1990 (11) TMI 196 - AT - Income Tax

Summary

Issues:
1. Whether the failure to file prescribed certificates along with the return makes the deduction claim invalid.
2. Whether the requirement of a report in prescribed forms by a qualified Chartered Accountant is mandatory for allowing deductions.
3. Whether the failure to submit the certificate along with the return should result in the forfeiture of the claim.

Analysis:
1. The case involved an appeal against the order of the CIT under section 263 regarding the deduction claims made under sections 80H and 80-I by an HUF engaged in the export business of brasswares. The CIT considered the absence of prescribed certificates, Forms 10C and 10CCB, fatal to the deduction claim and directed the income-tax authority to withdraw the relief granted by the ITO. The CIT did not admit a certificate obtained during the hearing. The assessee argued that the prescribed certificate was unnecessary as the accounts were audited by qualified CAs, and the required information was implied in the audited accounts. The tribunal held that the requirement of a prescribed certificate is dispensable when accounts are statutorily audited, and compliance was met in this case, allowing the deduction claim.

2. The tribunal emphasized that the purpose of the prescribed certificate by a qualified Chartered Accountant is to ensure the accuracy of the claim based on audited accounts. Referring to a Kerala High Court decision, it was noted that the failure to file the certificate along with the return should not result in the forfeiture of the claim if the certificate is later produced and meets the required standards. The tribunal concluded that the certificate, though not submitted with the return, should be accepted if validly procured, especially when the purpose of the requirement has been fulfilled. The tribunal directed the ITO to allow the assessee to produce the certificate and decide on the claim accordingly.

3. In modifying the order under section 263, the tribunal allowed the appeal, emphasizing that the assessee should not be denied the deduction solely due to the absence of the certificate at the time of filing the return. The tribunal highlighted that the essence of the requirement was fulfilled by obtaining the certificate, even if not submitted initially, and stressed the importance of allowing the assessee an opportunity to provide the certificate for consideration. The tribunal held that the failure to file the certificate along with the return should not automatically invalidate the deduction claim, especially when compliance with the prescribed conditions is subsequently met.