2009 (1) TMI 260 - HC - Income Tax

Industrial Undertakings exemption under section 80IA Audit Report held that - Sub-section (7) of section 80-IA of the Act also does not cast any obligation on the assessee that the return must be accompanied by the audit report. There appears to be proper reasoning as to why in all cases it cannot be accompanied by audit report. For meeting the practical difficulties of the assessee it is not necessary that in all cases it must be accompanied by the audit report.

Summary

Issues:
- Appeal by Revenue under section 260A of the Income-tax Act, 1961 against the order of the Income-tax Appellate Tribunal for the assessment year 2003-04.
- Reliance on judgments of Calcutta High Court and Punjab and Haryana High Court regarding the filing of audit reports.
- Interpretation of sub-section (7) of section 80-IA of the Act regarding the obligation to submit audit reports with returns.

Analysis:
1. The appeal before the Karnataka High Court stemmed from a decision by the Income-tax Appellate Tribunal Bangalore Bench concerning the assessment year 2003-04 under the Income-tax Act, 1961. The Tribunal's order was challenged by the Revenue under section 260A of the Act.

2. The Tribunal's order referenced two key judgments from the Calcutta High Court and the Punjab and Haryana High Court regarding the filing of audit reports. The Calcutta High Court emphasized that the Assessing Officer should allow time for filing the audit report, and relief should not be denied solely on the basis of non-submission at the initial stage. Similarly, the Punjab and Haryana High Court held that audit reports could be submitted even at the appellate stage, indicating flexibility in the submission process.

3. Contrary to the Tribunal's observation that the audit report was filed before the Assessing Officer, the High Court noted that it was actually submitted at the appellate stage. Despite this discrepancy, the Court highlighted that sub-section (7) of section 80-IA of the Act does not mandate the audit report to accompany the return. The Court recognized the practical challenges faced by taxpayers and acknowledged that there are valid reasons why audit reports may not always be submitted concurrently with returns.

4. Based on the above analysis, the High Court concluded that no substantial question of law arose in the appeal, leading to the dismissal of the appeal by the Revenue. The judgment underscored the importance of considering practical difficulties faced by taxpayers and the absence of a strict requirement for audit reports to be filed simultaneously with returns under the relevant provisions of the Income-tax Act.