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2017 (6) TMI 180

Head Note:
Non est Return of income as filed without the audit report - delay in statutory audit - Held that:- As the assessee has filed the return of income on the basis of provisional accounts and the AO has rejected the books as not reliable and disallowed the loss claimed by the assessee. AO has therefore, relied upon the return of income, but has not allowed the loss claimed. In such circumstances, it is not open to the CIT (A) to hold the returns of income as non-est particularly when the assessee, though a Govt. Agency, had no power to appoint the auditors by itself. The assessee has explained the reasons for delay in audit of accounts which is clearly beyond the control of the assessee. Therefore, the delay cannot be attributable to the assessee. In view of the same, we set aside the order of the CIT (A) and remit the issue to the file of the AO with a direction to recompute the income of the assessee on the basis of the audited accounts of the assessee, if they are available now.

Penalty levied u/s 271B - Held that:- We find that the assessee being a Govt. organization and a Registered Society, has to abide by the rules framed under the Societies Act. As per the said Act, the Auditors have to be appointed by the Registrar of Societies and therefore, is beyond the control of the assessee. We are satisfied that the assessee was prevented by reasonable cause for not getting its accounts audited u/s 44AB of the Act within the prescribed time. Therefore, we set aside the penalty levied by the AO and confirmed by the CIT (A).

Disallowance u/s 43B - disallowance of interest payable - Held that:- We find that in the case before us, the Govt. has sanctioned the loan to the assessee for payment to the employees who have opted to retire under the VRS. It is therefore, not covered under any of the clauses of section 43B of the Act, nor is the interest payable to the Institutions mentioned in the clauses. It is not fee or tax paid by the assessee. In view of the same, we see no reason to interfere with the order of the CIT (A).


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