IN INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ITA No.485/Mds/2015 & C.O. No.41/Mds/2015 (in I.T.A. No.485/Mds/2015) Assessment Year : 2007-08 Deputy Commissioner of M/s Bnazrum Agro Exports (P) Ltd., Income Tax, v. Sirumalai Road, Erandalaparai, Circle I, Dindigul. Rettiarpatti Post, Dindigul 624 006. PAN : AABCB 2418 B (Appellant) (Respondent & cross-objector) Appellant by : Shri R. Duraipandian, JCIT Respondent by : Shri R. Kumar, Advocate Date of Hearing : 28.09.2016 Date of Pronouncement : 18.10.2016 ORDER PER G. PAVAN KUMAR, JUDICIAL MEMBER: Revenue has filed appeal against order of Commissioner of Income Tax (Appeals) in ITA No.24/2013-14 dated 02.12.2014 and cross-objection was filed by assessee. 2 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 2. At time of hearing, Ld. AR of assessee did not press C.O. No.41/Mds/2015, therefore, same is dismissed as not pressed. 3. grounds raised by Revenue are as under:- (1) CIT(A) erred in holding that assessee has filed return u/s 139(1) of Act. (2) CIT(A) has not given its reason why and what basis it is condoning delay of filing return of income by respondent. (3) CIT(A) erred in relying on case laws of Chennai and Hyderabad Tribunals which were clearly distinguished on facts by CIT(A) in his detailed order. (4) CIT(A) failed in its duty in not following Supreme Court Judgment in case of Orissa State Warehousing Corporation Vs. CIT reported in 103 Taxman 623(SC) relied by department. (5) CIT(A) also failed to consider that e-filing accepts return even without payment of self assessment tax and when Respondent had not established any valid reason for belated filing of return of income. 4. brief facts of case are that assessee is manufacturing and exporting Gherkins. assessee filed its return of income on 27.03.2008 admitting total income of `11,65,820/-. return was processed under Section 143(1) of Income-tax Act, 1961 (in short 'the Act'). Assessing Officer having reason to believe that income escaped assessment, initiated notice under Section 148 of Act. In response to notice, Ld. AR of assessee appeared before Assessing Officer. 3 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 Assessing Officer, on verification of assessment records, found that assessee-company has claimed deduction under Section 10B of Act in respect of exports and as per conditions laid down for claiming of deduction under fourth proviso to Section 10B of Act, assessee has to file return of income within due date prescribed under Section 139(1) of Act. But, assessee has filed e-return belatedly under Section 139(4) of Act on 27.03.2008, which is beyond due date specified for company. A.O. was of view that since it is mandatory to file return of income before due date, belated return cannot be treated as valid return for purpose of allowing deduction under Section 10B of Act. assessee has also challenged validity of issue of notice for reassessment and prayed for dropping reassessment proceeding. But, Assessing Officer based on information and provisions of Act, has considered facts submitted in assessment proceeding and in return filed belatedly and Ld. A.O. held that information submitted cannot be accepted as there is mandatory requirement applicable to assessee from assessment year 2007-08 to file return of income within time allowed under Section 139(1) of Act. With this finding, assessment was completed and 4 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 amount of `3,14,32,640/- claimed by assessee as deduction under Section 10B of Act was disallowed along with addition under income from other sources and assessed total income to `3,25,98,460/- and passed order under Section 143(3) r.w.s. 147 of Act on 28.03.2013. Aggrieved by order of Assessing Officer, assessee has filed appeal before CIT(Appeals). 5. In appellate proceeding, Ld. AR argued grounds and submitted facts and reasons for filing return of income beyond due date prescribed under Section 139(1) of Act. contention of assessee that reassessment proceedings are not valid but Ld. CIT(Appeals) confirmed reassessment proceeding as valid relying on judicial decisions. In respect of allowance of deduction under Section 10B of Act, Ld. CIT(Appeals) has made categorical finding that though there is specified condition under Section 10B of Act to file return of income within time allowed under Section 139(1) of Act, since assessment year 2007-08 being first year after amendment, therefore, proviso has to be interpreted liberally and since e-filing of return was introduced recently during that period and there was software and other technical problems which 5 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 are faced by assessee. Ld. CIT(Appeals) considered judicial decisions relied on by assessee and finally relied on decision in assessee's own case for assessment year 2008- 09 passed by Tribunal in I.T.A. No.774/Mds/2012 dated 19.09.2012 where Tribunal held that due date for filing of return of income under Section 139(1) of Act is directory in nature and not mandatory and delay alone cannot be reason for denying exemption if there are other substantive conditions necessitating for claiming deduction. With these observations, Ld. CIT(Appeals) has directed Assessing Officer to allow deduction under Section 10B of Act. Aggrieved by order of CIT(Appeals). Revenue has filed appeal. 6. Ld. Departmental Representative s contention is that CIT(Appeals) has erred in condoning delay when assessee has not filed return of income under Section 139(1) of Act which is mandatory requisite for claiming deduction under Section 10B of Act. Ld. D.R. submitted that there is no clarity as to on what basis delay was condoned for filing return of income. CIT(Appeals) has not relied on decision of Supreme Court. Further, assessee s reasons are not satisfactorily supported with 6 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 any evidence. Ld. D.R. prayed for setting aside order of CIT(Appeals). 7. Contra, Ld. AR of assessee relied on order of CIT(Appeals) and submitted that assessee-company has made application to Central Board of Direct Taxes under provisions of Section 119(2)(b) of Act praying for relaxation of fourth proviso to Section 10B of Act and opposed to grounds raised by Revenue. 8. We heard rival submissions, perused material available on record and judicial decisions cited. sole crux of issue envisaged by Ld. Departmental Representative is that order of CIT(Appeals) is bad in law as provisions of Section 10B of Act mandatorily require to file return of income within time allowed under Section 139(1) of Act which, according to Ld. D.R., Ld. CIT(Appeals) has overlooked. When same issue came before this Tribunal, in assessee's own case, it was held that delay cannot be technically considered for allowing exemption. Whereas, in present case, assessee has filed application before CBDT under Section 119(2)(b) of Act for condoning delay for relaxation of filing return of income 7 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 belatedly. We perused petition made under Section 119(2)(b) of Act by assessee dated 20.07.2015 where it was prayed that four proviso to Section 10B of Act may be relaxed in assessee s case. fourth proviso to Section 10B of Act was inserted by Finance Act, 2006 with effect from 01.04.2006, for assessment year 2007-08, is as under:- Provided also that no deduction under this section shall be allowed to assessee who does not furnish return of his income on or before due date specified under sub- section (1) of section 139 9. Further, Ld. AR of assessee drew our attention to petition and also supported his argument with decision of co- ordinate Bench of this Tribunal in case of Chella Software Pvt. Ltd. v. ACIT in I.T.A. No. 2081/Mds/2015 dated 03.03.2016, where similar issue was dealt and also application was pending before CBDT for condoning delay in filing return of income. We perused order of co-ordinate Bench of this Tribunal and concurred that facts are similar to present case which has held at para 7 page 9 as under:- 7. We heard rival submissions and perused material on record, judicial decisions cited. ld. Authorised Representative emphasized that return could not filed within due date and filed submissions in 8 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 assessment proceedings and appellate proceedings relying on decision of Co-ordinate Bench of Tribunal. But ld. Commissioner of Income Tax (Appeals) without going into merits, considered decision of Special Bench in case Saffire Garments(supra) and over ruled assessee s objections and observed filing return of income u/s.139(1) of Act is mandatory. ld. Authorised Representative drew attention to decision of Hyderabad Bench, Tribunal in case of S. Venkataiah (supra) where similar issue was dealt and delay was condoned due to technicalities. Subsequently, on appeal by Revenue u/s.260A of Act Hon ble Andhra Pradesh High Court has confirmed order of Tribunal in I.T.T.A No.114 of 2013, dated 26.06.2013. Andhra Pradesh High Court considered technicalities and circumstances were assessee could not file return. assessee company has made application with CBDT for condonotion of delay by letter dated 4.12.2014. assessee demonstrated submissions made to CBDT. We considering factual aspects, evidences, provisions of laws and decision of High Courts and Tribunal relied by assessee, are inclined to remit issue in dispute to file of Assessing Officer as application filed is pending with CBDT u/s.119(2)(a) of Act. Assessing Officer has to pass order based on satisfactory directions from CBDT after providing adequate opportunity of being heard to assessee. 10. We find in present case that assessee has made application to CBDT for condonation of delay by letter dated 20.07.2015. We rely on Tribunals decision and remit disputed issue to file of Assessing Officer as application is pending with CBDT under Section 119(2)(b) of Act. Further, Assessing Officer shall pass order based on 9 I.T.A. No.485/Mds/15 C.O. No.41/Mds/15 directions of CBDT. A.O. shall provide adequate opportunity to assessee before passing order. appeal of Revenue is allowed for statistical purposes. 11. In result, appeal of Revenue is allowed for statistical purposes and cross-objection of assessee is dismissed as not pressed. Order pronounced on 18th October, 2015 at Chennai. sd/- sd/- (Chandra Poojari) (G. Pavan Kumar) Accountant Member Judicial Member Chennai, th Dated, 18 October, 2015. Kri. Copy to: 1. Appellant 2. Respondent 3. CIT(A)-1, Madurai 4. CIT, Central-II, Madurai 5. DR 6. GF. Deputy Commissioner of Income-tax, CircleI, Dindigul v. M/s Bnazrum Agro Exports (P) Ltd