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2018 Supreme(Mad) 401
IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. DURAISWAMY, J.
M/s. REGEN Powertech Private Ltd. - Petitioner
Versus
The Central Board of Direct Taxes, Rep by its Chairperson, New Delhi & Another - Respondents
W.P. No. 24273 of 2016
Decided On : 28-03-2018
Advocate Appeared:
For the Petitioner: Vijaya Narayanan, R. Sivaraman
For the Respondents: Hema Muralikrishnan
The court emphasized the importance of justifying the delay in filing the Return Of Income and the discretion of the authority to condone the delay, considering the requirements of the Tax Audit Report under Section 44 AB.
Headnote:
Return Of Income - Tax Audit Report - Section 139(1), Section 44 AB - The court discussed the delay in filing the Return Of Income for the assessment year 2014-15 and the requirement of Tax Audit Report under Section 44 AB. The court considered the reasons for the delay, the petitioner's efforts to obtain the Tax Audit Report, and the refusal of the existing Auditor to issue a No Objection Certificate. The court emphasized the importance of justifying the delay and the discretion of the authority to condone the delay.
Fact of the Case:
The petitioner, a Private Limited Company engaged in Wind Energy Generators manufacturing, filed a Writ Petition to direct the respondent to accept its Return Of Income for the assessment year 2014-15 under Section 139(1) of the Act. The delay in filing the return was due to difficulties in obtaining the Tax Audit Report.
Finding of the Court:
The court found that the petitioner satisfactorily explained the reasons for the delay in filing the Return Of Income and emphasized the importance of the Tax Audit Report under Section 44 AB. The court considered the petitioner's efforts to obtain the report and the refusal of the existing Auditor to issue a No Objection Certificate.
Issues: The main issue was the delay in filing the Return Of Income and the refusal of the existing Auditor to issue a No Objection Certificate for appointing an alternative Auditor.
Ratio Decidendi: The court held that the delay in filing the Return Of Income should be justified and the authority has the discretion to condone the delay. The court emphasized the importance of the Tax Audit Report under Section 44 AB and the petitioner's efforts to obtain the report.
Final Decision: The court set aside the order of the 1st respondent dated 01.06.2016 and allowed the Writ Petition.
1. The petitioner has filed the above Writ Petition to issue a writ of certiorarified mandamus to call for the records pertaining to the order passed by the 1st respondent dated 01.06.2016 and consequently direct the 1st respondent to accept the Return Of Income filed by the petitioner Company for the assessment year 2014-15 under Section 139(1) of the Act.
2. The brief case of the petitioner is as follows:
(i) According to the petitioner, it is a Private Limited Company incorporated under the provisions of the Companies Act and is engaged in the manufacturing of Wind Energy Generators. For the assessment year 2014-15, the petitioner Company had filed its Return Of Income (ROI) as required under Section 139(1) of the Act on 07.01.2015 due to certain reasons beyond the control of the petitioner Company. As per Section 139(1) of the Act, the due date for filing of Return Of Income, in case of assessee having specified international/domestic transactions, was 30.11.2014. There was a delay of 37 days in filing the Return Of Income for the relevant assessment year. It is mandatory on the part of the Company to get its account audited under Section 44 AB of the Act. To file its Return Of Income, Tax Audit Report under Section 44 AB is mandatory, without which the return will not be accepted by the System as a correct return.
(ii) The petitioner Company sought the services of M/s. S.R. Batliboi & Associates, LLP to conduct audit of its Tax accounts and issue a report thereon in Form-3CB prescribed under the Income Tax Rules, 1963. The Chartered Accountant Firm had also agreed to carry out the assignment in terms of their Assignment Letter dated 08.09.2014. Pursuant to the aforesaid engagement Letter, the Audit exercise commenced on 15.09.2014. The team members of M/s. S.R. Batliboi & Associates were deployed and the petitioner Company co-operated with the Audit Firm in providing with necessary details, which were called for from time to time. Periodical interactions were taking place between the Auditor and the petitioner Company and weekly meeting was held to review the progress of the Audit work. The petitioner Company in full faith submitted the details called for by the Auditor in a progressive manner.
(iii) During the assessment year 2014-15, the petitioner Company transferred its Operating & Maintenance (O&M) business division on a going concern basis as a slump sale to its wholly owned subsidiary Company, namely, Renewable Energy Generation Pvt. Ltd (now, renamed as REGEN Infrastructure and Services Pvt. Ltd.) for a consideration of Rs.310 crores. The aforesaid consideration was based upon two independent valuation exercises from M/s. TRC Corporate Consulting Pvt. Ltd and M/s. C. Ramaswamy & B. Srinivasan, Chartered Accountants.
(iv) The Tax Auditors viz., M/s. S.R. Batliboi & Associates, Chartered Accountant had certain reservations in the valuation of the aforesaid business transfer and wanted to issue a disclaimer in this regard in the Audit Report in Form-3CB prepared for the purpose of Tax Audit. The reservation was orally communicated by their Tax Auditors to the petitioner Company on the last day of November 2014. The petitioner made an attempt to explain their Auditors about the last date for filing return and the importance and consequences of filing the Tax Audit Report along with the return. However, the Auditors were delaying the process of Audit completion without proper reasons inspite the petitioner providing expert valuation report from other professional firm to satisfy their concerns.
(v) The Auditors could have completed the audit by providing their qualified opinion as regards the above point, but they used this point to justify their delay in completion of the Tax Audit, which caused serious hardship to the petitioner, which was beyond the control of the petitioner Company. This has resulted in delay in finalizing the Tax Audit Report, without which the petitioner cannot upload the return electronicall
