9911796707
TMI Blog2003 (12) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... date of 1-7-1995 cannot be applied in relation to assessment year 1992-93. It may also be relevant here to make a useful reference to the judgment of Hon'ble Punjab Haryana High Court in the case of ITO v. Kaysons India [ 2000 (2) TMI 58 - PUNJAB AND HARYANA HIGH COURT] and in the case of CIT v. Janta Service Station [ 2000 (12) TMI 33 - PUNJAB AND HARYANA HIGH COURT] in which the Hon'ble High Court had held that the Tribunal was justified in cancelling the penalty levied u/s 271B in a case where the audit report had been obtained before the specified date but had been filed along with belated return u/s 139(4) and not with the return filed u/s 139(1). Ordinarily, the date on which audit report is signed by the auditor, is considered to be the date on which the assessee had obtained the said audit report because in most of the cases, the auditors are themselves the tax consultants of the said concern and the audit report is retained or given back to them for furnishing the same along with their income-tax returns, as was done by the assessee in the present case. Once it is accepted that the audit was got completed on 30-10-1992 i.e., before the specified date, the further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 44AB within the stipulated period." 2. The relevant and material facts for the disposal of this ground of appeal are that the assessee-firm was required to obtain audit report as per provisions of section 44AB on or before 30-10-1992 and file the same along with return within stipulated period as provided under section 139(1) of IT Act. Since the same was not filed within stipulated period as provided under section 139(1) the Assessing Officer visited the business premises of the assessee-firm and recorded the statement of Raj Kumar, partner of the assessee-firm on 4-11-1992 wherein he specifically stated before the Assessing Officer that the return for 1992-93 had already been filed and acknowledgement thereof was available with the C.A., Shri R.K. Kapoor. He further specifically stated that the assessee-firm has not obtained the tax audit report under section 44AB but the same was available with the C.A. Shri R.K. Kapoor. On that very day the Assessing Officer also visited the office of the C.A. Shri R.K. Kapoor and came to know that Shri Kapoor was out of station for 3/4 days. Thereafter the Assessing Officer issued a show-cause notice under section 271B d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee but was with the C.A. and his further statement that the return along with report must have been obtained by the assessee otherwise no report could have been filed by the assessee and secondly on the reasoning that the reply of the assessee clearly states that the audit was completed within time i.e., 30-10-1992 which was apparent from the certificate of the auditors and thus the penalty, according to the CIT(A), was a result of misunderstanding on the part of the Assessing Officer and hence liable to be deleted and accordingly he cancelled the penalty imposed by the Assessing Officer. 6. Now, aggrieved with the order of CIT(A), the revenue is in appeal before us for setting aside the order of the CIT(A) and restoring that of the Assessing Officer. 7. According to the ld. DR for the revenue firstly the report is antidated and secondly when the partner of the firm, Shri Raj Kumar, in his statement recorded by the Assessing Officer on 4-11-1992 has categorically stated that the audit report has not been obtained till date then any subsequent explanation by the assessee asserting that the audit report was obtained by the assessee on 30-10-1992, was an after-thought and so th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his arguments contended that in this case the assessee has failed to prove that the audit report was completed and obtained on 30-10-1992 and the CIT(A) was in error in accepting the self-serving explanation of Shri Raj Kumar, the partner of the assessee-firm, which has been simply given in order to get rid of rigour of imposition of penalty amount imposed by the Assessing Officer because his explanation was contrary to what he stated before the Assessing Officer on 4-11-1992. 9. On the other hand the ld. AR for the assessee has relied upon the reasoning given in the order of the CIT(A), its reply given in response to notice under section 271B. 10. We have considered the rival submissions of both the parties, perused the records and carefully gone through the orders of lower authorities. 11. The simple question required to be decided by this Bench is whether a categorical statement made by a partner of the assessee-firm before the Assessing Officer, should be accepted or whether the retraction from the same by that very partner furnished subsequently in response to penalty notice issued by the Assessing Officer, in the form of explanation of the assessee, should be accepted. 12. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not have specifically stated that the audit report has not been obtained till date i.e., upto 4-11-1992. (iii) The audit report as per requirement of section 271B is to be physically obtained on behalf of the assessee but neither according to the explanation of Raj Kumar, nor in the certificate given by the CA nor in the tax audit report, it has anywhere been stated as to who obtained the tax audit report on behalf of the assessee. This was a very significant fact which was required to be disclosed by the assessee while giving the explanation as to who obtained the audit report on 30-10-1992 on behalf of the assessee. In these facts, the bare explanation of the assessee that the audit report was obtained by the assessee on 30-10-1992, does not prove the fact that the audit report was obtained on behalf of the assessee on 30-10-1992. 14. Hence we are of the opinion that the Assessing Officer was fully justified in rejecting the explanation of the assessee with regard to the fact that the assessee had obtained the audit report on 30-10-1992. He was also justified in imposing the penalty upon the assessee because by not obtaining the audit report within prescribed period, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e undersigned remained under the belief that the return has been filed. Sir, that is the reason that when your honour visited our premises on 4-11-1992, the undersigned stated that the return of income has been filed. It was only when we later enquired from Shri Prem Kapoor/R.K. Kapoor about the return that they stated that the return had not been filed because the TDS certificates were still not received by them. We immediately gave them the TDS certificates that were available with us and requested, them to file the return without waiting for the balance ones. Accordingly, since 7th 8th were holidays, the return was filed by them on 9-11-1992. Sir, at the time of your honour's visit to our business premises, to the best of my remembrances I had told your honour that the audit had been completed and the return of income had also been filed. Your honour had also seen the books of account and even enquired from me about the tick marks which were on the books and I had explained that the same were by the auditors. Sir, it appears that by some mistake somewhere, your honour probably got the impression that the books of account were not audited. However, sir, how could I say that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also a single sentence. It is trite law that a statement has to be read as a whole and conclusions drawn only thereafter. 8. That apart the C.A gave a certificate (reproduced earlier) and in the fitness of things the Assessing Officer should have confronted him about the facts certified but chose not to do so stressing on a part of the statement of Raj Kumar. After all the C.A gave the certificate fully realising the implications in case the fact certified was not correct. It may be relevant to state that the CIT(A) in para 5 of his order has stated and which is not rebutted by Revenue in the hearing before the Tribunal that the assessee filed a photocopy of receipt dated 30-10-1992 obtained by the Auditor while handing over the audit report to the assessee. 9. My learned colleague, the Judicial Member has relied heavily on the portion of the statement of Raj Kumar to which the Assessing Officer has adverted in levying the penalty and has attributed complete knowledge to him in running the affairs of the firm. He has also accepted at page 7 of his order that the certificate of the CA proves that the audit under section 44AB was completed on 30-10-1992 i.e., within the prescribed ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid appeal and the following point of difference was referred by them to the Hon'ble President, Income-tax Appellate Tribunal for the nomination of the Third Member: - "Whether on the facts of the case and in law, the penalty under section 271-B of the Income-tax Act, 1961 was not leviable on the assessee as held by the Vice President or the view taken by the Judicial Member to the effect that the penalty was leviable, was the correct one?" 2. The Hon'ble President, Income-tax Appellate Tribunal, nominated my name as Third Member. The case was heard on 8-12-2003. 3. The learned Departmental Representative relied upon the reasons mentioned in the penalty order and the elaborate reasons given by the learned Judicial Member in his proposed order. He also placed heavy reliance on the statement of Shri Raj Kumar, partner of the respondent assessee in which he inter alia, admitted that tax audit report had not been obtained by the firm till that date. The learned Departmental Representative strongly urged that penalty levied by the Assessing Officer under section 271-B has rightly been confirmed by the learned Judicial Member. 4. The learned counsel for the respondent assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax audit report and stated that the same had not been obtained by the firm. The assessee in the course of penalty proceedings under section 271B submitted a certificate from M/s. R.K. Kapoor Company, Chartered Accountants confirming that the books of account of the assessee-firm had been audited by them and as per their records, the balance-sheet, other statements of accounts and audit report under section 44AB in the prescribed forms 3CB 3CD along with annexures thereto had been given by them to the respondent assessee on 30-10-1992. The assessee vide letter dated 23-11-1992, stated before the Assessing Officer that the audit report in the prescribed form was obtained from the auditors on 30-10-1992 and the same was given along with other papers for filing income tax return to M/s. R.K. Kapoor Co., Chartered Accountants (Sh. Prem Kapoor/R.K. Kapoor). The return could not be filed by them before the due date for want of some TDS certificate. Therefore, the return of income was filed late on 9-11-1992 along with tax audit report. After submission of the said letter dated 23-11-1992, the Assessing Officer neither examined any of the partners of the respondent firm, nor examined t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid amendment, there was no specific penalty provided for failure to furnishing of the report. The said provisions have been amended which now provide that penalty is leviable in a case where any person fails to get his account audited and also in cases of failure on the part of an assessee to furnish his report of such audit along with the return of income filed under section 139(1) or along with the return of income filed in response to a notice under section 142(1) of the Act. The substantial requirement of section 44AB are (i) to get the audit of accounts completed before the specified date and also (ii) to furnish the said audit report before that date along with return of income. It is an undisputed fact that the audit report had duly been completed and signed on 30-10-1992 i.e., before the specified date. Thus there was a sufficient compliance of the provisions of section 44AB and no penalty under section 271B was then leviable for failure on the part of the assessee to furnish such audit report. The amendment made w.e.f. the cut-off date of 1-7-1995 cannot be applied in relation to assessment year 1992-93. It may also be relevant here to make a useful reference to the j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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