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TMI Blog2000 (6) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee was rejected by the Assessing Officer on the ground that there was no mention of filing of audit certificate along with the return and the claim of the assessee that the same was duly mentioned in Part V of the return is without any basis. The Assessing Officer, therefore, rejected the application filed by the assessee. Against this order of the Assessing Officer under section 154, assessee preferred appeal before the CIT(A). 3. The CIT(A), while dismissing the appeal, made following arguments: "The facts and circumstances have been considered and the Income tax records have been examined. After careful consideration, I am unable to agree with the assessee. To decide the issue following 3 questions have to be answered and all the three questions are highly debatable:-- 1. Whether audit report was enclosed with the return of income or not, 2. If enclosed what should be the quantum of deduction under section 80HHC, 3. If not enclosed, can Assessing Officer disallow the claim under section 80HHC at the time of passing the order under section 143(1)(a). On examining of the return of income, it is noticed that as per the acknowledgement issued by the I.T. Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was justified in not making the tax demand. The lesser claim certified by the auditor is on account of non-remittance of export proceeds. In my view, assessee was hoping that by the time the dispute would be sorted out in appeal etc., he would realise entire export proceeds and would be entitled for deduction under section 80HHC to the extent claimed in the return of income. The facts have been considered and in my view, the audit report was not filed. For arriving at this decision, I have gone through the case records, the return of income and all other circumstances, but the fact remains that the issue is debatable and two views are possible on the question whether the audit report was filed or not? It is my personal view and I am fully convinced that report was not filed, but another view is also possible. The issue is highly debatable and in my view cannot be dealt by way of a rectification application. Presuming that report was filed with the return of income, the question would be regarding quantum of deduction under section 80HHC. One view would be that entire deduction as claimed in the return of income should be allowed. Another possible view is, which in my view is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a certificate as required under section 80HHC(4) was duly filed along with the return, which was mentioned in Part V. The cuttings and over-writings in Part V of the return are made after filing of the return. It was also submitted that the Acknowledgement Slip issued by the Receipt Clerk is a testimony of this fact. It was submitted that at the inner page of the return, DCIT, Special Range, Cuttack has stamped, which reads: "Processed under section 143(1)(a) of the IT. Act, 1961 on a total income/loss of Rs. 1,59,029." It was also submitted that the assessment records were transferred from Jaipur to Cuttack and, back to Jaipur and, therefore, it is quite possible that the audit report might have been detached and lost somewhere. The ld. A.R. further argues that filing of certificate from the Auditor under section 80HHC(4) is not mandatory but directory in nature. It was argued that while moving an application under section 154, assessee filed further certificate from the Auditors and as per CBDT Circular Nos. 669 689, the Assessing Officer should have accepted the certificate and rectified the intimation already sent by him. By not accepting this rectification application, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 143(1)(a). Reference made to the decision of the Allahabad High Court in the case of Pradeep Kumar Har Saran Lal v. Assessing Officer [1998] 229 ITR 46. Lastly, it was submitted that the conduct of the assessee clearly proves the fact that it is a 100% export unit claiming deduction under section 80HHC in earlier years and evening the computation of total income, such deductions were claimed. The ld. A.R. strongly opposed the enlarging the scope of application under section 154 by the CIT(A) on the ground that quantum would have been worked out much smaller than what was claimed in the computation sheet or alleged certificate. It was also submitted that how a person, who made exports, earned foreign exchange, claimed deduction in the computation of total income under section 80HHC, would not file the certificate, though special audit report under section 44AB enclosed along with the return. It was, therefore, finally submitted that the order passed by the CIT(A) is against the facts and circumstances of the case and highly illegal and unjustified. 7. The ld. D/R, on the other hand, strongly relied upon the orders passed by the Assessing Officer. and the CIT(A) and further argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 143(1)(a) does not provide for any notice being given to the assessee, nor does it provide for any hearing being given to the assessee before disallowing the claim made by him." S.R.F. Charitable Trust v. Union of India [1992] 193 ITR 95 (Delhi) and Kamal Textiles v. ITO [1991] 189 ITR 339 (MP) followed. Tanna Exports v. M.G. Kamat, Asstt. CIT [1993] 202 ITR 219 (Bom.) held as under: "Recalculation of adjustment under section 80HHC of the I.T. Act is not permissible under section 43(l)(a)." Modern Fibotex India Ltd. v. Dy. CIT [1995] 212 ITR 496 (Cal.) at page 497 it was held as under: "The power under section 143(1)(a) though described as a prima facie determination is not a temporary one in the sense that an interlocutory order is passed which is subject to a final order on further scrutiny. The intimation as far as the Assessing Officer is concerned is final and it entails immediate and drastic consequences unless corrected or revised by a higher authority under section 154 or 264, as the case may be. The exercise of power under section 143(1)(a) of the Act is, therefore, required to be scrutinised carefully and kept strictly within the bounds of the statute, any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JKS Employees Welfare Fund v. ITO [1993] 199 ITR 765 at page 769 Rajasthan High Court had held that whether the provisions of a particular section are applicable or not, will not be covered under this section. It was held at page 770 that "If any different interpretation is sought to be taken on which there could be two views or the information in respect thereof is not available in the return, then no such disallowance can be made." This judgment of Jurisdictional High Court is binding on the Officers working in Rajasthan. Mrs. Sudha Sharma v. ITO [1993] 44 ITD 351 (Delhi). At page 352, it had held as under: "Though under sub-section (4) of section 80HHC furnishing of a certificate from an accountant alongwith the return of income is a condition precedent for allowance of the claim on account of exports, the stringency and mandatory nature provided under that section has to be viewed in the light of the purpose intended to be served. The mere fact that it is a statutory condition, does not matter one way or the other. It would be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they are intended to serve. Some of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted the unsigned and unverified return filed by the assessee and passed an assessment order on that basis, and whether the assessee should have been given an opportunity under section 139(9) to remove the defects. CIT v. Rai Bahadur Bissesswarlal Motilal Malwasie Trust [1992] 195 ITR 825, Calcutta High Court, at page 826, it was held that defects specified in sub-section (9) of section 139 are illustrative and not exhaustive. If an audit report was not filed alongwith the return, the exemption as available to such trust under sections 11 and 12 may not be denied merely on account of delay in furnishing the audit report. U.P. Rajya Vidyut Utpadan Nigam Ltd. v. Dy. CIT [1993] 202 ITR 93 Allahabad High Court. At page 94 it was held as under: "That the return filed by the petitioner was defective and hence invalid since the profit and loss account submitted along with the return was provisional in nature." 9-10. The appeallant actually filed an Audit Report under section 80HHC(4) along with the return as stands proved from direct and circumstantial evidence. In the said Audit Report under section 80HHC(4), the Auditors have clearly clarified that the claim under section 80HHC(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod has expired before the assessee received or brought into India the sale proceeds, in that event, it is for the assessing authority to place the same before the Chief Commissioner or Commissioner if the, assessee proposes to satisfy that he was unable to do so for reasons beyond his control. Inasmuch as the assessing authority having not been invested with the power granted under sub section (2)(a) for allowing further period, he can neither refuse nor deal with the same. Therefore, it is imperative on its part to place the same before the Chief Commissioner or Commissioner, as the case may be. The assessee may also bring the fact to the notice of the Chief Commissioner or Commissioner, but in that event, no time limit can be applied except that the claim is to be made in the return to be filed." In view of the above Allahabad High Court judgment also the, Assessing Officer was legally not justified in adding Rs. 1,07,33,971 claim as exempt under section 80HHC as a prima facie adjustment under section 143(1)(a) of the Income-tax Act. At any rate, the Audit Report under section 80HHC(4) could also be filed later on, which was filed along with the application under section 154 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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