The officer declared your return invalid for want of an audit report when your turnover was below the audit threshold. What is the remedy?
The High Court quashed the orders invalidating the return and the order in revision, and remitted the matter to the Assessing Officer to re-examine the turnover. Where the record, including the officer's own finding, showed that the turnover was below the threshold at which audit is required, the premise on which the return had been held defective under s.139(9) did not stand.
Decided by the High Court (P. Sam Koshy J and N. Tukaramji J) on 2023-12-28, reported as Writ Petition No. 19073 of 2023. No reporter citation is printed on the copy read.. It bears on section 139(9), section 139(9) Explanation, section 44AB, section 264 of the Income Tax Act 1961, in Assessment & Scrutiny, Revision & Rectification and Evidence & Burden of Proof matters.
It is the answer to a defect notice founded on a wrong fact. The clause of the Explanation requiring the audit report bites only if the assessee was liable to audit. Where the department's own record shows it was not, the notice and everything built on it fall with it, and the writ jurisdiction is available even though a s.264 order has intervened.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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By an order dated 9 August 2022 the second respondent treated the petitioner's return as defective under s.139(9) on the footing that the balance sheet and profit and loss account were not certified by an auditor as the statute required. The petitioner's case was that its business income was below Rs. 10 crores, so that audit was not required. In an application before the High Court the Assessing Officer recorded that the assessee's claim of its turnover being less than Rs. 10 crores was found to be in order. Notwithstanding that finding, the second respondent had invalidated the return as unaudited. Further orders followed on 14 December 2022 and 25 December 2022, including an order in revision. The petitioner sought a declaration that the communications invalidating the return were illegal and arbitrary and a direction that the return be treated as valid, and in the alternative that the order under s.264 be set aside.
The writ petition was allowed to that extent. The impugned orders dated 9 August 2022, 14 December 2022 and 25 December 2022 were quashed, and the matter was remitted to the Assessing Officer to re-examine the turnover and pass fresh orders accordingly. No costs.
The Court proceeded on the record. The first respondent had reproduced the Assessing Officer's finding that the turnover was below Rs. 10 crores. Once that finding was on the record, the orders of the second respondent dated 9 August 2022 and 25 December 2022, which rested on the return being unaudited, were not sustainable and had to be set aside, and the communication of 14 December 2022 went with them (paras 4 and 5).
the assessee's claim of its turnover being less than Rs.10 Crores is found to be in order
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Handle my notice → Ask a CA on WhatsAppThe High Court quashed the orders invalidating the return and the order in revision, and remitted the matter to the Assessing Officer to re-examine the turnover. Where the record, including the officer's own finding, showed that the turnover was below the threshold at which audit is required, the premise on which the return had been held defective under s.139(9) did not stand. This was decided by the High Court (P. Sam Koshy J and N. Tukaramji J) and bears on section 139(9), section 139(9) Explanation, section 44AB, section 264 of the Income Tax Act 1961. It is reported as Writ Petition No. 19073 of 2023. No reporter citation is printed on the copy read.. It is the answer to a defect notice founded on a wrong fact. The clause of the Explanation requiring the audit report bites only if the assessee was liable to audit. Where the department's own record shows it was not, the notice and everything built on it fall with it, and the writ jurisdiction is available even though a s.264 order has intervened. If it applies to you, the first step is this: Check the factual premise of the defect before arguing anything else: if the notice says no audit report, ask whether the assessee was liable to audit at all.
By an order dated 9 August 2022 the second respondent treated the petitioner's return as defective under s.139(9) on the footing that the balance sheet and profit and loss account were not certified by an auditor as the statute required. The petitioner's case was that its business income was below Rs. 10 crores, so that audit was not required. In an application before the High Court the Assessing Officer recorded that the assessee's claim of its turnover being less than Rs. 10 crores was found to be in order. Notwithstanding that finding, the second respondent had invalidated the return as unaudited. Further orders followed on 14 December 2022 and 25 December 2022, including an order in revision. The petitioner sought a declaration that the communications invalidating the return were illegal and arbitrary and a direction that the return be treated as valid, and in the alternative that the order under s.264 be set aside. The matter was decided on 2023-12-28 by the High Court (P. Sam Koshy J and N. Tukaramji J). On those facts the High Court held as follows. The writ petition was allowed to that extent. The impugned orders dated 9 August 2022, 14 December 2022 and 25 December 2022 were quashed, and the matter was remitted to the Assessing Officer to re-examine the turnover and pass fresh orders accordingly. No costs.
The Court proceeded on the record. The first respondent had reproduced the Assessing Officer's finding that the turnover was below Rs. 10 crores. Once that finding was on the record, the orders of the second respondent dated 9 August 2022 and 25 December 2022, which rested on the return being unaudited, were not sustainable and had to be set aside, and the communication of 14 December 2022 went with them (paras 4 and 5). In the words reproduced by the source cited on this page: "the assessee's claim of its turnover being less than Rs.10 Crores is found to be in order"
It was decided by the High Court on 2023-12-28 and is reported as Writ Petition No. 19073 of 2023. No reporter citation is printed on the copy read.. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 139(9), section 139(9) Explanation, section 44AB, section 264, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The writ petition was allowed to that extent. The impugned orders dated 9 August 2022, 14 December 2022 and 25 December 2022 were quashed, and the matter was remitted to the Assessing Officer to re-examine the turnover and pass fresh orders accordingly. No costs. It arises in Assessment & Scrutiny, Revision & Rectification and Evidence & Burden of Proof matters, on section 139(9), section 139(9) Explanation, section 44AB, section 264 of the Income Tax Act 1961, and was decided by P. Sam Koshy J and N. Tukaramji J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Find any departmental record in which the officer has himself accepted the turnover figure, and put it in front of the court; that was decisive here. Where a s.264 order has already gone against you, the writ petition can be framed against the invalidation order and the revision order together. Expect a remit rather than a final declaration; the relief here was a direction to re-examine turnover and pass fresh orders.
Searched for later treatment; none was found. That is not the same as a source affirming it. No later decision applying, doubting or dissenting from this order was located on indiankanoon. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The copy read does not name the High Court in its body; the order is signed by P. Sam Koshy J and N. Tukaramji J, who sat in the Telangana High Court at the date of the order, and indiankanoon indexes it as Telangana. The order is short and does not construe the Explanation; it decides the case on the factual premise of the notice. The key_quote is the Assessing Officer's finding as the Court reproduces it, not a statement of the Court's own reasoning, and is recorded because it is what the decision turns on. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was allowed to that extent. The impugned orders dated 9 August 2022, 14 December 2022 and 25 December 2022 were quashed, and the matter was remitted to the Assessing Officer to re-examine the turnover and pass fresh orders accordingly. No costs.
TaxSphere, “Reddy Vanga Ventures LLP v PCIT”, https://taxnotice.vittsphere.com/caselaw/case/reddy-vanga-ventures-v-pcit-139-9-defect-on-wrong-facts/ (validity last checked 2026-09-17)
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You missed the fifteen days on a s.139(9) notice and the officer has written back that your return is invalid. Is there anything left to do?
You never asked the Assessing Officer for more time, the return went invalid for want of proof of tax, and you have gone to the Commissioner under s.264. Will that work?
Is the list of defects in the Explanation to s.139(9) a closed list, so that the officer cannot call anything else a defect?
The accountant's certificate for the s.80HHC claim was prepared but never attached to the return. Is the deduction gone?
