2008 (3) TMI 124 - HC - Income Tax

Penalty u/s 271B for delay in furnishing audit report assessee states that even though he has failed to enclose the audit report at the time of submitting his return before the first respondent he submitted the audit report subsequently before the second respondent - instead of considering the audit report authorities imposed the penalty penalty is not justified reopening of assessment by AO u/s 147 is also unjustified

Summary

Issues:
1. Compliance with penalty provisions under section 271B of the Income-tax Act.

Analysis:
The petitioner, an income-tax assessee, filed a return for the assessment year 2000-01 without enclosing the audit report. The second respondent initially accepted the return and refunded an amount but later revised the order, directing the petitioner to pay a higher sum. The petitioner challenged this decision by filing a revision before the first respondent, who upheld the second respondent's order. The petitioner then approached the High Court through a writ petition, seeking to quash the orders passed by the respondents as illegal, arbitrary, and against the provisions of the Income-tax Act.

The main contention raised by the petitioner was that despite submitting the audit report subsequently, the penalty under section 271B of the Income-tax Act was imposed without due consideration of the petitioner's claim. The petitioner argued that the authorities should have taken into account the audit report submitted and not imposed the penalty arbitrarily. The petitioner sought the setting aside of the orders passed by the respondents and a direction for compliance with the provisions of section 271B of the Income-tax Act.

Upon hearing arguments from both parties, the court considered the submissions made by the petitioner and the facts of the case. The court found merit in the petitioner's contentions and concluded that the orders passed by the respondents were not legally sustainable. Therefore, the court set aside the orders passed by the respondents and directed them to comply with the penalty provisions under section 271B of the Income-tax Act. The writ petition was allowed with the specified terms and conditions, and the connected miscellaneous petitions were closed without any costs being imposed.