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Issues Involved:
1. Confirmation of penalty under Section 271B of the IT Act. 2. Consideration of the auditor's report filed with the return of income. 3. Excessiveness and legality of the penalty imposed. 4. Validity of penalty proceedings after the assessment was set aside. 5. Reasonable cause for non-compliance with Section 44AB. 6. Requirement of furnishing audited balance sheet and accounts. 7. Existence of mens rea or mala fide intention. 8. Necessity of issuing a notice under Section 139(9). 9. Specificity and validity of the show-cause notice. 10. Timeliness of the penalty order. 11. Justification of penalty when the assessment could be completed without the audit report. Issue-wise Detailed Analysis: 1. Confirmation of Penalty under Section 271B: The Tribunal upheld the penalty of Rs. 1,00,000 under Section 271B for non-compliance with the provisions of Section 44AB. The assessee's failure to get the accounts audited before the specified date was established, and the penalty was deemed justified. 2. Consideration of Auditor's Report: The auditor's report dated 21st Dec 1989, filed with the return, was based on unaudited accounts. The Tribunal held that filing Form 3CA without audited accounts does not meet the requirements of Section 44AB, thus justifying the penalty. 3. Excessiveness and Legality of the Penalty: The Tribunal found the penalty neither excessive nor contrary to law. The imposition of penalty was deemed proper based on the assessee's failure to comply with statutory requirements. 4. Validity of Penalty Proceedings after Assessment Set Aside: The Tribunal clarified that penalty proceedings under Section 271B are independent of the assessment proceedings. Setting aside the assessment for de novo purposes does not automatically cancel penalty proceedings. The penalty proceedings initiated during the original assessment remained valid and enforceable. 5. Reasonable Cause for Non-Compliance with Section 44AB: The Tribunal rejected the plea of reasonable cause due to the Government's delay in appointing auditors. It was held that the assessee was not prohibited from appointing a private auditor, and the failure to do so was not justified. 6. Requirement of Furnishing Audited Balance Sheet and Accounts: The Tribunal noted that while furnishing audited accounts may not be explicitly required under Section 44AB and Rule 6G, the penalty was imposed for failing to get the accounts audited before the specified date. Non-furnishing of audited accounts indicated non-compliance with Section 44AB. 7. Existence of Mens Rea or Mala Fide Intention: The Tribunal held that the doctrine of mens rea is not applicable in this case. The assessee's action of appointing a private auditor only to secure Form 3CA without audited accounts indicated a guilty mind and an attempt to evade statutory obligations. 8. Necessity of Issuing a Notice under Section 139(9): The Tribunal found no requirement for issuing a notice under Section 139(9) for non-furnishing of the audit report. The return was not considered defective under the provisions of Sections 139, 142, 147, 148, and relevant rules. 9. Specificity and Validity of the Show-Cause Notice: The show-cause notice under Section 271B was deemed valid as it specified the default. The Tribunal held that the notice sufficiently apprised the assessee of the default, and the assessee had the opportunity to defend itself. 10. Timeliness of the Penalty Order: The Tribunal found the penalty order timely. The penalty was imposed within the statutory period provided under Section 275(1)(a), considering the date of the CIT(A)'s order and the initiation of penalty proceedings. 11. Justification of Penalty when Assessment Could be Completed Without Audit Report: The Tribunal rejected the argument that penalty is unjustified if the assessment could be completed without the audit report. The purpose of Section 44AB is to ensure timely compliance, and failure to meet this requirement justifies the penalty. Conclusion: The Tribunal upheld the penalty under Section 271B, dismissing the assessee's appeal. The penalty was deemed justified based on the assessee's failure to comply with statutory audit requirements, and various pleas raised by the assessee were found to lack merit.
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