COMMISSIONER OF INCOME TAX Vs. SHIVANAND ELECTRONICS

JUDGEMENT

(1.) BY this reference under S. 256(1) of the IT Act, 1961 made at the instance of the Revenue, the Tribunal has referred the following question of law to this Court for opinion :

(2.) THE facts of the case, relevant for the purpose of determination of the controversy raised in the above question are as under : The assessee is a registered partnership firm. The business of the firm is of "manufacture of electronics and electrical equipments, etc.". In its return for the asst. year 1976 77, it claimed deduction of a sum of Rs. 2,272 under S. 80J of the IT Act, 1961 ("the Act"). Similar deduction of an amount of Rs. 9,096 was claimed during the asst. year 1977 78. This claim of the assessee was allowed by the ITO for both assessment years. However, on perusal of the records of assessment, the CIT being of the opinion that the order of the ITO was erroneous and prejudicial to the interests of the Revenue in so far as it related to the allowance of deduction under S. 80J of the Act, initiated suo motu revision proceedings under S. 263 of the Act and on hearing the assessee, set aside the orders of the ITO for both the assessment years in so far as it pertained to the allowance of the claim of the assessee under S. 80J. Against the order of the CIT, the assessee appealed to the Tribunal. The Tribunal considered the contentions of the assessee in regard to its claim for deduction under S. 80J from various angles. The Tribunal took note of the admitted position that no audit report in Form 10D, as required by S. 80J(6A) of the Act, had been filed by the assessee. It was, however, of the opinion that if an assessee fails to file an audited report as required by S. 80J, the ITO should give him an opportunity to file the same. The Tribunal was also of the opinion that in compliance with the requirements of principles of natural justice and fairness, the CIT ought to have given an opportunity to the assessee to file the audit report as required under S. 80J. Accordingly, the case was remitted to the CIT with a direction to give an opportunity to the assessee to file the audit report and consider the claim for deduction under S. 80J on the basis thereof. Hence, this reference at the instance of the Revenue.

(3.) THE contention of the learned Advocate for the Revenue is that in the instant case, it is admitted position that the audit report was neither filed by the assessee alongwith the return nor at any time thereafter even at the time of assessment. There is even nothing to show that the accounts were audited as required by Sub S. (6A). There was, thus, a total non compliance of all the requirements of Sub S. (6A). In such a situation, the ITO could not have allowed the claim of the assessee for relief under S. 80J of the Act which he did in complete disregard to the requirements of Sub S. (6A). The CIT, in exercise of his power of suo motu revision under S. 263 of the Act, rightly revised the order of the ITO as, in his opinion, it was erroneous and prejudicial to the interests of the Revenue. We find force in the above submission. We do not find any error in the action of the CIT. The CIT did peruse the record of the case to see whether on the basis of the records, the order of the ITO was erroneous or not. He found it to be erroneous. This finding of the CIT, in any view of the matter, cannot be said to be wrong having regard to the admitted position that no audit report had been filed even at the time of completion of the assessment. The allowance of rebate under S. 80J of the Act by the ITO was patently wrong and in complete disregard to the requirements of sub s. (6A) of S. 80J of the Act. The Tribunal was, therefore, not justified in such a case in interfering with the order of the CIT and sending the matter back to the CIT with a direction to give an opportunity to the assessee to file the audit report in the name of principles of natural justice. The learned counsel for the assessee submits that if the assessee had failed to submit the audit report, it was only a mistake on his part and it was the duty of the ITO to point out the same to the assessee and give him an opportunity of rectifying it by filing the same which the ITO failed to do. In such a case, the CIT, acting in exercise of powers under S. 263 of the Act, while setting aside the order should have directed the ITO to give such an opportunity to the assessee. According to the counsel for the assessee, in such a situation, the Tribunal was justified in directing the CIT to do so. Reliance is placed in support of this contention on the decisions of the Calcutta High Court in CIT vs. Hardeodas Agarwalla Trust (1992) 198 ITR 511 (Cal) and CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust (1992) 195 ITR 825 (Cal). We have carefully considered the submission of the learned counsel for the assessee. We find it difficult to accept the same because, in our opinion, doing so, will amount to exonerating the assessee from the obligation cast on him by the statute and impose a duty on the ITO which has not been imposed by the statute to ask the assessee to do something which he is obliged to do if he wants to avail of certain benefit granted by the statute. When the legislature casts a duty on the assessee claiming certain benefit, to comply with requirements which are associated with such benefit, the assessee cannot get the benefit without doing his part of the duty. He cannot be allowed to say that it was for the ITO to ask him to do so. If the assessee does not do his part of the statutory duty, the ITO may proceed to decide the allowability or otherwise of the relief on the basis of the facts and material available before him. It will be contrary to the language of Sub S. (6A) of S. 80J to cast an obligation on the ITO to ask the assessee to do his duty and to comply with the statutory requirements, whether directory or mandatory on the pretext of complying with the principles of natural justice. Principles of natural justice cannot be stretched that far to lead to such absurd results. The position may, however, be different where an assessee does a particular act not within specified time but after the expiry thereof and makes an application for condonation of delay. In such cases, depending on the language of the statute and the object sought to be achieved by prescribing the time limit, it would be the duty of the officer to consider the documents even submitted belatedly, if there is reasonable explanation for the delay. We, are, therefore, of the clear opinion that no duty is cast on the ITO to ask an assessee, who has failed to file the report of the audit, to do so before rejecting his claim for relief under S. 80J of the Act.