Audit of accounts under section 44AB of the Income-tax Act, 1961-Penalty under section 271B for assessment year 1985-86-Regarding - Income Tax - 422/1985

Audit of accounts under section 44AB of the Income-tax Act, 1961-Penalty under section 271B for assessment year 1985-86-Regarding Circular No.422 Dated 19/6/1985 To All Chief Commissioners (Admn.) and Commissioners of Income-tax. Sir, Subject: Audit of accounts under section 44AB of the Income-tax Act, 1961-Penalty under section 271B for assessment year 1985-86-Regarding. Section 44AB of the Income-tax Act, 1961, lays down that every person carrying on business, whose sales, turnover or gross receipts exceed rupees forty lakhs or carrying on a profession, whose gross receipts exceed rupees ten lakhs, shall get his accounts of such previous year audited before the specified date and obtain before that date the report of such audit in the prescribed form. 2. Under Explanation of this section, "specified date" means the date of the expiry of four months from the end of the previous year, or where there are more than one previous year, from the end of the previous year which expired last before the commencement of the assessment year or 30th day of June, of the assessment year, whichever is later. 3. Rule 6G of the Income-tax Rules, 1962, inserted by the Income-tax (Amendment) Rules, 1985*, with effect from April 1, 1985, prescribes the manner and Forms in which the audit report required under section 44AB is to be submitted. These rules were notified on January 31, 1985. 4. A number of representations have been received from assessees and various trade associations expressing their difficulties in getting the accounts audited by the "specified date" this year. The matter has accordingly been concidered by the Board. This being the first year of the operation of the section and considering that the relevant rule was notified only on January 31, 1985, the Board has decided that the penalty proceedings under section 271B of the Income-tax Act, 1961, for failure to comply with the provisions of section 44AB should not be initiated for the assessment year 1985-86, in cases, where: (i) The audit report prescribed under section 44AB read with rule 6G has been obtained by September 30, 1985; and (ii) The self-assessment tax under section 140A of the Act has been paid within the normal period prescribed under section 139(1) of the Act for filing return of income. Yours faithfully, (Sd.)............ Director, Central Board of Direct Taxes. * See [1985] 152 ITR (St.) 182.