9911796707
TMI Blog2006 (7) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... profit and loss account of the appellant disclosed that its contract receipts exceeded Rs. 40 lakhs, during the previous year, relevant to the assessment year 1995-96, but the appellant had failed to furnish by November 30, 1995, a report of audit of the accounts, as required under section 44AB of the Act and accordingly the Assessing Officer served show-cause notices dated September 30, 1996, and February 28, 1997, on the appellant to show cause as to why penalty under section 271B would not be imposed. In its reply dated March 10, 1997, the appellant contended that it had got its accounts audited by November 29, 1995, and the same were sent by registered post on November 30, 1995, and as an evidence attached a copy of receipt issued from Rajgarh Town Post Office and. therefore, the appellant had complied with the provisions of section 44AB of the Act and was not liable for penalty under section 271B of the Act. The Assessing Officer rejected the said contention of the appellant and held that the assessee has not been able to produce any cogent evidence as proof of furnishing of the audit report by the specified period and accordingly levied penalty of Rs. 1,00,000 (Rs. one lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T [1998] 232 ITR 364 and the decision of Madras High Court in CIT v. S. Palaniswamy [1996] 219-1TR 380. Mr. Chaphekar further submitted that in any case section 271B of the Act provides that, "If any person fails to get his accounts audited in respect of any previous year or years relevant to an assessment year or furnish a report ot such audit as required under section 44AB, 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". He submitted that the word "may" shows that a discretion is conferred on the Assessing Officer to impose the penalty or not to impose the penalty and in case he imposes the penalty then discretion has been further vested on the Assessing Officer to determine the quantum of penalty. He submitted that this discretion has to be exercised by the Assessing Officer judicially, considering the facts and circumstances of each case. He submitted that in this case the appellant had in fact had i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out that in para 29.5 of the said circular, it is stated that the amendments take effect from July 1, 1995. He submitted that the contention of Mr. Chaphekar that amendment to section 44AB of the Act casting an obligation on an assessee having turnover of more than Rs. 40 lakhs to furnish a report of audit to the Department by the specified date, would not apply to the ass,essment year of 1995-96, therefore, is not correct. He submitted that the appellant was required to furnish a report of audit of his business with turnover exceeding Rs. 40 lakhs by November 30, 1995, and hence the Assessing Officer has rightly exercised his discretion and imposed a penalty of Rs. 1 lakh, under section 271B of the Act, after having found the explanation of the assessee in the show cause reply for not furnishing the audit report by November 30, 1995, not at all believable. The findings of the Tribunal in the impugned order upholding the levied penalty of Rs. 1 lakh, on the appellant under section 271B of the Act are in paragraph 6 of the impugned order, which is quoted hereunder: "After considering the arguments advanced by the parties, averments of auditor Shri Dinesh Kasat, in affidavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... audit report was ready with the assessee on November 29, 1995, especially when there was no tax liability and the return was ready for filing on October 24, 1995 as evident from page No.2 of the paper book. It is not material that the delay is of one day or inordinate in furnishing the audit report but material is to see as to whether the delay has been properly explained or not to show that some bona fide reason was there with the assessee for not furnishing the audit report in time. Unfortunately, in the present case the behaviour of the auditor and the assessee do not reflect bona fide reason that they had made all the expected efforts to furnish the audit report in time. The judgments relied upon by the learned Authorised Representative are thus not relevant as the assessee has failed to furnish a bona fide reason which constitutes a reasonable cause for the delay. We thus, find no reason to interfere with the first appellate order upholding the penalty against the assessee. The same is affirmed. In result the appeal is dismissed." From a reading of the aforesaid findings of the Tribunal, it appears that the Tribunal has not found the explanation of the appellant that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even, if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." Since the aforesaid decision of the Supreme Court had been cited before the Tribunal by the appellant, the Tribunal should have applied its mind to the aforesaid law as well as the facts and circumstances of the case and should have recorded a finding whether the appellant had acted deliberately in defiance of the provisions of section 44AB of the Act and was guilty of conduct contumacious or dishonest, warranting imposition of penalty by the Assessing Officer under section 271B. For the aforesaid reasons, we set aside the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
