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Issues involved: Appeal against cancellation of penalty u/s 271-B of the I.T. Act, 1961 by CIT (Appeals) based on delay in filing audit report along with return of income.
Summary: The Revenue appealed against the cancellation of a penalty of Rs. 43,265 imposed on the assessee by the ITO u/s 271-B of the I.T. Act, 1961. The dispute arose from the delay in filing the audit report along with the return of income. The ITO initiated penalty proceedings u/s 271-B due to the audit report not being filed along with the return of income as required by section 139(1). The assessee argued that all conditions of section 271-B were met, as the audit report was obtained before the specified date of 31-10-1989. The CIT (Appeals) cancelled the penalty after considering the submissions, noting that the delay was attributable to the counsel and should not penalize the assessee. The counsel admitted fault for the delay. The appeal was supported by the learned DR, emphasizing the late filing of the return and justifying the penalty. The learned counsel for the respondent reiterated arguments supporting the cancellation of the penalty, highlighting compliance with section 44AB. The penalty u/s 271-B was deemed unsustainable by the appellate authority. The audit report was obtained before the specified date, meeting the requirements of the law. The amendment effective from assessment year 1989-90 mandated the audit report to accompany the return filed u/s 139(1) or u/s 142(1)(i). The cancellation of the penalty was upheld based on different grounds, as the return filed by the assessee was not under section 139(1) and no notice under section 142(1)(i) was issued. In conclusion, the penalty cancellation by the CIT (Appeals) was upheld, and the appeal was dismissed.
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