Income Tax Appellate Tribunal - Jaipur
Income Tax Officer vs Jaipur Zila Dugdha Utpadak Sahkari ... on 28 August, 1992
Equivalent citations: (1993)46TTJ(JP)84
ORDER
M. A. BAKSHI, J.M. :
These two appeals of the Revenue involve common grounds. Hence, they are being disposed of for the sake of convenience, by this consolidated order.
2. Assessing Officer had imposed a penalty of Rs. 1 lakh each for asst. yrs. 1985-86 and 1986-87 under S. 271B of the IT Act, 1961 for assessees failure to get the accounts audited and to file report along with the return in terms of S. 44AB. The CIT(A) deleted the penalty on being satisfied that there was no conscious default committed by the assessee. Revenue is aggrieved. Departmental Representative Shri S. K. Kundra contended that assessee having committed a default in not obtaining the audit report in accordance with the provisions of S. 44AB and not having filed copy of the audited accounts along with the return, penalty under S. 271B was warranted. According to the learned Departmental Representative, CIT(A) was not justified in taking into account the delay in appointing the statutory auditors by the Registrar of Co-operative Department for deleting the penalty.
3. We have received written submissions on behalf of the assessee. On consideration of the rival contentions we are satisfied that the decision of the CIT(A) is in order. Sec. 44B was incorporated by the Finance Act of 1984 w.e.f. 1st April, 1985 by virtue of this section every person carrying on business and having turnover or gross receipts exceeding Rs. 40 lakhs in any previous year and in the case of persons carrying on profession, where the gross receipt exceeded Rs. 10 lakhs, was under an obligation to get his accounts of such previous years audited by an accountant before the specified date and obtain before the date the report of such audit in the prescribed form duly signed and verified by the said accountant. There is an exception provided under this sections in such cases where a person is required by or under any other law to get his accounts audited in which case it would be sufficient compliance with the provisions of S. 44AB if such person gets accounts of such business or profession audited under such law before the specified date and obtains before the date the report of the audit as required under such other law and further report in the form prescribed under S. 44AB. As already stated assessee is a co-operative society and governed by the Rajasthan co-operative Societies Act, 1965. Under S. 68 of the said Act, it is the responsibility as well as the authority of the Registrar of the co-operative societies to audit or to cause the audit done at least once in each year. Sec. 68 of the Rajasthan Co-operative Societies Act, 1965 is reproduced hereunder :
"(1) The Registrar shall audit or cause to be audited by a person authorised by him by general or special order in writing in this behalf, the accounts of every co-operative society at least once in each year."
It is evident from the aforesaid provision that the Registrar is under the obligation to audit or to cause the audit done. It is not disputed that there was delay by the Registrar of Societies in appointing the statutory auditors in the case of the assessee. The auditors had been appointed as late as on 27th June, 1988 vide order No. F. 15. The audit reports in respect of asst. yrs. 1985-86 and 1986-87 have been obtained on 7th Nov., 1988 and copies furnished before the first appellate authority as well as before us. It is in the light of these circumstances that the CIT has come to the conclusion that the delay in getting the accounts audited in accordance with S. 44AB was not deliberate and, therefore, penalty for non-compliance was not warranted. In this connection it may be relevant to point out that the idea behind incorporation of S. 44AB was to discourage tax avoidance and tax evasion we are reproducing hereunder extracts from the budget speech of the Union Finance Minister, para 71, which indicates the intention behind incorporating S. 44AB :
"71. With the reduction in rates and expeditious disposal of assessments, I believe there can now be no excuse for any leniency to be shown to those who abuse our laws. Such cases will necessarily have to be dealt with severally. In order to discourage tax avoidance and tax evasion. I am also introducing some further measures. In all cases where the annual turnover exceeds Rs. 20 lakhs or where the gross receipts from a profession exceed Rs. 10 lakhs, I am providing for a compulsory audit of accounts. This is intended to ensure that the books of accounts and other records are properly maintained and faithfully reflect the true income of the tax payer."
4. We may also point out that there has been amendment in S. 271B by the Taxation Laws (Amendment) and Misc. Provisions of Act, 1986 w.e.f. 10th Sept., 1986 by the virtue of which the words "without reasonable cause" have been omitted. One more amendment worthy of noticing is insertion of the words "or furnish the said report along with the return of his income filed under sub-s. (1) of S. 139. .." These were inserted by the Finance Act, 1988 w.e.f. 1st April, 1989. Before the aforesaid amendments the penalty under S. 271B was provided where the assessee had failed to furnish the report along with the return of income. However, w.e.f. 1st April, 1989 penalty has been provided for the default in not attaching the report along with the return also. This amendment being applicable w.e.f. 1st April 1989 is not applicable in this case. Taking the laws it existed as on the 1st day of the respective assessment years into account, penalty under S. 271B could not be imposed unless assessee had failed to obtain the report without a reasonable cause. In this case, the reason for the delay in obtaining a report is the delay beyond the control of the assessee, i.e., the appointment of the auditors by the Registrar of Co-operative Societies. Considering the totality and the circumstance of this case, we are of the view that penalty under S. 271B is not warranted in this case. The CIT(A) was thus justified in deleting the penalty for asst. yr. 1985-86 as well as for asst. yr. 1986-87. The appeals of the Revenue are accordingly dismissed.