1983 (5) TMI 60 - AT - Income Tax

CIT's Challenge to Section 80J Claim Dismissed

The CIT's reference application challenging the Tribunal's decision to allow the assessee's claim under section 80J despite non-compliance with section ... Directory versus mandatory character of statutory requirements - Procedural character of assessment provisions - Principle of natural justice in tax assessment procedure - Admissibility of deduction where procedural non-compliance is cured during appellate proceedingsReferability of questions of law from Tribunal orders - Scope of reference jurisdiction - The question proposed by the CIT does not arise out of the order of the Tribunal and therefore is not referable to the High Court. - HELD THAT: - The Tribunal's order of 22nd February, 1983 had already held that the provisions in question were directory and procedural. The reference framed by the CIT asked whether the Tribunal was right in law in allowing the assessee's claim despite alleged non-compliance. That query did not seek resolution of any distinct or unresolved legal point emerging from the Tribunal's findings but rather challenged the Tribunal's conclusion; consequently the question did not arise out of the Tribunal's order for purposes of reference to the High Court and fell outside the scope of referable questions.Reference dismissed insofar as the question was held not to arise out of the Tribunal's order and therefore not referable.Directory versus mandatory character of statutory requirements - Procedural character of assessment provisions - Principle of natural justice in tax assessment procedure - Admissibility of deduction where procedural non-compliance is cured during appellate proceedings - The Tribunal was correct in treating the requirement of filing under s. 80J(6A) as directory and in regarding s. 139(9) as procedural, thereby permitting adjudication of the claim on merits where the necessary material was before the authorities. - HELD THAT: - The Tribunal found that s. 80J(6A) is directory in character and that s. 139(9) is procedural as it is embedded in the Chapter dealing with assessment process. Consistent with authorities that require adherence to principles of natural justice in assessment proceedings, the Tribunal directed that, since the audit report and requisite facts were on record and the claim had been made while appellate proceedings were pending, the authorities below should entertain and decide the claim on its merits. The Appellate Tribunal's approach - treating procedural non-compliance as curable where the information is available and natural justice is observed - was affirmed and the reference on this point was rejected.Tribunal's conclusion upheld: s. 80J(6A) is directory and s. 139(9) is procedural; the claim should be entertained and decided on merits where the requisite facts are on record.Final Conclusion: The reference application is dismissed: the question does not arise out of the Tribunal's order and the Tribunal correctly treated the filing requirement as directory and the assessment provision as procedural, directing that the claim be adjudicated on merits where the necessary material was on record. The CIT filed a reference application questioning the Tribunal's decision to allow the assessee's claim under section 80J despite non-compliance with section 80J(6A). The Tribunal found that section 80J(6A) is directory, not mandatory, and upheld its decision. The Tribunal emphasized the importance of following natural justice principles in assessment procedures. The reference application was dismissed. (Case Citation: 1983 (5) TMI 60 - ITAT CHANDIGARH)