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TMI Blog2022 (2) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... uction under section 80IA of the Act. Based on this factual position, we allow both appeals of the assessee. The assessing officer is directed to allow deduction under section 80IA for assessment year 2010-11 and for assessment year 2012-13.Since, we have adjudicated both these appeals taking into account the peculiar facts of the assessee`s case, therefore it is made clear that instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year. - Decided in favour of assessee. - ITA Nos. 405 And 406/SRT/2019 - - - Dated:- 24-1-2022 - Shri Pawan Singh, JM And Dr. A.L.Saini, AM For the Assessee : Shri Rasesh Shah, CA For the Respondent : Shri Deependra Kumar, Sr. DR ORDER PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned two appeals filed by the assessee, pertaining to assessment years 2010-11 and 2012-13, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals)-1, Surat [ the ld. CIT(A) in short] dated 17.06.2019,which in turn arise out of separate assessment orders passed by the Assessing Officer under section 143(3) r.w.s 147 of the Income Tax Act, 1961 (hereinafter refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fresh Income Tax Return, along-with Form 10CCB, dated 25.04.2017. In this Income Tax Return and computation it is seen that, the Gross Total Income is ₹ 72,61,254/- (same as original Income Tax Return) and against it assessee has claimed deduction under section 80IA of the Act to the tune of ₹ 2,31,016/-, thereby offering total income of ₹ 70,30,238/- (₹ 72,61,254-₹ 2,31,016). Therefore, ld assessing officer noticed that assessee on its own has reduced its deduction under section 80IA by ₹ 8.69 lacs. The assessing officer in assessment u/s 143(3) r.w.s. 147 did not allow this revised deduction claimed u/s 80IA at ₹ 2,31,016/-, on the ground that, the audit report in Form 10CCB was not filed as prescribed u/s 80IA(7) of the Act. 5. Aggrieved, the issue was taken up before the first appellate authority for relief. Before the CIT (A), it was contended by the assessee that for the claim of deduction u/s 80IA of the Act was genuine and it was also argued that AO is bound to allow correct deduction even if assessee claims incorrect deduction. However, ld CIT(A) rejected the contention of the assessee and confirmed the action of the assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for deduction under section 80IA of the Act. The audit report may be filed at the time of making the assessment. The ld Counsel submits that accounts of the assessee has been audited and subject to Tax Audit Report. The books of accounts has not been rejected by AO, hence assessee is entitle for deduction and for that ld Counsel relied on the judgment of Hon'ble Gujarat High Court in the Case of Zenith Processing Mills vs. CIT (1996) 219 ITR 721 (Gujarat) wherein it was held as follows: From a perusal of sub-section (6A) of section 80J, it is apparent that compliance with two things is necessary. The first requirement is that the statement of accounts for the previous year relevant to the assessment year for which deduction is claimed must have been audited by an accountant and the second part is that the assessee must furnish along with his return of income the report of such audit in the prescribed form duly signed and verified by such accountant. It can be stated without fear of contradiction that the former is the requirement which furnishes substantial foundation for claiming allowance and the latter is the requirement of furnishing proof that foundation for claimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already made without affording opportunity to do so. It may be noted that in a given case, the assessee's return having a claim of deduction under section 80J may be accepted by the ITO without holding an inquiry, though it may not have been accompanied with proof of accounts being audited in the manner prescribed. The question of furnishing proof of such audited accounts in the prescribed form at a later stage arises only when the matter is being actively considered for disallowance by the concerned authority. If the assessee does not offer to furnish proof even at the stage when it is pointed out to him that requirements of law are not fulfilled to sustain the claim made by him and he fails to fulfil the requirements of law at that stage, it can be said that the assessee had failed to rectify the defect at the earliest opportunity offered to him. It is an inherent part of section 143(3) that where the Assessing Officer is not inclined to accept the return submitted by the assessee and if he wants to modify the assessment from the return a show-cause notice is required to be given to the assessee. Giving of this opportunity will include opportunity to erase procedural de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y file the return in time, but at that stage, for reasons beyond his control, the audit report is not ready, he files the return in time but without its being accompanied by the auditor's report while another assessee who is not prompt enough may not file the return at the first opportunity. In such a contingency, a prompt assessee who files the return in time would stand to suffer only because the auditors' report has not physically accompanied the return while another assessee who waits till the end of the expiry of the period and files the return with the report will stand to gain, as he would get the benefit of section 80J(1) while the assessee who files the return at the first opportunity would stand to suffer though, in both the cases, at the time when the assessments are framed, the audited reports are made available by both the assessees to the ITO. This would result in absurdity. Hence, the Tribunal was right when it took the view that the second part of the provision regarding furnishing of the report of the auditor along with the return was not a mandatory provision and it requires substantial compliance in the sense that it should be made available to the ITO be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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