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2017 (6) TMI 180 - ITAT HYDERABAD

2017 (6) TMI 180 - ITAT HYDERABAD - TMI - 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 .....

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sessee, 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 prescrib .....

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aid by the assessee. In view of the same, we see no reason to interfere with the order of the CIT (A). - ITA No.741 to 744/Hyd/2015, And ITA No.1296 to 1298/Hyd/2015 - Dated:- 2-6-2017 - Smt. P. Madhavi Devi, Judicial Member, And Shri S.Rifaur Rahman, Accountant Member For The Assessee : Shri B. Sai Prasad For The Revenue : Shri K.J. Rao, DR ORDER Per Smt. P. Madhavi Devi, J.M. These are cross appeals filed both by the assessee and the Revenue for the A.Ys 2004-05, 2005-06, 2009-10, 2010-11 and .....

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declaring a loss of ₹ 63,43,910. During the course of the assessment proceedings u/s 143(3) of the Act, the AO called for certain information. The assessee s representative appeared and filed the required information. The AO observed that the assessee company is mainly engaged in the activities of procurement of milk from farmers in Andhra Pradesh, process the same into whole milk, standardized milk, toned milk and milk products and sells them. For this purpose, the assessee maintains milk .....

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nd the appointed auditors have to conduct audit for the A.Y 2003-04. Since the assessee has not filed the audited report along with the return of income, the AO informed the assessee s Authorized Representative that the loss claimed by the assessee shall not be allowed in the absence of completion of such audit and furnishing of the report. 4. The AO held that in the absence of audited books of accounts, it is not possible to verify the veracity and authenticity of the quantum of expenditure cla .....

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of earlier years and unless the earlier year s audit is completed, the statutory audit for the next year could not be completed and that the statutory audits for the earlier years is also delayed considerably due to change in the system of accounting. The AO, thus explained the reason for the deficiency. The CIT (A) however, was not convinced with the assessee s contention and held that the assessee is required to file the return of income along with the audited report and the assessee being a S .....

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of time has held the returns to be defective and not issued any defective notices for any of the A.Ys and therefore, according to him, the CIT (A) was in error in holding the return of income as non-est. Thus, according to him, the CIT (A) ought to have decided the appeals on merits. 7. Having regard to the rival contentions and the material on record, we find that the assessee has filed the return of income on the basis of provisional accounts and the AO has rejected the books as not reliable .....

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le 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. 8. In the result, assessee s appeals for the A.Ys 2004-05, 2005-06 and 2011-12 are treated as allowed for statistical purposes. ITA No.743/Hyd/2015 9. This appeal is against the order of the CIT (A)-VII dated 21.4.2015 confirming the penalty .....

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strar of the Societies and thus beyond the control of the assessee and that the assessee should not be penalized for non compliance of section 44AB of the Act under such circumstances. However, the AO was not convinced with the assessee s explanation and levied the penalty. Aggrieved, the assessee preferred an appeal before the CIT (A), who confirmed the order of the AO and the assessee is in second appeal before us. 11. Having regard to the rival contentions and the material on record, we find .....

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(A). 12. In the result, assessee s appeal for the A.Y 2011-12 is allowed. ITA Nos.1296 to 1298/Hyd/2015 (Revenue s Appeals) 13. All the above appeals are filed by the Revenue for the A.Y 2009-10, 2010-11 and 2012-13 against the orders of the CIT (A)-VII dated 28.8.2015 giving relief to the assessee. 14. Brief facts are that during the assessment proceedings u/s 143(3) of the Act for all the respective A.Ys, the AO observed that the assessee has debited interest as payable to government loans, bu .....

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