2009 (12) TMI 16 - HC - Income Tax

Impact of non filing of Audit Report as contemplated u/s 44AB Cat it snatch away the valuable right as guaranteed under the statute power to condone the delay inherent as well as extra ordinary jurisdiction Penalty u/s 271B - For the assessment year under consideration (1985-86), the assessee has filed the Tax Audit Report on 22.11.1985 along with the return of income. For filing the Tax Audit Report belated, the A.O. has levied the penalty under Section 271-B of the Income Tax Act, 1961 for Rs.25,887/-. The same was upheld not only by the first appellate authority but also by the Tribunal by its impugned order held that - . For the delay, no explanation or reason was given by the assessee. The plea of the appellant - assessee that he made the application for extension of time is not acceptable for the reason that he never produce any proof of filing the application for extension of time - we find no reason to interfere with the impugned order passed by the Tribunal. The same is hereby sustained along with the reasons mentioned therein penalty confirmed

Summary

Issues:
1. Non-filing of Audit Report under Section 44-AB of Income Tax Act within specified date
2. Authority's jurisdiction to condone delay in filing report
3. Judicial/quasi-judicial authority's jurisdiction in extraordinary circumstances

Issue 1: Non-filing of Audit Report under Section 44-AB
The appeal was filed against the penalty levied under Section 271-B of the Income Tax Act for filing the Tax Audit Report belatedly. The appellant argued no malafide intention and cited a case where penalty was not levied when the return was filed within the allowed time after an extension was granted. The appellant claimed to have applied for extensions using Form-6, which was presumed to be allowed. The department contended that no extension application was made, as per lower authorities' order. The court noted the report was filed late without any explanation or proof of extension application.

Issue 2: Authority's jurisdiction to condone delay
The court considered Section 271-B, which allows a penalty if accounts are not audited without reasonable cause. The appellant failed to provide a reasonable cause for the delay in filing the Tax Audit Report. The court found no interference warranted with the Tribunal's order as the appellant did not substantiate the claim of applying for an extension of time. The penalty was upheld based on the lack of a valid reason for the delay.

Issue 3: Judicial/quasi-judicial authority's jurisdiction in extraordinary circumstances
The court highlighted that no reasonable cause was presented for the delayed filing of the Tax Audit Report. As such, the impugned order by the Tribunal was upheld. The court ruled in favor of the department, stating that the appellant failed to provide a valid explanation for the delay, leading to the dismissal of the appeal. The judgment was delivered on 01.12.2009, sustaining the Tribunal's decision against the appellant.

This detailed analysis of the judgment highlights the key legal issues involved, the arguments presented by both parties, and the court's reasoning leading to the dismissal of the appeal.