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TMI Blog2018 (5) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 139(9) of the Income Tax Act, 1961? 2) Whether on the facts and circumstances of the case, the Income tax Appellate Tribunal was right in law in holding that the excise duty of Rs. 1,25,44,398/tantamount to income of the appellant for AY 199798?" 2. Brief facts are as under. The appellant is a company registered under the Companies Act and is engaged in manufacturing of excisable goods. For the assessment year 1997-1998, the assessee had filed return of income on 28.11.1997 describing it as a provisional return, declaring total loss of Rs. 24.69 crores (rounded off) along with provisional balance sheet and Profit and Loss account. Since the report was not accompanied by audit report, the Assessing Officer issued a notice dated 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted that the assessee presented the audit report only on 9.3.2000 along with what the assessee described was a revised return which was beyond the time permitted for such purpose. The Tribunal also noted that under proviso to subsection( 9) of section 139, the Assessing Officer would have the power to condone the delay in removing the defects. However, at no stage before the Assessing Officer, before the CIT(Appeals) or before the Tribunal also, any attempt was made by the assessee to seek such a condonation. The Tribunal thus rejected the assessee's appeal on this score. This has given rise to the first question of law. 6. Section 44AB of the Act makes the requirement of compulsory audit in given circumstances mentioned therein. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Firstly, if the Assessing Officer finds any defect in the return, he would notify the same to the assessee granting him time for removing the defect. If the defect is not removed within such time or extended time, the return would be treated as invalid and as a consequence thereof, it would be a situation where the assessee has not filed any return at all. Under the proviso to subsection( 9), the Assessing Officer has discretion to condone the delay in rectifying the defect, if the same is done before the assessment is made. Explanation to subsection( 9) lists various conditions for a valid return. Clause (bb) thereof reads as under : "(bb) the return is accompanied by the report of the audit referred to in section 44AB, or, where the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e audit as referred to in section 44AB of the Act. This was clearly not done. The Assessing Officer was within his rights to raise this defect in the return and seek its rectification. The assessee failed to rectify or even failed to make out grounds why the same was not done earlier. Discretion of the Assessing Officer under the proviso to subsection( 9) to condone delay is wide enough and could be exercised even without a formal application by the assessee for such purpose. However, the onus would be on the assessee to atleast lay down sufficient grounds before the Assessing Officer to enable him to exercise such discretion. The record shows that the assessee made no such attempt. The Tribunal committed no error in confirming the view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, we may record that the factum of outside book purchases of Rs. 5.01 crores is not in dispute before us. As noted, the Tribunal had deleted the excise duty component from the estimate of the assessee's general profit. Counsel for the assessee however, strongly opposed the addition of entire excise duty component by way of assessee's additional undisclosed income. 14. Two things are fairly well settled. Firstly, even in case of clandestine sales or purchases of goods, the Courts approve not entire amount necessarily but the profit element embedded therein unless ofcourse, it can be shown that the sales or purchases were totally bogus and therefore, would have the propensity to suppress the assessee's disclosed income. Second i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment in unaccounted transactions? [C] Whether the Appellate Tribunal is right in law and on facts in directing the assessing officer to reduce the addition of Rs. 1,44,50,000/by Rs. 87,77,934/being ½ of Rs. 1,77,55,864/on the ground that profit earned on sales consideration would have been routed in the business for making unaccounted purchases and thereby reducing the addition made by the assessing officer in respect of investment in the peak credits, invoking provisions of Sec. 69 of the Act?" 16. Question no.1 is part of the assessee's question no.1 above, which we have already examined and upheld the view of the Tribunal. Revenue however, contends that the Tribunal committed an error in deleting the excise duty compo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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