Audit of accounts under section 44AB of the Income-tax Act, 1961-Penalty under section 271B for assessment year 1985-86-Regarding - Income Tax - 422/1986

Audit of accounts under section 44AB of the Income-tax Act, 1961-Penalty under section 271B for assessment year 1985-86-Regarding Circular No.422 Dated 10/7/1986 To The Chief Commissioner (Admn.) and Commissioner of Income-tax, Gujarat-I, Ahmedabad. Subject: Audit of accounts under section 44AB of the Income-tax Act, 1961-Penalty under section 271B for assessment year 1985-86-Regarding. Reference is invited to Circular No. 422, dated 19th June, 1985,* to the effect that penalty proceedings under section 271B of the Income-tax Act, 1961, for failure to comply with the provisions of section 44AB should not be initiated for assessment year 1985-86 in cases where the prescribed audit report has been obtained by 30th September, 1985, and self-assessment tax has been paid within a normal period prescribed under section 139(1) of the Act for filing return of income. The Gujarat High Court in Civil Application No. 640 of 1986 in Special Civil Application No. 2068 of 1985 in its order dated April 21, 1986 (Rajkot Engineering Association/Tax Advocate Association v. Union of India [1986] 162 ITR 28) recommended that the Board may consider to extend the date specified in the Circular No. 422, dated 19th June, 1985,* from 30th September, 1985, to such other date as may be just and convenient having regard to the overall circumstances. The Board has since considered this matter. The officers working in the jurisdiction of the Gujarat High Court, while deciding on initiation of penalty itself under section 271B of the Income-tax Act, 1961 (for the assessment year 1985-86), should keep in view and give due or proper weight to the fact that the High Court upheld only on 31st March, 1986, the validity of the provisions of section 44AB. (Sd.) L.M. Prasad, Member (Income-tax), Central Board of Direct Taxes. * See [1985] 155 ITR (St.) 44.