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C.I.T. v. Mahesh Swaroop - INCOME TAX REFERENCE No. 48 of 1994  RD-AH 16449 (20 September 2006)
Court No. 2
Income Tax Reference No. 48 of 1994
Commisisoner of Income Tax, Lucknow
M/s Mahendra Swaroop Ram Swaroop, Dataganj, Badaun.
Hon'ble R.K.Agrawal, J.
Hon'ble Vikram Nath, J.
The Income Tax Appellate Tribunal, Delhi has referred the following question of law under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act) for opinion of this Court.
"Whether on the facts and circumstances of the case the Tribunal was right in law to hold that provisions of Section 271B were not attracted in this case notwithstanding the fact that the audit report had been furnished alongwith the return of income under section 139(4) and not under section 139(1) of the Income Tax Act, 1961?"
The reference relates to the assessment year 1989-90 in respect of the penalty proceedings under section 271B of the Act.
Briefly stated the facts giving rise of the present reference are as follows:
For the assessment year 1989-90 the assessee had disclosed the turnover of Rs. 50,14,872/-. Since the turnover of the assessee exceeded Rs. 40 lakhs, the assessee was under an obligation to get its accounts audited as per the provisions of Section 44AB of the Act. The assessee got the accounts audited on 26th April, 1989 and obtained a report in accordance with the provisions of Section 44AB. Under section 139(1) the assessee was required to file the return by 31st August, 1989. The return was, however, filed on 26th March, 1990. During the course of assessment proceedings the assessee was asked to show cause as to why penalty may not be imposed for having contravened the provisions of Section 44AB of the Act. The assessee furnished a reply explaining the reasons for the delay in filing of the return of income and claimed that the accounts had been audited on 26th April, 1989 and a report obtained in accordance with the provisions of Section 44AB of the Act. It was accordingly claimed that there was no default committed by the assessee. The Assessing Officer did not accept the explanation of the assessee as according to him, the assessee was required to file the audit report along with the return furnished under section 139(1) of the Act. Since the assessee had not filed any return under section 139(1) of the Act, there was a default of not having filed the audit report, according to the Assessing Officer. He thus imposed a penalty of Rs. 28,075/-. On appeal the Commissioner of Income Tax (Appeals) cancelled the penalty by holding that there was no requirement of law to attach auditor's report obtained under section 44AB of the Act to the return of income and since the assessee had obtained the report on 26th April, 1989, there was no non compliance of the provisions of Section 44AB of the Act. The Tribunal considering the facts and circumstances of the case concurred with the view of the Commissioner of Income Tax (Appeals) and held that penalty under section 271B was not attracted in this case as the assessee had obtained the audit report as required under section 44AB of the Act.
We have heard Sri A.N.Mahajan, learned standing counsel appearing for the Revenue.
We find that this Court in Commissioner of Income Tax vs. Jai Durga Construction Co. (2000) 245 ITR 857 has held that penalty under section 271B of the Act, as it stood at the relevant point of time prior to its amendment by the Finance Act, 1995 which came into existence with effect from 1st July, 1995, was not exigible in case the audit report has been obtained within the specified date and the return of income has been filed beyond time.
Respectfully following the aforesaid decision of this Court, we are of considered opinion that the penalty under section 271B of the Act has rightly been deleted.
We, accordingly, answer the question referred to us in the affirmative, i.e. in favour of the assessee and against the Revenue. There will be no order as to costs.
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