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Issues Involved:
1. Whether the assessee failed to get its accounts audited within the stipulated time under section 44AB of the Income-tax Act. 2. Whether the penalty under section 271B of the Income-tax Act was justifiably imposed for the alleged failure. Issue-wise Detailed Analysis: 1. Failure to get accounts audited within the stipulated time under section 44AB: The return of income was due on 31-12-1990, but the assessee filed it on 22-7-1991. The assessee initially claimed that the audit was incomplete as of 10-5-1991, but later clarified that the accounts were audited by December 1990, and only the computation of income was pending. The Assessing Officer doubted the completion of the audit within the stipulated time due to the late filing of the return and imposed a penalty of Rs. 1 lakh under section 271B. The CIT(A) confirmed this penalty. 2. Justification of penalty under section 271B: The assessee argued that the audit report was dated 22-12-1990, and it was the Assessing Officer's duty to verify its authenticity by examining the auditors. The onus of proving that the audit report was not obtained on time lay with the Assessing Officer, as per the Supreme Court's decision in Daulat Ram Rawat Mal. The Tribunal noted that the purpose of sections 44AB and 271B is to ensure proper maintenance of books and accurate reflection of income. The Tribunal observed that section 271B contemplates three situations for penalty: failure to get accounts audited, failure to obtain the audit report, and failure to furnish the report with the return. The Tribunal found that the assessee got its accounts audited and filed the audit report with the return, thus not falling under the first and third situations. The Tribunal also noted that the term "such audit as required under section 44AB" distinguishes audits under section 44AB from other audits and does not imply a time constraint for obtaining the report. The Tribunal concluded that the penalty under section 271B was not applicable as the audit was completed, and the audit report was filed with the return. The Tribunal referenced the Finance Bill, 1995, which amended section 271B to include a time factor effective from 1-7-1995, indicating that prior to this, there was no requirement to obtain the audit report within the stipulated time. Conclusion: The Tribunal held that no penalty under section 271B was imposable on the assessee as the audit was completed, and the audit report was obtained and filed with the return. The penalty sustained by the CIT(A) was canceled, and the appeal by the assessee was allowed.
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