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TMI Blog1992 (4) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1989-90 was filed on 27-10-1989 but he forgot to enclose the audit report of M/s R L. Rathi Co. C.A. in Form No. 3AA for the purpose of claiming relief under section 32AB of the Income-tax Act, 1961. 2. The Assessing Officer sent an intimation to the assessee under section 143(1)(a) of the Income-tax Act, 1961 rejecting the claim under section 32AB for the reason the assessee failed to comply with the provisions of section 32AB(5) and also the Explanation below to section 2 of section 288 of the Income-tax Act, 1961. 3. The assessee filed an application under section 154 dated 3-3-1990 to rectify the mistakes apparent from the record in the intimation sent under section 143(1)(a) by duly enclosing the audit report in Form 3AA da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income was mandatory and its filing after completion of assessment would not entitle the assessee to the benefit of relief under section 32AB. For this proposition, he relied on the ratio of the Punjab Haryana High Court in the case of CIT v. Jaideep Industries [1989] 180 ITR 81. Further the CIT (Appeals) observed that non-enclosure of audit report along with the return is not treated as defect under section 139(9) and in view of the mandatory provision of section 32AB(5) the principle of equity does not apply. Therefore, he upheld the order of the Assessing Officer under section 154 and dismissed the appeal. 8. At the time of hearing, the learned counsel for the assessee filed a paper compilation and a copy of the order of the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 143(1)(a) and making addition of Rs. 1,35,000 be held erroneous. Further the assessing authority may be directed to verify the claim and allow the same, if found admissible, (2) it be held that the Assessing Officer acted erroneously in rejecting the application for rectification disregarding the circular instructions contained in para 5.17 of the Circular No. 549 issued by the CBDT, and (3) it be held that the return of income filed by the appellant was defective calling for a defect notice under section 139(9) and affording an opportunity to cure the said defect. A copy of the affidavit by Shri Shah Vijaykumar, son of Shri Rupchand Shah working as a Tax consultant dated 15-2-1991 enclosing copy of the audit report in Form No. 3AA and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) also pointed out that non-furnishing of audit report would not come within the purview of section 139(9) so as to treat it as a defective return. He also observed that principles of equity do not come into picture in view of the specific and clear provisions of section 32AB(5) of the Income-tax Act, 1961. 12. In this connection, we would like to point out that section 32AB(5) itself contemplates fulfilment of two conditions, namely, the accounts of the business or profession of the assessee for the previous year relevant for the assessment year for which the deduction is claimed should have been audited by an accountant as defined in Explanation below sub-section (2) of section 288 and the second condition is that the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of accounts were duly audited or not. The crux of the problem is income returned should be in accordance with the audit report. In other words, the income returned should be correct and complete supported by the audit report. The authorities have been persuaded and carried away by the fact that audit report has not been furnished along with the return of income. It is necessary to verify whether the income returned is as per the audit carried out or not. If it is so, the furnishing of audit report even if it is delayed for a reasonable cause could be considered on merits and still the claim of deduction under section 32AB should be decided on appreciation of the reasonable cause shown for the delay or omission to enclose along with the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also has not properly appreciated and the case law relied upon by him could also be distinguished on facts, there is miscarriage of justice. In the facts and circumstances of the case, therefore, the matter is restored to the file of the Assessing Officer by setting aside the order of the CIT (Appeals). It is open to the Assessing Officer to appreciate the evidence and the reasons offered by the assessee for the delay in filing the audit report and also verify and satisfy himself about the fact that the books of accounts have been audited and the income returned is also as per the audit report and pass fresh order in accordance with law after giving the assessee reasonable opportunity of being heard in this regard. 13. In result, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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