1999 (9) TMI 113 - AT - Income Tax

Summary

Issues:
- Validity of deduction under section 80HHC based on unsigned audit report
- Interpretation of Circulars 581, 669, and 689 regarding the filing of evidence for deduction claims
- Assessing Officer's refusal of rectification under section 154 based on unsigned audit report

Analysis:

1. The case involved a dispute over the validity of a deduction under section 80HHC based on an unsigned audit report submitted by the assessee. The Assessing Officer disallowed the deduction, citing non-compliance with the statutory requirement of filing a signed audit report. The CIT(A) disagreed, considering the unsigned report as valid but defective, eligible for rectification under section 154.

2. The Revenue appealed the CIT(A)'s decision, arguing that the unsigned audit report should not be accepted as valid based on Circular No. 581 dated 28-9-1990. The Revenue contended that subsequent submission of a signed report should not rectify the initial non-compliance.

3. The ITAT considered Circulars 581, 669, and 689 to interpret the requirements for deduction claims. Circular 581 indicated that failure to provide evidence along with the return could lead to prima facie disallowance under section 143(1)(a), with no subsequent rectification allowed. However, Circular 669 introduced exceptions for rectification in specific cases, broadening the scope for rectification under section 154.

4. The ITAT concluded that the Assessing Officer's refusal to rectify based on the unsigned audit report was unjustified. Considering Circulars 669 and 689, the ITAT held that subsequent submission of evidence should allow for rectification under section 154. Therefore, the ITAT dismissed the Revenue's appeal and upheld the CIT(A)'s decision to allow rectification and consider the signed audit report for the deduction under section 80HHC.