Law: Income Tax Act, 1961

Section: 280C

Section 280C, read with sections 154 and 280W, of the Income-tax Act, 1961 - Annuity deposit - Assessment year 1967-68 - ITO initially allowed benefit of annuity deposit made by assessee after prescribed date but subsequently withdrew it by making rectification of his order under section 154 - Tribunal set aside rectification order holding that since ITO had discretion to extend time for making said deposit he should be deemed to have exercised his discretion in matter of condoning delay - Whether since assessee had not filed an application before prescribed time for condonation of delay, ITO could not have exercised his discretion to condone delay - Held, yes - Whether therefore, Tribunal was not justified in setting aside rectification order - Held, yes - Conditions were fulfilled Tribunal was not justified in reaching inference that ITO had exercised his discretion in condoning delay - Held, yes FACTS The assessee was liable to pay annuity deposit for the assessment year 1967-68, admittedly before 31-3-1967. However, the same was paid on 3-4-1967 i.e., with a delay of three days. The ITO allowed deduction on that count of annuity deposit from the payable income of the assessee. However, later on, the ITO corrected the order under section 154 since the conditions precedent for condoning delay in making payment of the annuity deposit were not satisfied with the result that the allowance made on account of annuity deposit was withdrawn. On appeal, the AAC confirmed the order of the ITO. Before the Tribunal, it was conceded on behalf of the assessee that no application in the prescribed form as required by clause 4 of the Annuity Deposit Scheme, 1966, was made within the prescribed period. It was also conceded that no previous approval of the IAC as required under second proviso to clause 4 was obtained by the ITO. The Tribunal, however, was of the opinion that since the ITO had a discretion under the proviso to section 280C(2) to extend the time and since the ITO concerned had noted that the deposit was paid after the prescribed date, it should be deemed that he had exercised his discretion in the matter of condoning the delay. The Tribunal further held that…

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