9911796707
TMI Blog1990 (6) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... essary for deciding this appeal as culled out from the records of the Revenue as well as the facts stated in the remand report are as under : On 9th Dec., 1987 there was a survey of the premises of the assessee. On that occasion, a sworn statement was recorded by the Inspector from one Shri A. Mujahid Abdullah Sahib, Director of the assessee-company. The following questions and answers are relevant to the issue now under consideration: "Q.4 : I find from my records that your company has not yet submitted the return of income for the asst. yrs. 1986-87 and 87-88. What have got to say in this regard? Ans : Yes, the company has not submitted the return of income for the asst. yrs. 1986-87 and 87-88. This is due to the reason that our statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and answers, was handed over to the Inspector. The relevant portion of the minutes stated that item no. 4 of the agenda regarding the resignation of the Auditor Shri S.A. Bhatt was taken up and it was found that he had completed the audit work of some of the partnership firms in which the assessee was interested till 30th June, 1985, but the audit of the assessee's account had been completed only till 30th Sept., 1984. Thereafter, it was stated in the Minutes: "But he has received fees till Feb., 1987. The board unanimously resolved to decline the acceptance of his resignation on the ground that despite payment of fees in advance till Feb., 1987, he has failed to do the work of Almeezaan for the accounting years 1984-85 and 1985-86. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent a reply to the show-cause notice issued to it to show cause as to why penalty should not be imposed under s. 271B. This reply was dt. 18th Jan., 1988 and read as under: "We are in receipt of your notice asking us to show cause as to why income-tax returns and auditing was not completed in time. We regret to state that due to sudden and premature resignation of our Auditor. Mr. S.A. Bhatt, we were unable to complete the same at the schedule time. In fact, this was evident during your course of personal visit to our office, your good self found that the matter was discussed in the Board Meeting dt. 24th Oct., 1987. After this meeting, the Board considered the procedure to be followed with regard to appointment of Statutory Auditor with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to have been passed in the extraordinary general meeting held on 2nd Feb., 1988. In that letter they requested that they were in need of the books of account and the documents impounded and gave an assurance that they would file the Tax Audit report and the return of income for the accounting year 30th Sept, 1985 within one month from the date of release of the books of account. Therefore, they requested the release of the books to help complete the formalities. In response to this request, the books of account were returned to the assessee only on 11th July, 1989. The question of the Revenue deciding to invoke the provisions of s. 142(2A) of the IT Act for appointing the Statutory Auditor apparently was not pursued further. In the rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of his income filed under sub-s. (1) of s. 139 or along with the return of income furnished in response to a notice under cl. (I) of sub-s. (1) of s. 142, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum equal to one-half per cent of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years or a sum of one hundred thousand rupees, whichever is less." However, under s. 273B of the IT Act, 1961, no penalty is to be imposed for any such failure if the assessee proves that there was reasonable cause for the said failure. In the present case, the show-cause notice issued by the ITO was on 10th Dec., 1987 and required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the Auditor and then alone can a decision be arrived at as to whether the assessee, whose turnover according to the accounts, which had been scrutinised by the Department, was about Rs. 59.48 lakhs, was prevented by sufficient cause from getting the accounts audited by 30th June, 1986. Since the aforesaid enquiries reaming to be made, it is not possible to render a decision on the maintainability or otherwise of the penalty. Therefore, we are of the view that the only order that can be passed is to set aside the penalty us imposed. We do so accordingly. 9. Non-completion of audit, on the facts set out by us, can be bifurcated particularly into the following periods: (a) Non-completion of the audit upto the statutory date when audit wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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