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TMI Blog2003 (4) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... als under section 260A of the Income-tax Act, 1961. Appeal No. 238 of 2001 is in respect of not obtaining tax audit report under section 44AB in time for the assessment year 1993-94 whereas Appeal No. 257 of 2001 is in the matter of imposition of penalty under section 271B of the Income-tax Act for not obtaining tax audit report under section 44AB in time for the assessment year 1992-93. For the sake of convenience, we would refer to the facts in I. T. A. No. 257 of 2001. Facts: Shri Swastik Steels Private Limited was incorporated in 1986. It manufactures steel ingots from steel scrap. The assessee filed its return of income for the year ending March 31, 1992, relevant to the assessment year 1992-93, on March 31, 1994, along with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on June 2, 1995, on the ground that the order imposing penalty was passed before the date of hearing and therefore the impugned order imposing penalty was void ab initio. That, the impugned order was arbitrary as it was passed without giving opportunity of hearing. That, the company was managed by two family groups, namely, the Gandhi group and the Jaju group, and there were differences amongst the: directors after November, 1991, and on account of these differences, Shri Pukharaj Gandhi has served a legal notice on August 10, 1992, raising various issues. That, Pukharaj Gandhi had also written a letter to the United Western Bank complaining against mismanagement of the company in June/July, 1993. That Pukharaj Gandhi had, withdrawn his pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal to this court under section 260A of the Income-tax Act. Findings: At the outset, it may be mentioned that the impugned order was passed on May 8, 1995, i.e., two days prior to the hearing which was fixed on May 10, 1995. However, one has to examine this matter in the light of totality of the facts and circumstances of this case. The assessee filed its return of income for the year ending March 31, 1992, along with the accounts and the audit report dated March 29, 1994, obtained under section 44AB of the Act. The audit report was obtained after a lapse of 14 months. The Income-tax Officer was, therefore, justified in issuing show cause notice to the assessee on February 6, 1995, calling upon the assessee as to why penalty should n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us. From the minutes, it appears that Shri Gandhi had objected to the holding of meetings on Sundays and at places outside the city limits. Secondly, the reasons given before the Commissioner of Income-tax (Appeals) show that there was an inter se fight between the Gandhi group and the Jaju group. That, the Jaju group was keen to acquire the controlling stakes in the shareholding of the Gandhi group. In the circumstances, the Tribunal was right in holding that such disputes cannot be termed as a reasonable cause for waiving or dispensing with the penalty under section 271B of the Income-tax Act. In the circumstances, we uphold the imposing of penalty of Rs. 1 lakh under section 271B for the assessment year 1992-93. However, since pena ..... X X X X Extracts X X X X X X X X Extracts X X X X
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