COMMISSIONER OF INCOME TAX Vs. A N ARUNACHALAM

JUDGEMENT

(1.) THE facts leading to the case are as follows THE assessee is a registered firm of five partners, engaged in the business of powerloom cloth. In the return filed on June 28, 1977, the assessee claimed relief under section 80J. However, the return was not accompanied by an audit report and certificate, which were filed only on July 23, 1977. Even though the audit report and certificate were before the Income-tax Officer when he made the assessment on November 26, 1977, he denied the relief on the ground that the return was not accompanied by the audit report as required by section 80J(6A) of the Act.

(2.) THIS was confirmed on appeal. In the further appeal, the Appellate Tribunal came to the conclusion that the requirement of section 80J(6A) was only directory and as long as the audit report was available before the assessment was made, the assessee could not be denied the deduction. At the instance of the Revenue, the following questions have been referred"1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that the assessee is entitled to the relief under section 80J of the Act, even though the report and certificate were not filed along with the return of income ?(ii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that the provisions of section 80J(6A) are not mandatory but only directory in nature ?" Before us, learned counsel for the Revenue relied on the provisions of section 80J(6A) of the Income-tax Act, which is as follows"Where the assessee is a person other than a company or a co-operative society, the deduction under sub-section (1) from profits and gains derived from an industrial undertaking shall not be admissible unless the accounts of the industrial undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant."Stress was laid upon the provision that the deduction shall not be admissible unless the accounts were audited and the assessee furnished along with the return, the report of such audit. Reliance was also placed on the decision of the Punjab and Haryana High Court in CIT v. Jaideep Industries to contend that the provision was mandatory and, therefore, the Tribunal was not right in granting the relief, when the report had been furnished along with the return. On the other hand, it has been contended by learned counsel for the assessee that the Gujarat High Court has taken a different view in CIT v. Gujarat Oil and Allied Industries and even in respect of similar provisions of section 184(7), before it was amended to relieve its harshness, there was difference of opinion as to whether a return should be accompanied by the declaration for getting registration, as between the Madras High Court in Halima Fancy Stores v. CIT and the Allahabad High Court in Addl. CIT v. Murlidhar Mathura Prasad. It was pointed out that the Patna High Court also has taken a similar view in CIT v. Sitaram Bhagwandas. It was submitted that the provisions of section 80J(6A) should not be construed as to frustrate that objectiveOn a consideration of the submissions of both sides, we are inclined to take the same view as the Gujarat High Court, which has differed from the Punjab and Haryana High Court.