1987 (4) TMI 127 - AT - Income Tax

Summary

Issues:
Departmental appeal against grant of s. 80J relief despite late filing of audit report under s. 80J(6A).

Analysis:
The case involved a departmental appeal against the grant of s. 80J relief despite the late filing of the audit report required under s. 80J(6A). The assessee, a registered firm engaged in offset printing business, claimed a relief of Rs. 2,62,530 for the assessment year 1981-82. However, due to an amendment in s. 80J by the Finance Act, 1980, the correct relief was determined by the ITO at Rs. 77,497. The ITO denied the relief as the audit report was not filed along with the return, even though the audit reports were prepared and signed before the assessment was completed. The CIT(A) held that the requirement to file the audit report along with the return was directory, not mandatory, and the assessee should not be denied the benefit of s. 80J relief solely for this reason.

The Department argued that there was a time limit prescribed in s. 80J(6A) for filing the audit report and that it was impermissible to file it after the assessment was completed. The Departmental Representative cited relevant decisions and provisions, emphasizing the importance of filing the audit report along with the return. However, the Tribunal referred to precedents such as ITO vs. Manav Hitkari Trust and highlighted that the requirement for filing the audit report along with the return should not entirely deprive the assessee of relief if otherwise admissible. The Tribunal also considered the nature of the audit report filing requirement under s. 80J(6A) and the implications of non-compliance.

The assessee contended that the direction to file the audit report along with the return was directory, not mandatory. They cited decisions like Coromandal Steel Products vs. Eighth ITO and Mahalaxmi Rice Factory vs. ITO to support their argument. The Tribunal agreed with the assessee's position, emphasizing that the appeal proceedings were a continuation of the original proceedings and the audit report should be considered even if filed after the assessment was completed. The Tribunal concluded that the provision to file the audit report along with the return under s. 80J(6A) was directory, not mandatory, and the ITO should have given the assessee an opportunity to rectify the defect. Ultimately, the Tribunal upheld the CIT(A)'s order, confirming that the assessee was entitled to the correctly computed relief of s. 80J by the ITO.

In conclusion, the Tribunal found the Department's appeal to be without merit and dismissed it, affirming the decision that the provision regarding the audit report filing under s. 80J(6A) was directory and not mandatory, and the assessee was entitled to the relief granted by the ITO.