs 1,05,18,030/- against the petitioner arising out of the impugned intimationdated 20.12.2021 communicated by the respondent underSection 143(1) of the Act for the A.Y 2020-21;(c) any other and further relief deemed just and proper begranted in the interest of justice; (d)to provide for the cost of this petition; 2.The controversy involved in the present litigation is in anarrow compass. It appears that the writ-applicant filed hisreturn of income for the A.Y. 2020-2021 invoking theprovisions of Section 115BAA of the Income Tax Act,1961 (forshort “the Act 1961) but in the absence of the Form 10- ICwhich the writ-applicant was obliged to file electronically. Inthe absence of the Form 10-IC, the return was assessed in aregular form and a intimation under Section 143(1) of the Actcame to be served upon the writ applicant raising a demandof Rs. 1,05,18,030/-. In such circumstances, referred to abovethe writ applicant is here before this Court with the presentwrit-application. 3.Mr. Ashutosh Dave, the learned counsel appearing forthe writ-applicant submitted that his client i.e the writ-applicant falls within the ambit of a domestic company. Insuch circumstances, the writ applicant is entitled to avail thebenefits under Section 115 BAA of the Act. Section 115 BAAof the Act reads thus : 115BAA.(1) Notwithstanding anything contained in this Act but subject to theprovisions of this Chapter, other than those mentioned under section115BA and section 115BAB, the income-tax payable in respect of the total income ofa person, being a domestic company, for any previous year relevant to the assessmentyear beginning on or after the 1st day of April, 2020, shall, at the option of suchperson, be computed at the rate of twenty-two per cent, if the conditions contained insub-section (2) are satisfied: Providedthat where the person fails to satisfy the conditions contained in sub-section (2) in any previous year, the option shall become invalid in respect of theassessment year relevant to that previous year and subsequent assessment years andother provisions of the Act shall apply, as if the option had not been exercised for theassessment year relevant to that previous year and subsequent assessment years. (2) For the purposes of sub-section (1), the total income of the company shall becomputed,— Providedthat where the person fails to satisfy the conditions contained in sub-section (2) in any previous year, the option shall become invalid in respect of theassessment year relevant to that previous year and subsequent assessment years andother provisions of the Act shall apply, as if the option had not been exercised for theassessment year relevant to that previous year and subsequent assessment years. (2) For the purposes of sub-section (1), the total income of the company shall becomputed,— (i) without any deduction under the provisions of section 10AA or clause (iia)of sub-section (1) of section 32 or section 32AD or section 33AB or section33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section(1) or sub-section (2AA) or sub-section (2AB) of section 35 or section35AD or section 35CCC or section 35CCD or under any provisions of [78][Chapter VI-A under the heading "C.—Deductions in respect of certainincomes" other than the provisions of section 80JJAA]; (ii) without set off of any loss carried forward or depreciation from any earlierassessment year, if such loss or depreciation is attributable to any of thedeductions referred to in clause (i); (iii) without set off of any loss or allowance for unabsorbed depreciationdeemed so under section 72A, if such loss or depreciation is attributable to anyof the deductions referred to in clause (i); and (iv) by claiming the depreciation, if any, under any provision of section 32,except clause (iia) of sub-section (1) of the said section, determined in suchmanner as may be prescribed. (3) The loss and depreciation referred to in clause (ii) and clause (iii) of sub-section(2) shall be deemed to have been given full effect to and no further deduction for suchloss or depreciation shall be allowed for any subsequent year: Providedthat where there is a depreciation allowance in respect of a block of assetwhich has not been given full effect to prior to the assessment year beginning on the1st day of April, 2020, corresponding adjustment shall be made to the written downvalue of such block of assets as on the 1st day of April, 2019 in the prescribedmanner, if the option under sub-section (5) is exercised for a previous year relevantto the assessment year beginning on the 1st day of April, 2020. (4) In case of a person, having a Unit in the International Financial Services Centre,as referred to in sub-section (1A) of section 80LA, which has exercised option undersub-section (5), the conditions contained in sub-section (2) shall be modified to theextent that the deduction under section 80LA shall be available to such Unit subjectto fulfilment of the conditions contained in the said section. Explanation.—For the purposes of this sub-section, the term "Unit" shall have thesame meaning as assigned to it in clause (zc) of section 2 of the Special EconomicZones Act, 2005 (28 of 2005). (5) Nothing contained in this section shall apply unless the option is exercised by theperson in the prescribed manner on or before the due date specified under sub-section (1) of section 139 for furnishing the returns of income for any previous yearrelevant to the assessment year commencing on or after the 1st day of April, 2020 andsuch option once exercised shall apply to subsequent assessment years: Providedthat in case of a person, where the option exercised by it under section115BAB has been rendered invalid due to violation of conditions contained in sub- clause (ii) or sub-clause (iii) of clause (a), or clause (b) of sub-section (2) of saidsection, such person may exercise option under this section: Provided further that once the option has been exercised for any previous year,it cannot be subsequently withdrawn for the same or any other previous year. Providedthat in case of a person, where the option exercised by it under section115BAB has been rendered invalid due to violation of conditions contained in sub- clause (ii) or sub-clause (iii) of clause (a), or clause (b) of sub-section (2) of saidsection, such person may exercise option under this section: Provided further that once the option has been exercised for any previous year,it cannot be subsequently withdrawn for the same or any other previous year. 4.Mr. Dave would submit that it was the first return ofthe writ-applicant filed in accordance with the provisions ofsection 115 BAA and inadvertently the Chartered Accountantmissed filing the form 10 IC electronically. He would submitthat if the form 10 IC would have been submittedelectronically then the assessment would have beenaccordingly and the liability could not have been asdetermined and intimated under Section 143(1) of the Act. 5.He would submit that the omission on the part of thewrit-applicant in filing the Form 10 IC electronically was nota deliberate act on his part and is going to prove very costlyas the tax liability has been determined to the tune of Rs1,05,18,030/-. He would submit that it is a high pitchedassessment. 6.In such circumstances referred to above, Mr.Dave,made a fervent appeal to this Court to issue anappropriate direction to the authority concerned to nowpermit him to file the Form 10 IC electronically and re-process the return of income for the A.Y. 2020-21. 7.On the other hand Mr. M.R Bhatt, the learned SeniorCounsel has opposed this writ-application pointing out thatthe statutory legal remedy available to the writ-applicant isto make a request to the Principal Chief Commissioner orthe Chief Commissioner in accordance with Section 119 (2) (b) of the Act. Mr. Bhatt pointed out that the Board hasdelegated its powers under Section 119(2) (b) to thePrincipal Chief Commissioner/ the Chief Commissioner. Mr.Bhatt would submit that if the Chief Commissioner isconvinced that having regard to the circumstances in whichthe Form 10 IC could not be filed at the relevant point oftime then it is within his power to permit or admit anapplication or claim for any exemption, deduction, refund orany other relief under the Act, even after the expiry of theperiod specified by or under the Act. 8.Mr. Bhatt also laid much emphasis on Sub Section 5 ofSection 115 BAA of the Act which reads thus “ “5) Nothing contained in this section shall apply unless the option isexercised by the person in the prescribed manner on or before the due datespecified under sub-section (1) of section 139 for furnishing the returns ofincome for any previous year relevant to the assessment year commencingon or after the 1st day of April, 2020 and such option once exercised shallapply to subsequent assessment years:” 9.According to Mr. Bhatt nothing in Section 115 BAA ofthe Act would apply to the assessee unless the option isexercised by the assessee in the prescribed manner. One ofthe prescribed manners of availing the benefit of Section 115BAA of the Act is to file the Form 10 IC electronically. It isonly upon filing of such Form 10 IC electronically that thedepartment would be in a position to give effect to theprovisions of Section 115 BAA of the Act and process thereturn of income accordingly. 10.Having heard the learned counsel appearing for theparties and having gone through the materials on record, we are of the view that the writ-applicants should at the earliestfile an appropriate application in writing addressed to thePrincipal Chief Commissioner/ Chief Commissioner making arequest to permit him to file the Form 10 IC electronicallyafter condoning the delay in that regard so that the return ofthe writ-applicant can be re-processed or regular assessmentcan also be framed accordingly and the liability can bedetermined. 10.Having heard the learned counsel appearing for theparties and having gone through the materials on record, we are of the view that the writ-applicants should at the earliestfile an appropriate application in writing addressed to thePrincipal Chief Commissioner/ Chief Commissioner making arequest to permit him to file the Form 10 IC electronicallyafter condoning the delay in that regard so that the return ofthe writ-applicant can be re-processed or regular assessmentcan also be framed accordingly and the liability can bedetermined. Section 119 of the Act falls under Chapter XIII- Section 119(1) reads thus : “The Board may, from time to time, issue such orders,instructions and directions to other income-tax authorities as it maydeem fit for the proper administration of this Act, and such authoritiesand all other persons employed in the execution of this Act shallobserve and follow such orders, instructions and directions of theBoard. Sub section (2)(b) of Section 119 reads thus : (2) Without prejudice to the generality of the foregoing power _ (a) xxxxx (b) the Board may, if it considers it desirable or expedient so to dofor avoiding genuine hardship in any case or class of cases, bygeneral or special order, authorise [ any income-tax authority, notbeing a Commissioner (Appeals)] to admit an application or claimfor any exemption, deduction, refund or any other relief under thisAct after the expiry of the period specified by or under this Act formaking such application or claim and deal with the same on meritsin accordance with law. 11.At this stage Mr. Dave the learned Counsel appearing forthe writ-applicant submitted that the intimation under Section143(1) has already been issued to his client fixing the liability.In such circumstances, the next step in the process would bethe recovery of the said amount. He would submit that butfor the omission on the part of the writ-applicant in filing theForm 10 IC electronically, the liability would not have been as determined as reflected in the intimation under Section143 (1) of the Act. In this regard we may only observe that ifany steps are taken by the A.O towards recovery it is alwaysopen for the writ-applicant to file an application with arequest to the AO to keep the demand in abeyance againstsuch an assessment order and pray for stay of the recoveryatleast till the time the application that may be filed by thewrit-applicant under Section 119 before the ChiefCommissioner is decided one way or the other. 12.In view of the aforesaid, we dispose of this writapplication reserving the liberty for the writ applicant to filean appropriate application addressed to the ChiefCommissioner Income Tax under Section 119 (2) (b) of theAct referred to above with a request to permit him to file theForm 10 IC electronically. If any such application is filed thenthe Chief Commissioner shall look into it expeditiously andmay exercise his discretion in accordance with law moreparticularly keeping in mind the object behind Section 119(2)(b) of the Act. The Chief Commissioner/ Commissionershall also consider the hardships that the writ-applicant mayhave to face in the event if he is not permitted to file theForm 10 IC electronically. 13.With the aforesaid this writ application stands disposedof. (J. B. PARDIWALA, J) MARY VADAKKAN (NISHA M. THAKORE,J)