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Issues:
1. Defective income tax returns filed by petitioners. 2. Compliance with provisions of section 139 of the Income-tax Act, 1961. 3. Validity of impugned orders passed by the Assessing Officer. 4. Requirement of audited profit and loss account. 5. Completion of assessment proceedings by the Assessing Officer. Analysis: The judgment by the High Court of Allahabad addressed two writ petitions concerning defective income tax returns filed by the petitioners. In the first case, the petitioner-company declared a substantial loss for the assessment year but failed to comply with certain provisions of the Income-tax Act, leading the Assessing Officer to deem the return as invalid. The court noted that the petitioner's submission of a tentative profit and loss account did not meet the requirements of the Act, rendering the return defective. The Assessing Officer's decision to treat the return as non est was upheld, emphasizing the need for compliance with statutory provisions. In the second case, the U. P. State Sugar Corporation Ltd. declared a significant loss but also failed to fulfill the complete requirements of section 139(9)(e) of the Income-tax Act. Despite submitting an audit report, the petitioner did not provide a complete audited profit and loss account, leading to the Assessing Officer deeming the report invalid. The court acknowledged the petitioner's argument that the statutory audit had not been completed, but emphasized the necessity of meeting the Act's requirements for filing returns. The court considered the contentions of both parties, with the petitioners arguing that the audit report and profit and loss account submitted should have been accepted, while the respondents supported the Assessing Officer's decision to deem the returns defective. The court agreed that the returns were indeed defective due to the provisional nature of the accounts submitted by the petitioners, affirming the Assessing Officer's stance. However, the court held that the Assessing Officer should have proceeded to complete the assessment proceedings in accordance with the law after deeming the returns defective. It was emphasized that whether under sections 142, 144, or 148 of the Act, the assessment proceedings should involve giving the petitioners an opportunity to be heard and considering the materials provided. The court directed the Assessing Officers to complete the assessment proceedings promptly, considering the audit reports prepared by the Government auditors. In conclusion, both writ petitions were allowed, and the court issued directions for the completion of assessment proceedings in accordance with the law, emphasizing the importance of due process and consideration of all relevant materials.
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