1981 (6) TMI 58 - AT - Income Tax

Summary

Issues:
1. Challenge to first appellate order based on non-filing of audit report with return.
2. Interpretation of provisions under s. 12A(b) of the IT Act, 1961 regarding audit report submission.
3. Consideration of audit report by assessing officer for granting concessions under ss. 11 and 12 of the Act.
4. Determination of whether the audit report submission is mandatory or procedural.
5. Application of precedents from Patna High Court and Allahabad High Court to the current case.

Analysis:

The appellant-revenue challenged the first appellate order, contending that the assessment order was set aside due to the non-submission of the audit report along with the return, as required by s. 12A(b) of the IT Act, 1961. The Income Tax Officer (ITO) had noted the absence of the audit report when framing the assessment order for the assessment year 1978-79. The ITO considered the provisions of s. 12A(b) as mandatory, leading to the disallowance of certain concessions under ss. 11 and 12 of the Act.

The first appellate authority (ld. AAC) found a reasonable cause for the delay in filing the audit report and directed the ITO to reconsider the assessment, taking into account the contents of the audit report. The ld. AAC emphasized that the ITO did not consider the audit report during the initial assessment, denying the assessee an opportunity to claim concessions under ss. 11 and 12. Therefore, the assessment was set aside for a fresh consideration based on the audit report.

During the appeal, the appellant-revenue argued that the audit report should have accompanied the return to avail benefits under the IT Act. Conversely, the respondent-assessee contended that the audit report, though filed after the return, was available to the ITO before finalizing the assessment. The respondent argued that s. 12A(b) should be viewed as procedural rather than mandatory, citing decisions from the Patna and Allahabad High Courts.

The Tribunal analyzed the provisions of s. 12A(b) and concluded that the submission of the audit report is an enabling provision rather than a mandatory requirement for filing the return. Relying on precedents from the Patna and Allahabad High Courts, the Tribunal upheld the ld. AAC's decision to set aside the assessment and directed the ITO to conduct a fresh assessment considering the audit report. The Tribunal found no error in the ld. AAC's direction, confirming the dismissal of the Revenue's appeal.