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TMI Blog1998 (6) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the books were presented to the auditor in time and neither the Assessing Officer nor the CIT(A) has called for any evidence with regard to the sickness of the auditor; and (a) that the failure to obtain the audit report in time is, at best, venial or technical default. 2. After hearing the matter at length on 30-4-1998, the case was adjourned at the request of the assessee's counsel as he wanted to file certain documents. The case was listed for hearing on 13-5-1998, on which date, one of us (ld. Accountant Member) was otherwise engaged and hence a fresh date was given. Thus, the matter was listed for hearing, subject to part-heard, on 26-6-1988. 3. At the time of hearing, ld. Sr. Departmental Representative, Sri T.B.C. Rozara, submitted that Sri J.L. Basumatari, Sr. D.R. had appeared in this matter and because of his transfer from this charge, he is unable to continue the hearing in the part-heard matter. The present incumbent, therefore, requested the Bench to release the matter from part-heard list. It may be observed here that the Bench has invested sufficient time in this matter on the earlier occasion and, therefore, it is not advisable to release the same from part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-1987. The showcause notice under section 271B of the Act was issued by the Assessing Officer only on 10-10-1990 ie., after 34 months from the date of intimation. As the assessee did not comply with the terms of the notice, penalty was levied at 1/2% of the turnover. Similarly, in respect of assessment year 1987-88, the previous year ended on 14-4-1987 and the specified date for obtaining the audit report was 14-8-1987, whereas, the tax audit report was obtained on 30-10-1987 resulting in a delay of about 2 months. On the basis of the return filed on 2-3-1988 assessment was made under section 143(3) on 27-3-1990 whereas, penalty proceedings under section 271B were initiated by notice dated 10-10-1990 ie., after 7 months and the penalty was levied on 24-1-1991. It may be observed here that in the assessment order, Assessing Officer mentioned about the initiation of penalty proceedings under sections 271(1)(a) and 273 of the Act but as regards the initiation of proceedings under section 271 B, the assessment order is silent. In view of the non-compliance to the notice issued, penalty was levied under section 271B of the Act. 5. Before the CIT(A) it was contended that the proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent years 1986-87 and 1987-88 and I certified the prescribed Form No. 3-CD accordingly. 2. that due to my illness (severe type of influenza) I was unable to conduct my professional activities during the months of August' 86 and September' 86 and I prepared finally the said statement and signed the audited accounts and the prescribed form relating to the Assessment year 1986-87 on 27th September, 1986. 3. that as I remained outside Calcutta for conducting audit jobs during the period from 1st week of August' 87 to last week of October' 87 I could not sign the audited accounts and the prescribed Form No. 3-CD for the assessment year 1987-88 prior to 30th October' 87." It is the case of the ld. counsel that neither the Assessing Officer nor the CIT(A) has called for any further evidence in this regard and thus the assessee was prevented from furnishing the certificate before the tax authorities. Ld. counsel, therefore, requested us to admit the additional evidence in the substantial interests of justice. Ld. counsel further submitted that the delay is supported by reasonable cause and completely beyond the control of the assessee and thus no case is made for levy of penalty. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplies that there is no time limit to initiate penalty proceedings. 8. At the time of hearing the appeal, we have pointed out to the ld. departmental representative that this Bench, under similar circumstances, held that the penalty proceedings should be initiated during the course of assessment proceedings (see 87 Taxman 111-- Case digest/ITAT). However, ld. departmental representative submitted that under sections 271B/275 of the Act, there is no time limit for initiation of penalty proceedings. 9. We have heard the rival submissions and carefully perused the record. It is the case of the ld. counsel for the assessee that the CIT(A) has not called for any evidence with regard to the sickness of the Chartered Accountant. In this regard he has filed an affidavit of one of the partners of the assessee-firm. In the absence of any evidence to contradict the contents of the affidavit and in the interests of substantial justice, we admit the additional evidence filed in the form of confirmation letter of S. Samanta Co., Chartered Accountants. The case of the assessee is that the books were presented before the auditor well in time, but audit could not be completed before the speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Assessing Officer and the assessments were completed accordingly on the basis of the audit reports and thus the purpose for which sec. 44AB was enacted was fulfilled. In our opinion, the tax audit report was essentially to facilitate the Assessing Officer to make the assessment on the basis of the report of the auditor so that he could avoid making investigation into the facts and thus can save lot of time. The revenue has achieved this purpose in the instant case in view of returns having been filed along with audit reports. We, therefore, do not find justification in the Assessing Officer levying penalty under section 271B of the Act. 10. We may further observe that in respect of the assessment year 1986-87, assessment was made on 7-12-1987 whereas, penalty proceedings were initiated 34 months after the completion of the assessment proceedings. The assessment having been completed before 1-4-1989, sec. 275, as it was existing before 1-4-1989, applies. In the case of Sibonarayan Patro Bros. v. ITO [1996] 87 Taxman 111 (Cuttack) (Mag.), the Tribunal observed that penalty proceedings cannot be initiated separately, if not initiated during the course of assessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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