2015 (12) TMI 392 - AT - Income Tax

Penalty u/s 271B - assessee has obtained the tax audit report on 30th September 2008 and not before 30th September, 2008 - CIT (A) confirmed penalty holding that assessee has committed a default by not getting its accounts audited before the due date - Held that - The meaning of the word before in section 44AB of the Act is cloudy and uncertain. The word is possible of two meanings, one being the common meaning and the other as given in Chamber s Twentieth Century Dictionary as previous to the expiration of . Looking to the other sections of the Act as above and giving harmonious construction we hold that the expression before the specified date in section 44AB of the Act means on or before the specified date . In this view of the matter, there was no delay in audit of the accounts in terms of section 44AB of the Act - Decided in favour of assessee.

Summary

Issues:
- Appeal against penalty under section 271B of the Income Tax Act for not obtaining tax audit report before the specified date.

Analysis:
1. The appeal was filed against the penalty imposed under section 271B of the Income Tax Act by the CIT(A) for not obtaining the tax audit report before the specified date.
2. The assessee, a partnership firm, filed its return of income showing total income, and during assessment, it was observed that the tax audit report was signed on 30th September 2008, which the AO deemed as non-compliance with the requirement of obtaining the report before the specified date.
3. The appellant argued that "before" the specified date in section 44AB means "on or before" the specified date, citing relevant case laws and interpretations. The appellant also contended that the delay of one day should be considered reasonable cause for penalty deletion.
4. The Departmental Representative (DR) supported the lower authorities' decisions, emphasizing the failure to obtain the tax audit report before 30th September 2008.
5. The ITAT analyzed the provisions of section 44AB and previous judicial decisions, particularly a case from the ITAT Allahabad bench, which emphasized the requirement to obtain the audit report by the specified date, not necessarily before it. The ITAT concluded that there was no delay in the audit of accounts as per section 44AB, thereby reversing the CIT(A)'s order and deleting the penalty.
6. The ITAT's decision was based on a comprehensive analysis of the statutory provisions, interpretations of the term "before," and the legislative intent behind the penalty provisions under section 271B. The absence of contradictory decisions led the ITAT to allow the appeal and cancel the penalty.

This detailed analysis of the judgment provides a thorough understanding of the legal issues involved and the reasoning behind the ITAT's decision to reverse the penalty imposed under section 271B of the Income Tax Act.