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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 04.01.2018
+ ITA 897/2016
PR. COMMISSIONER OF INCOME TAX-6, NEW DELHI
..... Appellant
Through: Mr. Asheesh Jain, Sr. Standing
Counsel.
versus
NATIONAL INFORMATICS CENTRE SERVICES INC.
..... Respondent
Through: Mr. Ved Jain and Mr. Pranjal
Srivastava, Advocates.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE A. K. CHAWLA
HON'BLE MR. JUSTICE S. RAVINDRA BHAT (ORAL)
%
1. The question of law framed in the case, is, as follows:-
"Did the Income Tax Appellate Tribunal (ITAT)
fall into error in holding that the notice under
Section 143(2) of the Income Tax Act, 1961 ('the
Act,) was barred by time, in the facts and
circumstances of the case?"
ITA 897/2016 Page 1 of 9
2. The brief facts are that the assessee filed its returns for A.Y.
2009-10 on 01.09.2010, choosing the electronic mode, in accordance
with the then prevailing Rule 12(3) of the Income Tax Rules read with
Sections 139C and 139D of the Income Tax Act. It is not in dispute
that the returns were filed in an electronic mode, however, the ITR-V
form i.e. the verification was not so filed. Again, it is not in dispute
that there was no facilitation for filing of ITR-V forms electronically.
What was expected of the assessee was that the ITR-V forms be
mailed through a hard copy to the Headquarters at Central Processing
Centre (CPC), Bengaluru. This is evident from the Circular No.3 of
2009 issued by the Board. That circular provided 30 days period to
the parties, who did not have digital signatures, but, had filed their
returns through electronic mode under Rule 12(3)(iii) of the Rules.
By Circular of 01.09.2010, the Central Board of Direct Taxes (CBDT)
extended the period of filing of ITR-V forms in such cases till
31.12.2010. The assessee filed its ITR-V form on 01.12.2010. The
assesse's returns, in the meanwhile, were not processed and Revenue
treated the documents filed as "Nil" return. An order was thereafter
made under Section 143(3) of the Act and the assessment made at
Rs.48,55,39,800/-. Penalty proceedings too, were initiated. The
assessee appealed successfully to the Commissioner, who accepted its
plea and the contention that in the absence of a notice under Section
143(2) of the Act within the time stipulated, scrutiny assessment under
Section 143(3) of the Act could not have been completed. This
argument was further accepted, upon appeal by the Revenue to
Income Tax Appellate Tribunal (`ITAT').
ITA 897/2016 Page 2 of 9
3. The Revenue urges that the Tribunal erroneously held that the
return had been filed correctly. In doing so, it places reliance upon
Circular No.3 of 2009, to say, that the only manner known in law for
the assessee's return to have been valid, would be, if, the verification
form ITR-V was received by the Revenue Authorities i.e. the
concerned Authority CPC, Bengaluru, within 30 days period, provided
for, in the circular. Learned counsel relying upon Rule 12(3) of the
Income Tax Rules contends that a combined reading of Sections 139C
and 139D leads to the conclusion that in the absence of an ITR-V
Form, i.e. the verification, no return is deemed valid, and, till such
time, a valid return comes on record, which, in the present case
occurred after 01.12.2010, the question of issuing any notice under
Section 143(3) of the Act did not arise. Elaborating further, it was
further argued by the Revenue that in the present case, the assessee
had, in fact, participated in the proceedings through its representatives
and the plain textual interpretation would rather work against the
assessee, who was aware of the Circular No.3 of 2009, which had
enabled the parties to furnish the ITR-V form within 30 days of the
furnishing the return electronically. In his submissions therefore,
when the assessee did not do so, the Authorities were within their
rights in treating whatever was filed as a "nil" return.
4. Learned counsel for the assessee contends that the circular of
01.09.2010 was in fact formulated precisely, to cater to the exigencies
in the present case. It is pointed out that CBDT was aware of the
chaos and confusion, which prevailed after its earlier circular of 2009.
ITA 897/2016 Page 3 of 9
It is also contended that the assessee had in fact furnished the ITR-V
forms within the period of 30 days through mail and the Circular No.3
of 2009 had not formulated any specific procedure i.e. furnishing of
such form under registered post or any other stable form, to enable
due verification. In the circumstances, the assessee cannot be placed
at a disadvantage for having filed the ITR-V forms again within the
extended time on 01.12.2010. Since the statutory period under
Section 143(2) of the Act had gone past, the assessment completed
under Section 143(3) could not be treated as valid and was correctly
invalidated by the Appellate Commissioner and the ITAT.
5. The relevant part of Rule 12 of the Income Tax Rules was
amended through the Income Tax Fourth Amendment, which was
brought into effect on 14.05.2007. Rule 12(3), reads, as follows:-
"(3) The return of income or return of fringe benefits referred
to in sub-rule (1) may be furnished in any of the following
manners, namely:--
(i) Furnishing the return in a paper form;
(ii) Furnishing the return electronically under digital
signature;
(iii) Transmitting the data in the return electronically
and thereafter submitting the verification of the return in
Form ITR-V;
(iv) Furnishing a bar-coded return in a paper form."
6. Para 6 of the Circular No.3 of 2009 referred to Section 139C
and 295(2) and stated that the returns required to be furnished in the
concerned forms were not to be accompanied by attachment or
ITA 897/2016 Page 4 of 9
annexures. Having regard to this problem, it was imperative to enable
assessees, such as the present, to file electronic forms without
attaching the necessary ITR-V, which was mandatory, facilitating it
furnishing to the Central Processing Centre. This part was spelt out in
the said circular, at para 10, as follows:-
"10. Since the Form ITR-V is bar-coded, assessee is
advised not to fold the same and post it in A4 size
envelope. The assessee shall furnish the Form ITR-V to
the Income-tax Department by mailing it to "Income Tax
Department- CPC, Post Box No - 1, Electronic City Post
Office, Bangalore - 560100, Karnataka" within thirty
days after the date of transmitting the data electronically.
The Post Box shall deliver all the Form ITR-V to the
Centralized Processing Centre (CPC) of the Income-tax
Department in Bangalore. Upon receipt of the Form ITR-
V, the CPC shall send an e-mail acknowledging the
receipt of Form ITR-V. The e-mail shall be sent in due
course to the e-mail address furnished-by the tax-payers
in his return. No Form ITR-V shall be received in any
other office of the Income-tax Department or in any
other manner."
7. In the present case, the Appellate Commissioner in his detailed
order, was of the opinion that when the furnishing of the ITR-V form
on 01.12.2010 was in accordance with the Circular of 01.09.2010
(which had provided for an extended period up to 31.12.2010 to the
assessees to do so), the return filed originally i.e. on 30.09.2009, was
deemed to be valid one. The discussion by the CIT (A) in this regard
is as follows:-
ITA 897/2016 Page 5 of 9
"4.4 The E-Filing of Return Scheme of CBDT provides
that where the return has been filed electronically without
digital signature, on successful transmission the
acknowledgement in form ITR-V will be generated by
computer. The said computer generated form ITR-V shall be
downloaded & after taking a print out it shall be physically
verified under the signature of the taxpayer & shall be
forwarded to the CPC, within the prescribed time period. If
the said ITR-V in physical form is not sent to the CPC within
the prescribed time period, then the return filed
electronically will be considered as an invalid return. The
scheme further provides that the date of e-filing of the return
shall be considered as the date of furnishing of return if the
computer generated ITR-V is furnished in the prescribed
manner & within the prescribed time period. The CBDT
vide its press release dt. 1.9.2010, has extended the time
limit for filing ITR-V forms relating to ITRs for AY 2009-10
filed electronically (without digital signature) upto
31.12.2010 or within a period of 120 days of
uploading/filing of the electronic return, whichever is later.
There is no dispute that the assessee company has filed its
ITR for the AY 2009-10 electronically on 30.9.2009 i.e.
within the stipulated time period as prescribed u/s 139(1).
The computer generated ITR-V was received by CPC
Bangalore on 01/12/2010 within the prescribed statutory
time limit. From the copy of the acknowledgement of the
receipt of the said ITR-V issued by CPC the receipt of the
same on 1.12.2010 & the e-filing of the ITR for AY-2009-10
on 30.9.2009 is clearly evident. In view of the above, as the
duly verified and signed computer generated ITR-V was
received by CPC, Bangalore before 31/12/2010, therefore,
the e-return filed on 30/09/2009 is a valid return. On
identical issue, Hon'ble ITAT Cochin Bench in the case of
ITA 897/2016 Page 6 of 9
EKK & Co. vs. ACIT in ITA Nos.138 & 223 (Coch.) of 2012
in its decision dt.16/11/2010 held:
"Para 5. The scheme framed by the CBDT clearly says
that where the return was filed electronically with
digital signature the acknowledgement generated
electronically shall be evidence for filing of the return.
Wherever, the return was filed electronically without
digital signature, on successful transmission, the
computer shall generate acknowledgement in form ITR-
V. The form ITR-V generated by computer shall be
downloaded and after taking a print out it shall be
physically verified under the signature of the taxpayer
and forwarded to the CPC. The scheme has also
clarified that the date of transmitting the return
electronically shall be the date of furnishing of return if
the form ITR-V is furnished in the prescribed manner
and within the period specified. In this case, the period
specified is 31-12-2010 or 120 days from the date of
uploading the return whichever is later. Admittedly
form ITR-V was received by CPC on 29-11-2010 is
within the prescribed time in the prescribed manner in
the prescribed form. Hence, for all practical purpose,
the date of filing of the return shall relate back to the
date on which the return was electronically uploaded
i.e 25-09-2009. Therefore, the contention of the ld.DR
that receipt of Form ITR-V is the date of receipt of
return has no merit at all.
6. In view of the above, the date of filing of the
return of income is 25-09-2009. Therefore, the notice
served on the taxpayer u/s 143(2) on 26-08-2011 is
beyond the period of six months from the end of the
financial year in which the return was furnished.
ITA 897/2016 Page 7 of 9
Therefore, the notice issued by the assessing officer u/s
143(2) is invalid. Hence, it cannot be acted upon.
Consequently, the assessment order passed by the
assessing officer cannot stand in the eyes of law.
Therefore, the same is quashed."
8. The con-joint reading of para 10 of Circular No.3 of 2009 and
the circular dated 01.09.2010 makes it clear, beyond any manner of
doubt, that, CBDT itself was alive to the difficulties faced in
implementation of Section 139C, having regard to the phraseology in
Section 295B. In the event of assessee choosing to file without digital
signatures as per Rule 12(3) of the Income Tax Rules, there was a gap
in the Statute even a conflict. The Rule was, in essence, at war with
the express provision of the Statute, which required assessees not to
attach annexures or documents. Thus, the assessee could not attach the
ITR-V form or provision or even send any scanned form. To mitigate
the hardship, the CBDT felt that it was imperative to provide 30 days'
period as it did through Circular No.3 of 2009. It later, realised that
more confusion arose on account of limited period and the procedure
provided, and therefore, it extended the period on 01.09.2010 upto
31.12.2010 or 120 days from the filing of the return, whichever was
later. In the present case, the assessee had filed its return
electronically on 30.09.2009. It says that it availed of the filing of the
ITR-V forms through post. The Revenue is not in a position to verify
either way. It is precisely to cater to this circumstance that the circular
of 01.09.2010 (especially para 2) extended the period. The extension
of this period necessarily meant that ITR-V forms received during
ITA 897/2016 Page 8 of 9
such extended period validated the returns originally filed. The
interpretation sought to be placed by the Revenue now that fresh
returns were necessary, in the opinion of the Court, flies against the
opinion of the CBDT and the circumstances, under which, both the
circulars were framed and published. In other words, these circulars
were necessitated on account of the legislative gap even conflict
between the Rules on the one hand, which mandated electronic filing
and other provisions of the Statute, which prohibited the attachment of
annexures along with returns, which resulted in ITR-V form, as were
in the present case.
9. Having regard to the above discussion, the Court is of the
opinion that the question of law framed in this case is to be answered
in favour of the assessee and against the Revenue. The appeal is
therefore dismissed. No orders as to costs.
S. RAVINDRA BHAT, J
A. K. CHAWLA, J
JANUARY 04, 2018
nn/rc
ITA 897/2016 Page 9 of 9
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