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TMI Blog1998 (9) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... iled to get its accounts audited by 31st October, 1989 when the same has been relied upon in the assessment proceeding and the auditor was not examined in pursuance to letter dated 23-12-1989. (b) the return of income filed on 31-10-1989 was invalid as far as the defect was neither removed within the specified period desired vide notice under section 139(9) dated 4-12-1989 nor any extension was sought to remove the defect. (c) no default has been specified for which penalty under section 271B was levied by the learned DCIT, Spl. Range, Bhatinda and upheld by the learned CIT(A), Bhatinda. (d) it has not been established that the failure to file the audit report within the specified period was without any reasonable cause. (3) That wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding penalty proceedings under section 271B. The assessment proceedings were started by the Assessing Officer and assessment was completed under section 144 vide order dated 27-6-1990 and alongwith the assessment order, the appellant was again served with the penalty notice under section 271B read with section 274. The appellant filed explanation for late submission of audit report under section 44AB before the Assessing Officer and submitted that the audit report was filed within the time allowed by the Assessing Officer. The Assessing Officer was not convinced with the plea taken by the appellant and accordingly imposed penalty of Rs. 1.00 lakh. 5. Aggrieved against the order passed by the Assessing Officer the appellant filed appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avail since 271B expressly provides that audit report is to be filed along with the return of income under sub-section (1) of section 139. Thus, there is a twin requirement of law that audit report should be completed before the specified date and it should be filed along with the return of income. The plea of the counsel that report was completed by 21-10-1989 is also not borne out from the record. The Manager of the firm vide its letter dated 26-12-1989 stated that since the dealing clerk in the Auditor's office was on long leave, the report could not be submitted and the report was submitted on 20-2-1990 i.e, much after the filing of the return. The certificate of the Auditor to the effect that audit report had been completed by 31-10-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground taken by the learned Counsel of the appellant. Section 275(1) of the Income-tax Act, deals with the limitation for imposing penalties under the chapter dealing with the penalties. Section 275(1)(c) reads as follows:- "in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later." In any other case, after the amendment to section 275 w.e.f. 1-4-1989, the concept of limitation is drastically changed. The period of limitation is to be reckoned from the end of the financial year in which proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e latest changes in the Act by incorporating various sections like 271A, 271B, 271C, 271D, 271E, 272A(1)(a), (1)(c) and (1)(d), sections 272AA, 272BB, 272A sub-section (2) are the penalty provisions which are totally independent in itself and are not arising out of the assessment proceedings. The calculation of the penalty is also not linked with the assessed income or assessed tax. Section 275 of the Income-tax Act has given separate period of limitation for these penalties. Therefore, the period of limitation will start from the end of the month when the penalty proceedings were initiated. 7. If one goes through the penalty order there is no ambiguity regarding initiation of penalty proceedings. After filing the return of income on 31-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act. The power of jurisdiction regarding omission for which penalty is envisaged in the Act is assumed the moment a notice under section 271B is issued. After notice under section 271B is issued, the Assessing Officer is bound to issue notice under section 274 and after issue of notice under section 274, the Assessing Officer has to complete penalty within the time allowed under section 275. Therefore, we are of the opinion that the first notice issued under section 271B was the time when the Assessing Officer assumed the jurisdiction and the same was to be culminated by passing an order under section 271B within the time allowed under section 275(1)(c). Therefore, the penalty imposed by the Assessing Officer is invalid and as such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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