CIT Vs Shivanand Electronics (Bombay High Court)
The Bombay High Court considered a reference under Section 256(1) of the Income-tax Act, 1961, concerning whether non-compliance with the condition of filing an audit report was fatal to an assessee’s claim for deduction under Section 80J(6A) of the Act.
The assessee, a registered partnership firm engaged in the manufacture of electronics and electrical equipment, had claimed deductions under Section 80J for Assessment Years 1976-77 and 1977-78. These claims were initially allowed by the Income-tax Officer. However, the Commissioner of Income-tax invoked revisional jurisdiction under Section 263 after concluding that the assessment orders were erroneous and prejudicial to the interests of the Revenue because the deductions had been granted despite non-compliance with Section 80J(6A).
Section 80J(6A), as applicable at the relevant time, imposed two conditions for claiming deduction under Section 80J: first, that the accounts of the industrial undertaking be audited by a qualified accountant; and second, that the assessee furnish the audit report in the prescribed form, duly signed and verified, along with the return of income.
The Tribunal acknowledged that no audit report in Form No. 10-D had been filed by the assessee. Nevertheless, it held that the assessee ought to have been given an opportunity to submit the report and remitted the matter to the Commissioner with directions to permit such filing.
