2000 (4) TMI 146 - AT - Income Tax

Summary

Issues:
Penalty imposed under section 271B of the IT Act, 1961 for failure to furnish return of income and audit report on time.

Analysis:
The appeal was against the penalty of Rs. 1 lac imposed by the Assessing Officer (AO) under section 271B of the IT Act, 1961, confirmed by the CIT(A). The assessee failed to file the return of income under section 139(1) on or before the specified date and the AO initiated penalty proceedings. The assessee contended that no penalty was leviable as the audit was completed within the time specified by section 44AB. The CIT(A) confirmed the penalty, stating that the assessee failed to get the accounts audited before the specified date and did not file the return of income promptly after receiving the audit report.

The counsel for the assessee argued that the audit was completed on time and referred to the statement of the chartered accountant, stating the audit report was handed over to the party on 30th Oct., 1992. The counsel also cited a decision of the Punjab & Haryana High Court to support the argument that no penalty was leviable. The Departmental Representative supported the lower authorities' orders, highlighting that the audit was not completed before the specified date.

After considering the submissions and the statement of the chartered accountant, the Tribunal found that the audit report was handed over to the assessee on 30th Oct., 1992, within the specified time. The Tribunal noted that prior to the amendment of section 44AB, there was no requirement to submit the audit report before the specified date. Therefore, the penalty under section 271B was not justified. The Tribunal held that no penalty could be levied as the assessee obtained the audit report before the specified date and filed it along with the return under section 139(4). It was emphasized that if an assessee files a belated return with the audit report, no penalty under section 271B can be imposed.

Consequently, the Tribunal found no justification for the penalty under section 271B and canceled the same, allowing the appeal in favor of the assessee.