1981 (6) TMI 64 - AT - Income Tax

Summary

Issues:
- Assessment set aside by AAC
- Compliance with sections 11 and 12
- Registration under section 12A
- Opportunity to file audited accounts
- Applicability of section 12A
- Proper computation of income

Analysis:
The appeals were filed by the Revenue against the order of the Appellate Asstt. CIT (AAC) directing the Income Tax Officer (ITO) to reframe the assessment after providing the assessee an opportunity to file audited accounts. The ITO had completed the assessment without compliance with sections 11 and 12, noting that the total receipts exceeded Rs. 25,000 and no audit report was submitted as required under section 12A(b). The assessee argued before the AAC that the trust was registered under section 12A and requested an opportunity to file audited statements. The AAC set aside the assessment, considering the lack of opportunity given by the ITO and the registration under section 12A.

The Revenue contended that the AAC's direction to allow the filing of audited statements at the appellate stage was unjustified, emphasizing the mandatory nature of section 12A provisions. The Revenue argued that the AAC's order was unsustainable as the audited statements should have been filed with the return. However, the assessee's counsel argued that the income was below Rs. 25,000 when considering outgoing expenses, challenging the ITO's computation. The counsel supported the AAC's decision, stating that proper instructions were given for accurate assessment and computation.

Upon review, the Tribunal found merit in the assessee's argument that the ITO did not provide adequate opportunity to submit audited statements in the prescribed form. The Tribunal also noted the ITO's error in considering only gross receipts without accounting for outgoing expenses. Consequently, the Tribunal upheld the AAC's order, emphasizing the fairness of allowing the assessee to present the audited statements and the proper computation of income. The Tribunal found no basis to overturn the AAC's decision, leading to the dismissal of all appeals by the Revenue.

In conclusion, the Tribunal upheld the AAC's decision to set aside the assessment and allow the assessee to file audited statements, considering the registration under section 12A and the proper computation of income. The Tribunal's ruling favored the assessee's right to a fair assessment process and compliance with relevant provisions, leading to the dismissal of the Revenue's appeals.