TMI Blog1995 (9) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... eport in Form No. 10-D in revisional proceedings before the Commissioner of Income-tax ? 2. Whether, on the facts and circumstances of the case, the Tribunal was justified in law in observing and/or holding that provisions of section 80J(6A) were mandatory and not directory as claimed and pointed out by the assessee ? " We first take up question No. 2. The assessee is a firm. For the assessment year 1976-77, the Income-tax Officer framed the order on March 22, 1979. While framing the assessment, the Income-tax Officer allowed the assessee's claim for deduction in respect of profit and loss arising from its newly established undertaking. With effect from April 1, 1976, sub-section (6A) was inserted in section 80J, vide the Finance Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified by such accountant. According to the Commissioner of Income-tax, the assessee had not furnished the report of such audit in the prescribed form duly signed and verified by the accountant, the assessee was not entitled to relief under section 80J, the assessee had claimed that furnishing the report of such audit in the prescribed form which is Form No. 10D under the rules read with rule 18C, is not mandatory but a directory provision and, therefore, when the question of disallowance on that ground is considered, the assessee may be permitted to furnish them. This contention did not find favour with the Commissioner of Income-tax and he directed that the Income-tax Officer should make the necessary amendment in the assessment order for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur opinion, while compliance with the former before the deduction is claimed is mandatory and so far as manner of submitting proof of such compliance of filing along with the return is concerned, is directory because such requirement falls in the realm of procedure for furnishing evidence in support of the claim and which can be furnished at the time while allowance or disallowance under section 80J is being considered by the concerned authority. This court in the case of CIT v. Gujarat Oil and Allied Industries [1993] 201 ITR 325, had an occasion to consider the very same provision. The court held the provision of furnishing the auditor's report in the prescribed form along with the return to be directory adopting the view of the Allahab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce such report at a later stage when the question for disallowance arises during the course of the proceedings in a given case, it will depend upon the facts and circumstances of each case and, therefore, the assessee may be permitted to produce such report, if it has not been produced earlier. The learned advocate for the Revenue vehemently contended on the basis of the observations made in Gujarat Oil and Allied Industries' case [1993] 201 ITR 325 (Guj) that the requirement of furnishing of auditors' report in the prescribed form has to be complied with before the assessment is completed and the assessee cannot claim deduction under section 80J by producing the report later on. We are unable to sustain his contention. In Gujarat Oil and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis the assessment was framed. It was only during the course of proceedings before the Commissioner of Income-tax under section 265 that the question was considered whether the document furnished by the assessee amounted to sufficient compliance of furnishing such proof or not and that having been negatived the occasion arose to furnish the proof which according to the Commissioner of Income-tax was wanting in declaration that the accounts have been duly audited which is required by sub-section (6A) of section 80J and if the assessee requires production of evidence before the allowance made by the Income-tax Officer under section 80J was withdrawn. In our opinion, that would have been sufficient compliance with the requirement and the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e auditor's report on record, yet the same was allowed under a mistake by the Assessing Officer leaving no opportunity to the assessee to complete the requirements. The condition of non-fulfilment of the requirement under sub-section (6A) was made known to the assessee during the proceedings under section 263 although the assessee asked for an opportunity to produce the auditor's report to fulfil the requirements under section 80J(6A), the Commissioner of Income-tax ought to have afforded an opportunity to the assessee to furnish that proof and then examined the admissibility of the claim in the light of the proof furnished. As a result of the aforesaid discussion we answer question No. 1 also in the negative, i.e., in favour of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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