9911796707
TMI Blog1984 (1) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... red firms on trust for certain objects, which were patently non-charitable and for certain objects, which were stated to be charitable. This deed was further modified by a further deed dated 27-6-1946. For the assessment year under consideration, it was claimed before the ITO that the income derived from certain sources was exempt under section 11. The balance of the income was admittedly to be taxable. Since the declared income of the assessee without giving effect to the provisions of section 11 exceeded Rs. 25,000, the accounts of the trust were required to be audited under section 12A(b) of the Act and the trustees were expected to have furnished along with the return of income for the relevant assessment year, a report of such auditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these facts and circumstances were beyond the control of the assessee. 3. In due course, the IAC considered the draft assessment order submitted by the ITO and after hearing the assessee's representatives issued instructions to the ITO under section 144B(4), wherein he observed that although the audited accounts were filed during the proceedings under section 144B before him, he considered them to be invalid since, according to him, the requirement of the law was that the audited accounts should have been filed with the return of income. Subject to these remarks, he approved the draft assessment order submitted by the ITO. The ITO, accordingly, completed the assessment under section 143(3) of the Act read with section 144B rejecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and, therefore, exemption under section 11 could not be denied to the assessee on this ground only. It was explained on behalf of the assessee that the additional ground was being filed out of abundant caution. Actually the point is stated to have been covered by the ground about the non-availability of exemption under section 11. In support of this additional ground our attention is invited to a large number of the Tribunal decisions wherein it has been held that where the law required that the return claiming certain reliefs should be accompanied by an audit report, it was enough if the audit report was submitted before the ITO finally concluded the assessment. For example, the decision in IT Appeal No. 1427 (Jp.) of 1980 decided by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ujarat Oil Allied Industries v. ITO [IT Appeal No. 898 (Ahd.) of 1980 decided on 29-9-1981] has taken the same view. Finally, our attention is invited to the Patna High Court decision in the case of Purusottam Lal Kishorilal v. CIT [1978] 115 ITR 377 where the learned Judges had occasion to deal with the provisions of section 184(7) of the Act to the effect that for claiming the benefits of registration under section 185 of the Act, the firm, which was previously granted registration, should file a declaration in Form No. 12 'along with' the return of income. The learned Judges held that all that the Legislature intended was that the return should be duly filed and the declaration should be duly made and both the documents should be befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of curing some inherent lacuna, which it had itself discovered. 6. We have carefully considered the facts and circumstances of the case and the arguments on either side. We shall first deal with the objections on behalf of the revenue to the admission of the additional ground. The learned departmental representative has objected to the admission of the ground firstly, on the plea that it was submitted too late and secondly, that it did not arise out of the order of the Commissioner (Appeals). We are unable to agree with either of these objections. The ground was taken before the Commissioner (Appeals) but the Commissioner (Appeals) has not adjudicated upon it. The ground remains an open issue for being taken up before the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's claim under section 11. 8. On a perusal of the orders of the authorities below, we find that, though the assessee had filed the auditor's report before the ITO made the final assessment under section 143(3), the ITO did not have the advantage of the audit report before he submitted the case to the IAC under section 144B. The IAC has not availed of the opportunity to scrutinise the audit report. In the circumstances, in the instant case, we are inclined to hold that the audit report has not received the attention due to it. Therefore, in our opinion, the revenue is entitled to succeed on the plea made on its behalf by the learned departmental representative that the report should be made available to the ITO for a further scru ..... X X X X Extracts X X X X X X X X Extracts X X X X
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