TMI Blog2007 (1) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany has suffered such loss on account of export of chrome ore, to M/s Sinonex the export of which is the business of the assessee company. Further, the expenditure is covered by order of the Hon'ble Tribunal for asst. yr. 1997-98 vide appeal No. 485/Ctk/2003 order dt. 11th Nov., 2005. (3) For that not allowing the carry forward of loss to succeeding assessment years is unjust as the appellant has filed IT return on 28th Feb., 2000 within the prescribed time-limit although the appellant could not file the audited accounts in reply to the deficiency letter No. 338 dt. 13th Nov., 2000 for reasons beyond the control of the appellant. Further, the appellant had all along filed tax returns on the basis of provisional accounts which have been accepted by the Department. CBDT in the past had also condoned the delay in filing the audited accounts vide its order under s. 119(2) of IT Act, 1961. Further the learned Tribunal, Cuttack Bench, Cuttack had cancelled the penalty imposed under s. 271B for the appellant's inability to file the tax return under s. 44AB thereby admitting that the appellant was prevented by sufficient cause for not filing audited accounts in time. 3. At the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um profit that he can, out of his trading transactions. Income which accrues to a trader is taxable in law. Income which he could have but has not earned is not made taxable as income accrued to him. In the present case the income has been accrued to the assessee. Accordingly the learned CIT(A) was justified in confirming the additions. The ground raised by the assessee is accordingly dismissed." "72. We have considered the rival submissions made by both the sides and perused the orders of the authorities below and paper book filed on behalf of the appellant. We find that para 7(a) of AS-11 issued by the ICAI reads as under: "'7(a) monetary items denominated in a foreign currency (e.g. foreign currency notes, balances in bank accounts denominated in a foreign currency and receivable, payables and loans denominated in a foreign currency should be reported using the closing rate. However, in certain circumstances, the closing rate may not reflect with reasonable accuracy the amount in reporting currency that is likely to be realised from, or required to disburse, a foreign currency monetary item at the balance sheet date, e.g. where there are restrictions on remittances or where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est within the meaning of s. 139(9) of the Act. Sec. 139(9) stipulates that once the return is treated as an invalid return, 'the provisions of the IT Act shall apply as if the assessee had failed to furnish the return'. Accordingly, in this case, as the returns have been treated as invalid, it follows that the assessee has failed to furnish the returns for the assessment years under reference. The benefits of s. 139(3) are therefore denied to it. Hence, again no exceptions have been provided in the said sections. 4.4 As per s. 80, the right to carry forward the losses will be lost if the return is not filed in time for the year in which such loss was incurred. The said section begins with a non obstante clause, thus overriding the provisions of s. 66 to s. 79 of the Act. Sec. 80 requires two conditions to be met for carry forward of losses to be allowed (Bishamber Sabal vs. ITO (1987) 29 TTJ (Del) 194 : (1987) 22 ITD 16 (Del); (a) A return should have been filed under s. 139(1) of the Act. (b) The loss should be determined in pursuance of the said return. 4.5 In the case of the assessee, the said conditions are not met on account of the application of s. 139(9) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia in the matter of appointment of statutory audit and the subsequent process of the audit work. Since the statutory audit of the company could not be completed in time, the tax audit work also got delayed subsequently." 8.1 The learned counsel for the assessee further submitted that the order of the AO is in violation of s. 139(9) of the IT Act and also not in conformity with the CBDT Instruction No. 1348 dt. 30th Aug., 1980 wherein the Board specifically instructed its subordinate officers as follows: "The omission to enclose copies of the audited P L a/c, balance sheet and the auditor's report should be treated as a defect in all cases requiring statutory audit. If the return indicates that the audit has not been completed and hence audited accounts and auditor's report could not be enclosed, the return should not be treated as defective." In the present case, there were enough indications in the return of income filed by the assessee on 28th Feb., 2000 to the effect that the audit of its accounts has not been completed till 28th Feb., 2000. And the defect mentioned by the AO himself by stating that it is understood that the statutory audit for the financial year 1998-99 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns on the basis of provisional accounts which have been accepted by the Department. CBDT in the past had also condoned the delay in filing the audited accounts vide its order under s. 119(2). Further the Tribunal. Cuttack Bench, Cuttack had cancelled the penalty imposed under s. 271B for the assessee's inability to file the tax return under s. 44AB, thereby admitting that the assessee was prevented by sufficient cause for not filing audited accounts in time. 8.5 The assessee's learned counsel thus contended that taking into consideration all the above aspects, the order treating the original return filed on 28th Feb., 2000 as invalid on the flimsy ground of the return being not accompanied with the audited accounts (a task which was not possible for the appellant company to achieve for the different reasons as discussed above) be reversed and the said original return be kindly declared as a valid return and consequently, the claim of carry forward of loss and unabsorbed depreciation may also be directed to be allowed. 9. On the other hand, the learned Departmental Representative for the Revenue heavily relied on the orders of the Revenue authorities. He further contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been noted above, by which the assessee was prevented from filing the return without enclosing the statutory audit report as required under the Act. Therefore, it can be inferred that the above clause of Explanation below s. 139(9) do not have any direct impact on the issue at our hand. 11. We further find that the issue of treatment of returns as defective has also' been clarified by the CBDT vide Instruction No. 1348 dt. 30th Aug., 1980, the relevant portion of which has been quoted above in this order. In the said instruction, the CBDT made it clear that "if the return indicates that the audit has not been completed and hence audited accounts and auditor's report could not be enclosed, the return should not be treated as defective". It is an admitted position that the AO was aware of the fact that CAG is the competent body to appoint auditor for the assessee company, being a Government of Orissa Undertaking and the assessee had no control over CAG. The said fact has also been indicated during assessment proceeding and there was enough indications in the return of income filed by the assessee on 28th Feb., 2000 to the effect that the audit of its accounts had not been completed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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