2003 (3) TMI 273 - AT - Income Tax

Summary

Issues:
1. Penalty imposed under section 271B by AO deleted by CIT(A).
2. Substitution of late assessee with his wife as the proprietor of the business.
3. Interpretation of provisions of section 44AB regarding filing of audit report.

Analysis:

1. The appeal was filed by the Revenue against the order of CIT(A) deleting the penalty of Rs. 1 lakh imposed under section 271B by the Assessing Officer. The AO imposed the penalty on the assessee for not filing the trading account, P&L account, and balance sheet along with the audit report in Forms 3CB and 3CD. However, the CIT(A) considered that as per the provisions of section 44AB, it was not mandatory to submit these documents along with the audit report. The CIT(A) upheld the assessee's argument and deleted the penalty amount.

2. The appeal also involved the substitution of the late assessee with his wife as the proprietor of the business. After the demise of the assessee, his wife applied to be substituted as the legal representative of the late assessee. The Department did not object to this substitution, and the wife was brought on record as the proprietor of the business. This substitution was accepted, and the wife took over the business responsibilities.

3. The main issue in the appeal was the interpretation of the provisions of section 44AB regarding the filing of the audit report. The Revenue contended that the assessee was required to file the audit report along with the trading account, P&L account, and balance sheet before the specified date. However, the Authorized Representative for the assessee argued that as per the relevant Form 3CB applicable for the assessment year in question, it was not mandatory to attach these documents with the audit report. The Tribunal agreed with the assessee's interpretation, stating that the assessee had complied with the requirements of section 44AB by submitting the audit report in the prescribed forms within the specified date. Therefore, the penalty imposed by the AO was not justified, and the CIT(A)'s decision to delete the penalty was upheld.

In conclusion, the ITAT Chandigarh-B upheld the CIT(A)'s decision to delete the penalty imposed under section 271B, dismissed the appeal filed by the Revenue, and clarified the interpretation of the provisions of section 44AB regarding the filing of the audit report without the trading account, P&L account, and balance sheet.