The Himachal Pradesh High Court allowed deduction under Section 80IB(10) of the Income Tax Act, 1961 to H.P. Housing & Urban Development Authority as there was bonafide delay in filing income tax returns (ITR).
The Assessing Officer in his assessment order dated 16.12.2009 under Section 143(3) of the Act declined the deduction claimed by the assessee under Section 80 IB(10) of the Income Tax Act in its revised return. This was for the reason that the assessee had not filed the original return within the permissible period under Section 139 (1) of the Income Tax Act.
The AO held that return of income was filed by the assessee beyond the due date provided under Section 139(1) of the Income Tax Act. In view of provisions of Section 80 AC of the Income Tax Act, the assessee was not entitled to claim deduction under Section 80IB(10) of the Income Tax Act.
On appeal the Income Tax Appellate Tribunal (ITAT) observed that the assessee cannot be burdened with taxes which it otherwise is not liable to pay under the law. A duty is cast upon the Income Tax Authorities to charge legitimate taxes from the tax payers. They are not there to punish the tax payers for their bonafide mistakes. Accordingly, for the assessment year 2006-2007, the deduction computed by the CIT on the merits of assessee’s claim was confirmed and the appeal was accordingly allowed.
The contention of the appellant is that the original return was filed by the assessee beyond the period prescribed under Section 139(1) of the Income Tax Act. Hence, deduction under Section 80IB(10) could not be allowed to it in view of bar imposed under Section 80 AC.
A Division Bench comprising Chief Justice M.S. Ramachandra Rao and Justice Jyotsna Rewal Dua observed that “In the instant case, the assessee is a statutory organization created by the State for providing & develop housing infrastructure. It took up a defence of late audit for belated filing of its return of income. The veracity of ground so put forth for late filing of return has not been disputed by the appellant. The assessee deals with public money, the State exchequer. The Commissioner of Income Tax and the Income Tax Appellate Tribunal have concurrently held on facts after undertaking a lengthy & pain staking exercise that the assessee was actually entitled to deductions under Section 80IB(10) of the Income Tax Act.”
“The specific amount of deduction admissible to it has also been computed. The ground put forth by the assessee for not filing the return of income within the time provided under Section 139(1) having been accepted on facts by the appellant, we in the given facts are inclined to hold, in this case, that the assessee had a reasonable & bonafide cause for not filing the return of income within the time permitted under Section 139(1)” the Court concluded.
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