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2017 Supreme(Del) 2781
IN THE HIGH COURT OF DELHI AT NEW DELHI
S. MURALIDHAR, PRATHIBA M. SINGH, JJ.
Ms. Fiberfill Engineers - Petitioner
Versus
Deputy Commissioner Of Income Tax - Respondent
W.P. (C) No. 3935 of 2015
Decided on : 10-08-2017
For The Petitioner:Mr. Gautam Jain & Mr. Piyush Kumar, Advocates
For the Respondent: Mr. Rahul Chaudhary, Senior Standing Counsel With Mr. Sanjay Kumar, Junior Standing Counsel For The Revenue
The delay in filing the return could not defeat the petitioner's claim for deduction under Section 80IC of the Act, as the Department had accepted the petitioner's claim on merits for the preceding year.
Headnote:
Income Tax - Assessment Reopening - Section 147 - Section 80IC - Section 139(1) - Section 143(1) - Section 221(1) - Section 148 - Section 154 - Section 271(1)(b) - Section 119(2)(b) - Section 80AC - Section 139(4) - Section 143(3) - Section 119(2)(b)
Fact of the Case:
The petitioner, M/s Fiberfill Engineers, challenged the order passed by the Deputy Commissioner of Income Tax under Section 147 of the Income Tax Act, 1961 for Assessment Year 2011-12. The petitioner claimed 100% deduction under Section 80IC of the Act, but the return was filed with a delay. The assessing officer issued a notice for penalty, and subsequently, a notice was issued for reopening the assessment.
Finding of the Court:
The court set aside the order rejecting the objections to the reopening of the assessment and the consequential assessment order, as the delay in filing the return could not defeat the petitioner's claim for deduction under Section 80IC of the Act.
Issues: The issues included the delay in filing the return, the validity of the notice for reopening the assessment, and the petitioner's entitlement to deduction under Section 80IC of the Act.
Ratio Decidendi: The court held that the delay in filing the return could not defeat the petitioner's claim for deduction under Section 80IC of the Act, as the Department had accepted the petitioner's claim on merits for the preceding year. The court also set aside the assessment order and rejected the objections to the reopening of the assessment.
Final Decision: The writ petition was allowed, and the orders rejecting the objections to the reopening of the assessment and the consequential assessment order were set aside.
S. Muralidhar, J.
1. The Petitioner, M/s Fiberfill Engineers, has filed this petition under Article 226 of the Constitution of India challenging an order dated 17th March, 2015 passed by the Respondent/Deputy Commissioner of Income Tax [hereafter the Assessing Officer (‘AO’)] under Section 147 of the Income Tax Act, 1961 (‘Act’) for Assessment Year (‘AY’) 2011-12.
Background facts
2. The background to the present petition is that the Petitioner is a partnership firm engaged in the business of execution of works contracts and manufacture of various kinds of signages/sign boards/panels and their components, various kinds of MS/SS/Sheet Metal fabricated structures and frames, Aluminium structures, Canopy/Building fascia and cladding components and panels etc. It has a manufacturing unit set-up at Sitarganj, District Uddham Singh Nagar, Uttarakhand. It is stated that the profits from the said unit are eligible for 100% deduction under Section 80IC of the Act from AY 2010-11.
3. The Petitioner states that for the AY in question, the return in terms of Section 139 (1) of the Act ought to have been filed by it by 30th September, 2011. However, the return was filed with a delay of 46 days on 16th November, 2011. The reason furnished by the Petitioner for the delay is that a majority of the contract receipts was subject to deduction of tax at source under Section 194C of the Act and there was a delay in receiving TDS certificates. It is also claimed that there was a TDS mismatch inasmuch as the TDS appearing in its records was different from the TDS appearing in Form 26AS. The reconciliation of the TDS involving Government contract was stated to be “an extremely time consuming exercise.”
4. The Petitioner states that no intimation under Section 143 (1) of the Act about filing of the above return was received by it from the Income Tax Department within the prescribed time period. However, on 12th November, 2013 a notice was issued to the Petitioner under Section 221 (1) of the Act asking it to show cause why a penalty should not be levied on it for failure to pay a demand of Rs.81,32,850 plus interest.
5. In reply to the above notice, the Petitioner pointed out that it had not yet been served with intimation under Section 143 (1) of the Act for the relevant AY before expiry of one year from the end of the financial year in which the return was filed. Accordingly, it was contended that the demand was time-barred.
Reasons for reopening of assessment
6. On 25th March, 2014 a notice was issued to the Petitioner under Section 148 of the Act by the AO stating that there were reasons to believe that the Petitioner’s income chargeable to tax for AY 2011-12 had escaped assessment within the meaning of Section 147 of the Act. Pursuant to the request made by the Petitioner by the letter dated 17th April, 2014 its counsel was supplied the reasons for reopening the proceedings under Section 148 of the Act on 26th May, 2014. The said reasons read thus:
"Reasons for Re-opening the case of M/s Fiberfill Engineers
....
Date of filing of return:- filed as per record on 16-11-2011 belatedly.
For the AY 2011-12, it is seen from the records that the Assessee has declared income of Rs.4,86,l6,350/- from business, out of which Rs. 2,62,49,797/- has been claimed exempt by the assessee u/s 80IC of the Act. However, this claim of the assessee is not correct, because assessee has filed his return of income on 16-11-2011 after due date (30.09.2011) of filing the return, In view of the provisions of section 80AC of the Income Tax Act which is reproduced as under:-
..........
It is quite apparent that the provisions contained in section 80AC are mandatory in nature. Also it specifically provides for consequences that would follow if the return of Income is not furnished, within the time limit specified in section 139(1) of the Act.
As well as in view of the decision of the Amritsar bench of the ITAT in Bal Kishan Dhawan HUF v. Income tax Office, Ward 5(1) [2012] 18 taxamn.c
