W.P.No.3967 of 2009 IN HIGH COURT OF JUDICATURE AT MADRAS Reserved On 03.12.2020 Pronounced On 06.02.2020 CORAM HON'BLE MR.JUSTICE C.SARAVANAN W.P.No.3967 of 2009 M/s.Craftsman Automation P Ltd., rep. by reg. Director, 15, LML Colony, Amman Kulam Road, Coimbatore 641 037. ... Petitioner Vs. 1.The Commissioner of Income Tax II, Race Course Road, Coimbatore. 2.The Assistant Commissioner of Income Tax, Race Course Road, Coimbatore. ...Respondents Writ Petition filed under Article 226 of Constitution of India praying to issue Writ of Certiorarified Mandamus, to call for records of Petitioner in C.No.221(1)/2007-08/CIT-II/CBE on file of first respondent and quash impugned order dated 26.03.2008 and consequently, direct respondents to grant deduction u/s. 80JJAA of Act to extent of Rs.20,65,976/- in computation of taxable total income in previous year relating to Assessment Year 2004-05. http://www.judis.nic.in Page No 1 of 14 W.P.No.3967 of 2009 For Petitioner : Mr.A.S.Sri Raman for Mr.S.Sridhar For Respondents : Mr.A.N.R.Jayaprathap Standing Counsel. ORDER petitioner is aggrieved by impugned order dated 26.03.2008 bearing reference No.C.221(1)/07-08/CIT-II/CBE passed by 1st respondent under Section 264 of Income Tax Act, 1961, for Assessment Year 2004-05. 2. By impugned order, 1st respondent has dismissed application filed by petitioner under aforesaid provision of Income Tax Act, 1961. 3. petitioner had filed income tax return for Assessment Year 2004-2005 on 01.11.2004. Thereafter, assessment order was passed on 29.12.2006. 4. Petitioner thereafter filed application dated 02.01.2007 under Section 154 of Income Tax Act, 1961 before 2nd respondent, for rectification of mistake of assessment http://www.judis.nic.in____________ Page No 2 of 14 W.P.No.3967 of 2009 order dated 29.12.2006. By order dated 17.01.2007, assessment order passed on 29.12.2006 for Assessment Year 2004-05 was modified under Section 154 of Income Tax Act, 1961. 5. petitioner thereafter filed revised return and claimed benefit of deduction under Section 80JJAA of Income Tax Act, 1961 and claimed refund of Rs.3,04,291/- in terms of rectification order dated 17.01.2007. 6. However, 2nd respondent refused to act on revised return. reason given by Petitioner for filing revised return was that by mistake, petitioner failed to avail benefit of deduction under Section 80JJAA of Income Tax Act, 1961. 7. During interregnum, impugned order dated 26.03.2008 was passed by 1st respondent under Section 264 of Income Tax Act, 1961 rejecting benefits of Section 80JJAA of Act. In other words, order dated 17.01.2007 passed under 154 of Income Tax Act, 1961 allowing deduction claimed by petitioner under Section 80HCC of Act has been disallowed. http://www.judis.nic.in____________ Page No 3 of 14 W.P.No.3967 of 2009 8. Meanwhile, notice dated 06.02.2008 was issued under Section 148 of Act. petitioner replied to same on 02.12.2008, which was culminated in order dated 29.12.2008. 9. Aggrieved by order dated 29.12.2008, petitioner preferred appeal before Commissioner of Income Tax (Appeals). petitioner s appeal was dismissed for non- prosecution vide order dated 03.06.2009. 10. Under these circumstances, petitioner preferred appeal before Income Tax Appellate Tribunal in ITA No. 1337/MDS/094 for Assessment Year 2004-05. Separate appeal was filed in ITA No 1338/MDS/2009 for Assessment Year 2006- 07. 11. Tribunal by its common order dated 13.11.2009 set aside order of Commissioner of Income Tax (Appeal) dismissing petitioner s appeal and remitted case back to Commissioner of Income Tax (Appeal) to pass speaking order. 12. Commissioner of Income Tax (Appeal) in remand proceeding passed fresh order on 28.10.2011 and partly allowed http://www.judis.nic.in____________ Page No 4 of 14 W.P.No.3967 of 2009 aforesaid appeal. However, said appeal did not deal with issues relating to claim of petitioner for deduction under Section 80JJAA of Income Tax Act, 1961 as it was not subject matter of Appeal. 13. Against order of Commissioner of Income Tax (Appeal), 2nd respondent preferred appeal in ITA.No.19/Mds/2012 for Assessment Year 2004-05 and in ITA No.1835/Mds/2012 for Assessment Year 2003-04 before Income Tax Appellate Tribunal 'B' Bench. By order dated 12.05.2017, Appellate Tribunal dismissed respective appeals of 2nd respondent. 14. As far as Assessment Year 2005-06 is concerned, petitioner filed Revision Petition under Section 264 of Income Act, 1961. It was rejected by order dated 26.03.2008. said order was impugned in W.P.No.3968 of 2009. said W.P.No.3968 of 2009 was disposed on 03.12.2019. It was submitted that for Assessment Year 2005-06 no further assessment has been passed. 15. Challenging impugned order passed under Section 264 of Income Tax Act, 1961 for Assessment Year 2004-05, http://www.judis.nic.in____________ Page No 5 of 14 W.P.No.3967 of 2009 present Writ petition has been filed. It is stated that assessment order dated 29.12.2006 as modified by rectification order dated 17.01.2007 was reopened by 2nd respondent vide re-assessment order dated 29.12.2008 for Assessment Year 2004-05 under Section 147 of Income Tax Act, 1961 and therefore there is no justification in not allowing benefit of deduction under Section 80JJAA of Income Tax Act, 1961. 16. It is submitted that against order dated 12.05.2017 of Income Tax Appellate Tribunal, revenue had also preferred appeals in T.C.A.Nos.56 and 57 of 2018 which were recently dismissed as withdrawn on 07.06.2019. 17. It is further submitted that non-filing of audit report/certificate/form along with return of income under Section 80JJAA(2) of Income Tax Act, 1961 was not mandatory so as to deny substantive benefit of exemption and same could be even furnished subsequent to filing of return of income. 18. learned counsel for petitioner has relied on following decisions of Court:- http://www.judis.nic.in____________ Page No 6 of 14 W.P.No.3967 of 2009 i. Commissioner of Income Tax-1 vs. M/s.AKS Alloys P.Ltd.,(2012) 18 taxman.com25 (Madras). ii. Commissioner of Income Tax, Mahrashtra vs. M/s.G.M.Knitting Industries P.Ltd., (2016) 71 Taxmann.com 35(SC). iii. Commissioner of Income Tax vs. Punjab Financial Corporation, (2002) 121 Taxmann 656 (Punjab & Haryana) (FB). 19. In 1st mentioned case, court held that non filing of form/certificate along with return was not mandatory. It was further submitted that similar view was taken in 2nd mentioned case. 20. As far as non-filing of returns for Assessment Year 2004-05 is concerned, time-limit prescribed for revising return under Section 139(1) in terms of Section 139(5) would not eclipse powers vested with 1st respondent under Section 264 of Act to act fairly. In this connection, reference has been made to decision of this Court in Sri. Selva Muthu Kumar Vs. Commissioner of Income Tax, [2017 ] 394 ITR 247 Division Bench of this Court held as follows:- http://www.judis.nic.in____________ Page No 7 of 14 W.P.No.3967 of 2009 13. relief provided in terms of Section 139(5) is specific to correction of wrong statement or omission in original return by way of revised return. power under Section 264 of Act extends to passing any order as Principal Commissioner or Commissioner may think fit after making inquiry and subject to provisions of Act, either suo-moto or on application by assessee. Though remedies over lap, power under Section 264 is significantly wider and wisdom of choosing one over other would really depend on facts and legal position of each case. facts in present case are to effect that petition under Section 264 was filed on 12.03.2009 once it became clear that 144A directions issued in case of SASTRA were in fact being accepted and applied by Revenue in re-assessments of appellant dated 21.10.2008, 24.12.2008 and 14.12.2009 (AY 2003-04, 2004-05 and 2005- 06), by which time, limitation under Section 139(5) for filing revised return, being 31.3.2008, had lapsed. Suffice it to say that, on facts of this case, remedy under Section 264 is appropriate and ought to have been exercised in favour of appellant by Commissioner of Income tax. In view of above discussion, Writ Appeal stands allowed. 21. further reliance was placed on following decision of Court :- i. Chandrakant J Patel Vs. V.N.Srivastava, (2011) 339 ITR 330. ii. Parekh Bros. Vs. Commissioner of Income Tax, 150 ITR 105. http://www.judis.nic.in____________ Page No 8 of 14 W.P.No.3967 of 2009 iii. Commissioner of Income Tax Vs. Ramani Realtors P Ltd., TCA.No.730 of 2014 iv. Rashtriya Vikas Limited Vs. Commissioner of Income Tax, (1992) 60 Taxman 74. 22. Defending orders of 1st respondent, learned counsel for respondent Mr.A.N.R.Jayapratap submits that order is well reasoned and requires no interference. He submits that power under Section 264 of Income Tax Act, 1961 cannot be exercised to condone delay on part of assessee to comply with mandatory requirements of law. He submits that writ petition is misconceived and is therefore liable to be dismissed. 23. I have considered arguments advanced on behalf of petitioner and respondent. 24. By impugned order, respondent has rejected application filed under Section 264 of Income Tax Act, 1961. 1st respondent has noted Paragraph No.5 of assessment order dated 29.12.2006 passed by Assessing Officer, wherein it has been observed that since petitioner had failed to file return http://www.judis.nic.in____________ Page No 9 of 14 W.P.No.3967 of 2009 before expiry of one year from end of relevant assessment year, benefit of deduction under Section 80 JJAA of Income Tax Act, 1961 cannot be allowed. 25. 1st respondent has observed that as per sub-Section 2 to Section 80JJAA of Income Tax Act, 1961, deduction cannot be allowed unless assessee furnishes certificate along with return of income, report of accountant, as defined in explanation below such sub-section (2) of Section 288 giving such particulars and report as may be prescribed. Secondly, it is stated that revised return was filed beyond period of limitation prescribed under Section 139(5) of Income Tax Act, 1961. 26. In this case, assessment which was completed on 29.12.2006 for Assessment Year 2004-05 reopened with issue of notice under Section 148 of Income Tax Act, 1961. Thus, original assessment which was completed on 29.12.2006 as modified by order dated 17.1.2007 and was put to jeopardy by respondent. Once notice under Section 148 of Income Tax Act, 1961 is invoked, 2nd respondent has wide power to re- assess not only income escaping keeping assessment but also http://www.judis.nic.in____________ Page No 10 of 14 W.P.No.3967 of 2009 grant reliefs that are due to assessee. Such exercise would culminate in fresh re-assessment order which no doubt has been eventually set aside by Tribunal. 27. However, in course of such re-assessment proceedings, assessment already made was put to jeopardy Under Explanation 3 to Section 147 of Income Tax Act, 1961, assessing officer can assess or re-assess income in respect of any issue, which escaped assessment including such issue comes to his notice subsequently in course of proceeding, notwithstanding that reason for such issue have not been included in reasons recorded under Sub-section (2) of Section 148. Therefore, while assessing or re-assessing, Assessing Officer has to also factor such benefits that were available to petitioner. 28. Assessing Officer is also duty-bound to extend substantive benefits which were available and arrive at just tax to be paid. Benefits which are otherwise available to assessee cannot be denied on ground of technical failure of assessee is such assessee is legitimately entitled to such substantive benefit. In this connection, it may be apt to refer to following quotation of http://www.judis.nic.in____________ Page No 11 of 14 W.P.No.3967 of 2009 Hon ble Supreme Court in case of Commissioner of Sales Tax Vs. Auriya Chambers of Commerce (1986) 3 SCC 50, wherein Hon ble Court held that procedures are handmaids of justice and not mistress of law. In Unichem Laboratories Vs. Commissioner of Central Excise, (2002) 7 SCC 145, Hon ble Supreme Court held that it is no part of duty of officer of revenue to demand tax which are not due to it merely to augment more revenue. They must act fairly and justly. 29. In this case, 2nd respondent has not given to benefit while reassessing income of petitioner while passing order on 29.12.2008. It is precisely for dealing with situations like this, powers have been vested with superior officers like respondent under Section 264 of Income Tax Act, 1961. 30. Though, orders have to be passed subject to provisions of Act, intention of legislative is not whittle down or deny benefit which are legitimately available to assessee. 31. Failure to file return within period under Section 139 of Income Tax Act, 1961 for purpose of claiming benefit of deduction under Section 80 AAJJ of Income Tax Act, 1961, in http://www.judis.nic.in____________ Page No 12 of 14 W.P.No.3967 of 2009 my view is more procedural formality. In my view, denial of substantive benefit cannot be justified since assessment itself was reopened by 2nd respondent and assessment already made on 29.12.2006 was put to jeopardy. 32. If assessee is entitled to benefit, technical failure on part of assessee to claim benefit in time, should not come in grant of substantial benefit/benefits that was/were otherwise available under Income Tax Act, 1961 but for such technical failure. 33. I am therefore of view that petitioner would be entitled to benefit of Section 80JJAA of Income Tax Act, 1961. 1st respondent ought to have allowed application filed by petitioner under Section 264 of Income Tax Act, 1961. 34. In light of discussion, I am of view that petitioner is entitled to partial relief at this stage. Accordingly, impugned order is set aside by condoning delay in filing return. 2nd respondent is therefore directed to pass appropriate orders on merits in accordance with law, ignoring delay on part of petitioner in filing returns under Section 139(5) of http://www.judis.nic.in Page No 13 of 14 W.P.No.3967 of 2009 C.SARAVANAN, J. Jen Income Tax Act and/or failure to furnish report of accountant. 35. 2nd respondent shall pass speaking order within period of three months from date of receipt of copy of this order. Needless to state, petitioner shall be heard before order is passed. 36. Writ petition stands allowed with above observation. No cost. 06.02.2020 Index :Yes/No Internet :Yes/No jen To 1.The Commissioner of Income Tax II, Race Course Road, Coimbatore. 2.The Assistant Commissioner of Income Tax, Race Course Road, Coimbatore. Pre-Delivery Order in W.P.No.3967 of 2009 http://www.judis.nic.in Page No 14 of 14 Craftsman Automation P Ltd. v. Commissioner of Income-tax-II, Coimbatore / Assistant Commissioner of Income-tax, Coimbatore