s.80J(6A) permits directory auditor report filing; substantial compliance enough if report available by assessment framing

The HC held that s.80J(6A) requires the industrial undertaking's accounts to be audited to satisfy the Income-tax Officer when deciding admissibility of deductions, but the procedural requirement to furnish the auditor's report with the return is directory; substantial compliance suffices. The report need only be made available to the Assessing Officer by the time assessment is framed and the claim is considered. Construing the procedural "shall" as "may" for this context, the court affirmed the Tribunal's view and answered the reference in favour of the assessee and against the Revenue.

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Issues Involved:
1. Interpretation of Section 80J(6A) regarding the timing of filing the audit report.
2. Determination of whether the procedural requirement of filing the audit report along with the return is mandatory or directory.

Summary:

Issue 1: Interpretation of Section 80J(6A) regarding the timing of filing the audit report.
The core question referred for opinion was whether "section 80J(6A) merely requires that the audit report should be so furnished so that it would be available at the time of assessment." The assessee filed the return without the audit report but submitted it before the assessment was framed. The Income-tax Officer and the Appellate Assistant Commissioner denied the benefit u/s 80J(1) due to non-compliance with the procedural requirement of section 80J(6A). The Tribunal, however, held that the audit report should be available at the time of assessment, thus favoring the assessee.

Issue 2: Determination of whether the procedural requirement of filing the audit report along with the return is mandatory or directory.
The court analyzed the statutory context of section 80J and concluded that the first part of section 80J(6A) is mandatory, requiring the accounts to be audited by a qualified accountant. However, the second part, which requires the audit report to be furnished along with the return, is procedural and directory. The court reasoned that substantial compliance, meaning the report should be available before the assessment is framed, suffices. This interpretation avoids absurdity and ensures the beneficial provision of section 80J(1) is not frustrated by technicalities.

The court referenced various decisions, including those from the Supreme Court and other High Courts, to support its conclusion that procedural provisions should be construed reasonably and not strictly. The court disagreed with the Punjab and Haryana High Court's view that the requirement is mandatory, labeling it as an "ipse dixit." Instead, it endorsed the Tribunal's interpretation that substantial compliance is sufficient.

Conclusion:
The question was answered in the affirmative, favoring the assessee and against the Revenue, confirming that the procedural requirement of filing the audit report along with the return is directory and requires substantial compliance.

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