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TMI Blog2002 (10) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... s liable to be quashed. The Assessing Officer is directed to consider the application and hear the petitioner - - - - - Dated:- 22-10-2002 - Judge(s) : ARUN MISHRA. JUDGMENT Arun Mishra J.- In this writ petition the petitioner assails the order P10, dated December 23, 1997, communicated on August 16, 2001, passed under section 264 of the Income-tax Act, 1961, for the accounting year 1993-94 dismissing the revision filed by the petitioner against the order P 7 passed under section 139(9) of the Income-tax Act, 1961 (hereinafter referred to as "the Act, 1961"). The facts shorn of unnecessary details indicate that the petitioner is a Government company registered under the Indian Companies Act, 1956 (hereinafter referred to as "the Act, 1956") and formed by the State Government for the purpose of development of agricultural activities for providing various agricultural inputs at reasonable rates to the farmers by manufacture and also by way of trading in various items connected with agriculture and village development. The petitioner submitted its return of income for the accounting year 1993-94 in the assessment year 1994-95 on November 30, 1994, declaring loss of Rs. 5,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct in the return of income. The petitioner had pointed out the inability to submit the report as required as per reply P 6 for the reasons beyond its control against the intimation P 7 refusing to extend time and treating the return as invalid, the revision preferred has been wrongly dismissed. Prior to hearing of the revision, the audit report, dated March 2, 1996, was filed. The petitioner submitted the said audit report before the Deputy Commissioner of Income-tax along with the letter dated November 14, 1996. As per the audited accounts finally, the loss of the petitioner worked out to Rs. 29,66,800 as against the returned loss of Rs. 5,03,250. The Deputy Commissioner of Income-tax was requested that loss may be computed as per the audit report and revised position of the loss may be substituted as per the prayer made in letter P 9. The revision petition was heard by the Commissioner of Income-tax on November 22,1996, it was pointed out that the audit report under section 44AB has been filed before the Assessing Officer. A return has been filed by the petitioner contending that the Assessing Officer issued a notice under section 139(9) of the Act, 1961, on June 15, 1995, to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing for the respondents, contended that the orders P 7 and P 10 are discretionary. Opportunity was given to rectify the defects in the return. There was failure to submit the audit report. Hence, the orders are proper and remedy of filing an appeal against the ultimate assessment order which may be passed is available. Hence, no interference be made in the writ jurisdiction of this court. The facts are not disputed in the instant case that the petitioner is a Government company owned by the State Government. This is also not in dispute that as per article 17 of the memorandum of association and by virtue of the provisions of sections 224 to 233 read with section 619 of the Act, 1956, the statutory auditor has to be appointed by the Comptroller and Auditor General of India for the block assessment years 1992-93 to 1994-95. The appointment was made, vide letter P 3 on January 31, 1995, by the Comptroller and Auditor-General of India. This fact is also clear that the audit was completed on March 2, 1996, and the report was finalized as required by section 44AB of the Act, 1961, on May 9, 1996. The return was filed by the petitioner on November 30, 1994. Thus, it was not possible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal has opined that the matter has to be examined in the peculiar facts and circumstances of each case. No separate time-limit for furnishing the audit report under section 44AB has been prescribed in the Act, 1961, for Government/non-Government organisations in law and in the facts and circumstances of the present case the assessee had ample time to make requisite compliance in terms of section 44AB of the Act, 1961, in accordance with law before the order P 7 under section 139(9) was passed by the Assessing Officer. Even if the statutory audit was to take some time, it was possible for the assessee to take independent steps for audit report under section 44AB as required under the Act, 1961, and the revision petitions have been dismissed. The main question for consideration in the instant case is whether the respondents erred in law in not extending the time to file the audit report as mandated under section 44AB. Section 44AB of the Act, 1961, no doubt mandates audit of accounts of certain persons carrying on business or profession. Every person, carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year. (4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2, shall, if the total income in respect of which he is assessable as a representative assessee (the total income for this purpose being computed under this Act without giving effect to the provisions of sections 11 and 12) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1). (4B) The chief executive officer (whether such chief executive officer is known as secretary or by any other designation) of every political party shall, if the total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er period which, on an application made in this behalf, the Assessing Officer may, in his discretion, allow, and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return. The proviso to sub-section (9) of section 139 makes it clear that the Assessing Officer may condone the delay before the assessment is made and treat the return as a valid return and for that the assessee must rectify the defect after the expiry of the said period of fifteen days or the further period allowed. The Explanation to sub-section (9) of section 139 of the Act, 1961, makes it clear that for the purpose of the sub-section, a return of income shall be regarded as defective unless the conditions enumerated in the Explanation are fulfilled. Clause (bb) requires as one of the conditions that the return is accompanied by the report of the audit referred to in section 44AB, or, where the report has been furnished prior to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. Section 139(9) provides that when the return has been filed on or before the due date if the Assessing Officer considers that the return of income is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within the period of 15 days from the date of such intimation or within such other further period which is allowed in his discretion by the Assessing Officer on an application made in this behalf. The assessee has to rectify the defect within fifteen days or the further period allowed by the Assessing Officer. The effect of non-compliance with the direction to remove the defect is that the return shall be treated as an invalid return notwithstanding anything contained in any other provisions of the Act and the provisions of the Act shall apply as if the assessee had failed to furnish the return. The proviso gives the power to the assessing authority to condone delay in case the defect is rectified after the said period of 15 days or the further period allowed but before the assessment is made. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income-tax dismissed it as per order P 10. In the instant case before the Commissioner of Income-tax the order of refusal to extend the time as per P 7 was questioned. As the audit of the petitioner which is the State Government undertaking is required to be done as per section 619(2) of the Act of 1956 by the statutory auditor appointed by the Comptroller and Auditor-General of India. The Comptroller and Auditor-General appointed the auditor after the due date for filing the return was over on November 30, 1994, in my opinion, it would have been proper for the Assessing Officer to have extended the time. The petitioner, being a State Government undertaking and as per article 17 of the memorandum of association and by application of sections 224 and 233 and section 619(3) of Act of 1956 is bound to have the statutory audit. It is not a case where for the delay in appointment of the auditor blame could be fastened on the petitioner. The delay was on the part of the Comptroller and Auditor-General of India. The appointment of the auditor was made on January 30, 1995, as per letter P 3. Thereafter, the auditors took the time in auditing and the report could be finalised as required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id and were quashed. The Assessing Officer was directed to consider the petitioner's application. In Malik Damsaz Khan v. CIT [1947] 15 ITR 445, the Privy Council considered the question of incomplete return. Filing of incomplete return under section 22(3)/(4), 28 and section 30 of the Indian Income-tax Act, 1922, before the amendment in 1939. The defective return was filed which did not clarify the requirement of note 5(b) of the form. The Assessing Officer made the assessment under section 23(3). On appeal by the assessee the penalty was also imposed by the Assessing Officer. The Privy Council held that it was clearly incumbent on the Income-tax Officer in the circumstances of the case to accept the return as a valid return and proceed to assess the assessee under section 23(3). Though the facts are different the fact remains that the circumstances of the case have to be taken into consideration by the Assessing Officer while making the assessment and deciding on the validity of a return is the law laid down by the Privy Council. In my opinion, the facts and circumstances of the case and even otherwise as per the statutory provision of section 139(9) as the assessment has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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