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2008 (2) TMI 567 - HC - Income TaxWhether Tribunal is justified in upholding the order passed by the learned Commissioner of Income-tax (Appeals) by holding that the impugned adjustment made by the Assessing Officer was outside the purview of section 143(1)(a) of the Income-tax Act? Special deduction under section 80HHC claimed with false declaration that audit report furnished order u/s 143(1)(a) rejecting claim - Obviously, therefore, it cannot be said that the impugned adjustment made by the Assessing Officer was outside the purview of section 143(1)(a). Admittedly, fresh assessment has been made under section 143(1) (B), consequent upon the revised return having been filed under seclion 139(5), and according to the proviso to section 143(1B), even in such an eventuality, the liability of additional tax does survive, the question as framed is required to be answered against the assessee and in favour of the Revenue.
Issues:
- Dismissal of application under section 154 for rectification of mistake in the assessment order. - Justification of the adjustment made by the Assessing Officer under section 143(1)(a) of the Income-tax Act. - Interpretation of the requirement to file audit report along with the return for claiming deduction under section 80HHC. Issue 1: Dismissal of Application under Section 154: The appeal was filed by the Revenue against the Tribunal's decision affirming the Commissioner (Appeals)'s order setting aside the Assessing Officer's dismissal of the assessee's application under section 154 of the Income-tax Act. The Assessing Officer had dismissed the application as no report required for deduction under section 80HHC was enclosed with the return. The Tribunal framed the substantial question of law regarding the justification of the Assessing Officer's adjustment under section 143(1)(a). Issue 2: Justification of Adjustment under Section 143(1)(a): The Assessing Officer made an adjustment under section 143(1)(a) due to the absence of the required report for deduction under section 80HHC in the return filed by the assessee. The Commissioner (Appeals) held that the filing of the audit report was a procedural requirement and not a basis for the Assessing Officer to make adjustments under section 143(1)(a). The Tribunal upheld this decision, stating that the adjustment was outside the purview of the section as there was no mistake of fact or law apparent on the record. Issue 3: Interpretation of Audit Report Requirement under Section 80HHC: The judgment analyzed various legal precedents to determine the nature of the requirement to file an audit report along with the return for claiming deductions under section 80HHC. The court highlighted that the deduction under section 80HHC is subject to specific conditions, including the submission of the audit report as prescribed. It emphasized that the requirement to furnish the report by a specified date was not merely directory but mandatory, as indicated by legislative amendments. The court also clarified that even if a revised return with the audit report was filed later, the liability for additional tax under section 143(1)(a) remained, as per the proviso to section 143(1B). In conclusion, the court ruled in favor of the Revenue, stating that the adjustment made by the Assessing Officer under section 143(1)(a) was justified, considering the legal and factual circumstances surrounding the filing of the audit report and the revised return. The appeal was allowed, setting aside the orders of the Tribunal and the Commissioner (Appeals), and restoring the decision of the Assessing Officer.
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