TaxTMI 
TaxTMI 
2015 (3) TMI 350
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the CIT(A) has erred in law and on facts in directing to re-compute the deduction u/s 80IB in respect of disallowance made u/s 40A(3) of the IT Act, 1961 is totally disregard to the provisions of the Income Tax Act which require the exemption to be granted in accordance with the audited account filed alongwith the return in respect of the eligible unit. 3. In terms of sub-section 80IB(13) of the Act, the assessee is required to filed audited account of the eligible unit determining the profits thereof and file it alongwith the return of income. This makes mandatory that the deduction u/s 80IB is available only in respect of taxable profit of the eligible unit disclosed in the return of income and not in respect of subsequent enhancement of the income which is made y the AO over and above the returned income of the eligible unit. 4. That the order the ld CIT(A) being erroneous in law and on facts which needs to be vacated and order of the AO be restored. 5. That the appellant craves leave to add or amend any one or more of the ground of the appeal as stated above as and when need for doing so may arise." 2. All the aforesaid grounds project the grievance regarding th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rder to claim deduction u/s 80IB(10), "The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of sec. 288, and the assessee furnished, along with his return of income, the report of such audit in the prescribed from duly signed and verified by such accountant." 6. Apart from the above, the ld. AO, had also made a disallowance of Rs. 62,04,510/- on the ground that assessee has made cash payments of Rs. 3,10,22,550/- and as such 20% was disallowed u/s 40A(3) of the Act. 7. On appeal the ld. CIT(A) allowed the claim of enhanced deduction u/s 80IB of the Act by observing as under: "The facts of the case have been considered. It is noted that sec. 153A starts with a non-obstante clause meaning thereby that the issue of notice requiring a person to furnish a return of income is in the nature of fresh proceedings. Therefore, while examining claims made in the course of such proceedings, the merits have to be exam....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the deduction u/s 80IB. As regards the reliance placed by the AO on the decision in the case of Sun Engineering Works (198 ITR 297), the proposition being advanced is that an enhanced deduction is inadmissible in an assessment framed u/s 153A as such proceedings are not for the benefit of the assessee but for the revenue. The relevant case law has been perused and there does not appear to be any observation which lays down the above proposition. The said case law is with reference to the assessment proceedings initiated u/s 147. The only principle outlined by the Hon'ble Supreme Court is that the reassessment proceedings cannot be allowed to be converted as revisional or review proceedings. The assessee is not permitted to be agitated questions which have been decided in the original assessment proceedings. A matter not agitated in the concluded in the reassessment proceedings "unless relatable to the items sought to be taxed as escaped income." It is noted that the Hon'ble Court observed that it would be open to as assessee to put forward claims for deduction of any expenditure in respect of that income on the non-taxability of the items of all. In brief, it has been held t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l vs. ACIT (2009) 34 SOT 348 (Del.). 11. On the other hand the ld. AR Shri G.N. Gupta drew our attention to the language of Section 153A(1)(b) of the Act and explained that the Section itself starts with a non obstante clause. So according to him, when assessment proceedings under Section 153A of the Act is initiated; for six assessment years, for which, a notice under Section 153A(1)(a) of the Act has been issued and a return has been furnished, the AO was bound to assess the 'total income' of six assessment years immediately preceding the assessment year relevant to the previous year, in which, such search is conducted or requisition is made and, therefore, once the requirement of Section 153A(1)(b) of the Act is to assess the 'total income' in contradistinction to 'undisclosed income', the assessee is entitled to seek deduction, which might not have been sought at the time of original assessment proceedings and, therefore, it is open for an assessee to claim a new deduction while filing return under Section 153A of the Act, which deduction was not claimed under the regular assessment. Replying to the contention raised by the ld. AR, the ld. DR contende....
X X X X Extracts X X X X
X X X X Extracts X X X X
....declared for the first time in the return furnished in response to notice u/s 153A of the Act. Thus the finding of the AO that in the absence of audit report, the enhanced claim is not maintainable over looks this factual position. It is undisputed that audit report for the enhanced claim had been furnished during the impugned 153A assessment proceedings along with Profit and Loss account and Balance sheet duly certified by the Accountant. No adverse observations have been made vis-à-vis the said audit report/ financial statement. Also the Hon'ble Delhi High Court in the case of Contimeters Electrical Pvt. Ltd 317 ITR 249 (Del) has held that furnishing of audit report is directory and not mandatory. The relevant finding of the Hon'ble Court is as under:- "that the Tribunal had arrived at the correct conclusion that the requirement of filing of audit report along with the return was not mandatory but directory and that if the audit report was filed at any time before the framing of the assessment, the requirement of section 80-IA(7) would be met." 13. Similar view has been expressed by the jurisdictional High Court in the case of ACIT Vs. Murlidhara Prasad 118 ITR 393 (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cal and the same reads as under:- "The background of the case is that a search and seizure operation under Section 132 of the Act was conducted on 06.02.2009 in the case of Supertech & Crossing Infrastructure Group of Ghaziabad. The assessee's premises were also covered. Books of accounts and documents were found and seized. Disclosure of additional income of Rs. 10,00,00,000/- was made in the case of the assessee on the basis of seized material in the statement under Section 132(4) of the Act. Assessment proceedings were initiated under Section 153A for the A.Y. 2003-04 to A.Y. 2008-09. In compliance to the notice for the year under consideration, a return of income was furnished declaring total income at Rs. 94,91,330/- after claiming deduction of Rs. 18,32,552/- under Section 801B. During the assessment proceedings, the assessee was directed to get its accounts audited for the A.Y.2005-06 to A.Y.2009-10 under Section 142 (2A) of the Act. Initially, the auditor was required to submit report within 90 days of the relevant order of the AO dated 30.12.2010. Subsequently, the time was extended till 31.05.2011. The auditor submitted its report on 26.05.2011. In the assessment o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ant responded by filing written submissions dated 27.12.2010, a copy of which is placed on the paper Book at pages 69-94. And despite the appellant's objection dated 27.12.2010, obtained the saction of CIT Kanpur on 30.12.2010 when he directed the appellant to get its accounts audited by M/s. Seth and Associates CA of Lucknow within 90 days. Subsequently, the time for getting the accounts audited and furnishing the report was extended up to 31.05.2011 by the AO unilaterally by an order dated 25.03.2011. The report was submitted on 26.05.2011 by the Special Auditor. Incidentally, the Special Auditor was directed to audit only the original books of account and the impugned assessment order dated 22.07.2011 makes no reference to the report of the Special Auditor." 17. However there is no such issue in Assessment Year 2009-10. Thus the ground raised for Assessment Year 2009-10 is dismissed as infractuous. As regards ground raised in Assessment Year 2007-08 and 2008-09, we hold that the CIT(A) is justified in deleting the disallowance, on the ground that the payment have been made in cash to the Govt, which fact was clarified by the AO by a remand report to ld CIT(A). Since the pa....