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Issues Involved:
1. Whether the CIT(A) erred in not allowing the deduction claimed by the assessee under Section 32AB due to the absence of an audit report in Form No. 3AA with the original return. Detailed Analysis: Issue 1: Non-Allowance of Deduction under Section 32AB Facts: - The assessee, engaged in the business of transportation of tobacco and processing, filed a return declaring total income at Rs. 12,19,770 on 21st Dec., 1989. - The assessee made a deposit of Rs. 1,36,000 with IDBI and claimed a deduction under Section 32AB. - The necessary audit report in Form No. 3AA was not annexed with the original return but was filed later with a revised return. Lower Authorities' Decision: - The Assessing Officer (AO) rejected the claim based on the decision of the Punjab & Haryana High Court in CIT vs. Jaydeep Industries, which held that the requirement of filing an audit report along with the return is mandatory. - The CIT(A) upheld the AO's decision, emphasizing that the language of Section 32AB(5) is clear and unambiguous, requiring the audit report to be filed along with the return. Assessee's Argument: - The audit report was obtained before the original return was filed but was inadvertently not attached. - The revised return, filed before the completion of the assessment, included the audit report. - Various judicial precedents were cited to argue that the filing of the audit report during assessment proceedings should be considered substantial compliance. Tribunal's Analysis: - The Tribunal examined the relevant provisions of Section 32AB(5), which mandates that the audit report must be furnished along with the return. - The Tribunal noted that the Gujarat High Court in CIT vs. Gujarat Oil & Allied Industries held that while auditing of accounts is mandatory, the filing of the audit report along with the return is directory. - The Tribunal also referred to several cases where the filing of the audit report during assessment proceedings was deemed sufficient compliance. Conclusion: - The Tribunal found that the assessee had its accounts audited before filing the original return and subsequently filed the audit report with the revised return. - Given that the revised return is a valid return under Section 139(5), the Tribunal held that the assessee complied with the conditions of Section 32AB(5). - The Tribunal directed the AO to allow the deduction claimed under Section 32AB for the deposit made with IDBI. Final Judgment: - The appeal was allowed, and the AO was directed to grant the deduction of Rs. 1,36,000 under Section 32AB.
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