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TMI Blog1998 (9) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee under s. 271B stating: "the assessee should have taken due care to get his accounts audited and 44AB report should have been filed in time". Against the said order the assessee appealed to the Dy. CIT(A). Before the Dy. CIT(A) the assessee argued that under s. 44AB the assessee has to obtain the report by a specified date and which he has complied with and the AO without applying his mind properly levied the penalty. The Dy. CIT(A) quoting the amended provisions of s. 44AB confirmed the penalty on the assessee by stating that the assessee was required to furnish the audit report in the prescribed form duly signed and verified by the chartered accountant by the specified date. 3. The assessee s authorised representative argued before us that s. 44AB has been amended w.e.f. 1st July, 1995, by substituting the words furnished by in place of obtained before . According to the authorised representative under s. 44AB the assessee was required only to get his accounts audited before the specified date if his turnover exceeds a specified limit and he has also to obtain the audit report. In the case of the assessee the assessee has to obtain the audit report by 31st Oct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the audit report as obtained under s. 44AB by 31st Oct., 1993. The assessee failed to furnish the audit report by 31st Oct., 1993, but filed the same along with the return on 21st Dec., 1994. Therefore, he defaulted the provisions of s. 271B and, therefore he is liable to penalty under s. 271B. According to the Departmental Representative the language of s. 271B is simple and clear and there cannot be any other interpretation except the one which he argued. 5. On a rejoinder the assessee s authorised representative argued that there is no obligation for the filing of the audit report during the relevant assessment year by the date as specified under s. 139(1). Sec. 271B simply stated that audit report should be filed along with the return filed under s. 139(1) and no useful purpose would have been served by filing the audit report without filing the IT return. The assessee as soon as filing his IT return enclosed the audit report which he obtained in compliance with the provisions of s. 44AB. According to him there was no obligation on the part of the assessee to furnish the audit report by 31st Oct., 1993. He invited our attention to the amendment made by the Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive societies are also required to be audited under the Co-operative Societies Act, 1912. There is, however, no obligation on other categories of taxpayers to get their accounts audited. 17.2. A proper audit for tax purposes would ensure that the books of account and other records are properly maintained, that they faithfully reflect the income of the taxpayer and claims for deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of the accounts before the tax authorities and considerably saving the time of AOs in carrying out routine verifications like checking correctness of totals and verifying whether purchases and sales are properly vouched or not. The time of the AOs thus saved could be utilised for attending to more important investigational aspects of a case." From the said quotation the purpose of introducing ss. 44AB and 271B is to ensure that the assessee should maintain proper books of accounts and records and his income is based on such books of accounts and records. 7. Now we may refer to s. 271B of the IT Act, 1961 as was applicable to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under s. 139(1). We fully agree with the authorised representative that no penalty can be imposed until and unless there is an obligation or duty is cast on the assessee to comply with. Since there is no such provision requiring the assessee to furnish the tax audit report within the time as stipulated under s. 139(1) the provisions of s. 44AB were amended w.e.f. 1st July, 1995. This amendment was retrospective one, which is clear from the Memorandum explaining the provisions in Finance Bill, 1995. The relevant para is being reproduced as under: "Sec. 44AB of the IT Act, 1961, requires every person carrying on business or profession with gross receipts exceeding prescribed limits to get his accounts audited by an accountant before 31st October, as the case may be, 30th November. Sec. 139(6A) require an assessee engaged in business or profession to furnish, inter alia, the report of audit obtained under s. 44AB along with return of income. Sec. 271B prescribes levy of penalty for (1) failure to get the accounts audited as required under s. 44AB; (2) failure to obtain a report of such audit; or (3) failure to furnish the said report along with the return of income filed, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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