PODDAR PIGMENTS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS writ petition is directed against the order dated 25.03.2006 passed by the Commissioner of Income Tax on an application made by the petitioner under Section 264 of the Income Tax Act, 1961 (hereinafter referred to as 'the said Act') for the assessment year 2001 -02. The petitioner manufactures plastic granules, which is used as a colouring agent in the plastic and fibre industries. The petitioner claimed to have started production w.e.f. 01.03.1995. According to the learned Counsel for the petitioner, it was entitled to deduction under Section 80 -IB(3) to the extent of 30% in respect of its profits and gains for a period of 10 consecutive assessment years beginning with the assessment year 1995 -96. Since the petitioner did not have a positive gross total income in the initial years, it could not claim the said deduction. For the first time, the petitioner had a positive total gross income in the previous year relevant to the assessment year 2001 -02. However, the petitioner did not claim any deduction in respect of the said assessment year. According to the petitioner, it did not do so because the fact that the petitioner was entitled to such a deduction escaped the attention of the tax auditors as well as the tax department of the petitioner. According to the petitioner, this happened because a positive gross total income accrued to the petitioner only in the seventh year of production and in the earlier assessment years the petitioner did not have a positive gross total income and, therefore, could not have claimed such a deduction. This had escaped the attention of the tax advisers of the petitioner.

(2.) IT is further contended on behalf of the petitioner that the omission to claim such a deduction in respect of the assessment year 2001 -02 was noticed by the petitioner for the first time while preparing the return for the assessment year 2004 -05. Thereafter, the petitioner revised the Income Tax returns for the assessment years 2002 -03 and 2003 -04. The return for the assessment year 2001 -02 could not be revised as the period prescribed under Section 139(5) of the said Act had already elapsed.

(3.) IN the present case, we find that the petitioner had set out in his application the reason for delay in filing the revision application as being the over -looking by the tax auditor as well as the tax department of the petitioner of the fact that for the relevant year, the petitioner had a positive gross total income and that it had become eligible for deduction under Section 80 -IB for the first time in this year. This, according to us, would constitute sufficient cause for condoning the delay. We say so because we are of the view that the mistake was a bona fide one and the reason given by the petitioner is not a device to cover any ulterior purpose. This can be discerned from the fact that while preparing the return for the assessment year 2004 -05, the assessee learnt that it ought to have claimed deduction for the assessment year 2001 -02 and subsequent years. Insofar as the subsequent years are concerned, i.e., assessment years 2002 -03 and 2003 -04, the petitioner could have filed revised returns. The petitioner did so. However, in respect of the present assessment year, the period for filing a revised return had expired and, therefore, the only alternative left with the petitioner was to file a revision application under Section 264. It is also clear from the application made by the petitioner that this mistake was discovered by the petitioner sometime in November, 2004. The application was made immediately thereafter, i.e., on 25.11.2004. This can be co -related with the fact that the revised returns for the assessment years 2002 -03 and 2003 -04 were also made sometime in the early part of December, 2004 itself.