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Issues Involved:
1. Imposition of penalty u/s 271B for non-compliance with section 44AB. 2. Reasonable cause for delay in obtaining the audit report. 3. Burden of proof and standard of proof in penalty proceedings. Summary: 1. Imposition of Penalty u/s 271B for Non-Compliance with Section 44AB: The assessee, running a proprietary concern, had a turnover exceeding the threshold stipulated u/s 44AB, necessitating an audit report by 30-9-1985. The audit report was obtained on 22-3-1986, leading to non-compliance with section 44AB. The ITO issued a show-cause notice and subsequently imposed a penalty of Rs. 1 lakh u/s 271B, citing no plausible explanation for the delay. 2. Reasonable Cause for Delay in Obtaining the Audit Report: The assessee argued that the delay was due to the non-finalisation of accounts for previous years (1982-83, 1983-84, and 1984-85), which were only completed in October 1985. The CIT (Appeals) deleted the penalty, stating that the ITO should have conducted further enquiry if he disbelieved the explanation provided by the assessee. The CIT (Appeals) concluded that the assessee had reasonable cause for the delay, thus no penalty was imposable. 3. Burden of Proof and Standard of Proof in Penalty Proceedings: The revenue contended that the assessee failed to 'prove' reasonable cause for the delay. The assessee's counsel argued that penalty proceedings are not criminal in nature and the standard of proof required is not the same as in criminal cases. The Tribunal agreed, stating that the standard of proof in penalty proceedings is based on the preponderance of probabilities, not beyond reasonable doubt. The Tribunal held that the assessee had reasonable cause for the delay and was not liable for any penalty u/s 271B. Conclusion: The Tribunal dismissed the revenue's appeal, upholding the CIT (Appeals)'s decision to delete the penalty, emphasizing the need for reasonable opportunity of hearing and proper enquiry before imposing penalties.
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