While allowing relief to A.P diary Development Corporative Pvt Ltd, the Income Tax Appellate Tribunal (ITAT), Hyderabad held that the income tax return filed by a Government agency cannot be rejected by the authorities merely on ground that it had not furnished audit report along with the return.
Assessee- Company engaged in the activities of procurement of milk from farmers in Andhra Pradesh, process the same into whole milk, standardized milk, toned milk and milk products and sells them. The income tax return filed by the assessee for the relevant assessment year was rejected by the AO on ground that statutory audit report has not been filed along with it. The CIT(A), on first appeal, dismissed the assessee’s appeal by holding that the assessee is required to file the return of income along with the audited report and the assessee being a State owned company, running with public fund should have been careful in running its business as well as in complying with the statutory provisions of various Acts.
Overruling the findings of the first appellate authority, the bench noted the fact that the assessee has filed the return of income on the basis of provisional accounts and the AO has rejected the books as not reliable and disallowed the loss claimed by the assessee. AO has therefore, relied upon the return of income, but has not allowed the loss claimed. “In such circumstances, it is not open to the CIT (A) to hold the returns of income as non-est particularly when the assessee, though a Govt. Agency, had no power to appoint the auditors by itself. The assessee has explained the reasons for delay in audit of accounts which is clearly beyond the control of the assessee. Therefore, the delay cannot be attributable to the assessee. In view of the same, we set aside the order of the CIT (A) and remit the issue to the file of the AO with a direction to recompute the income of the assessee on the basis of the audited accounts of the assessee, if they are available now.”
Read the full text of the Order below.
