Punjab-Haryana High Court
Punjab Land Development & Reclamation vs Deputy Commissioner Of Income Tax on 7 December, 2010
Author: Ajay Kumar Mittal
Bench: Adarsh Kumar Goel, Ajay Kumar Mittal
Income Tax Appeal No. 111 of 2001 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.
---
Income Tax Appeal No. 111 of 2001
Date of decision: 7.12.2010
Punjab Land Development & Reclamation
Corporation Limited through its Managing Director
--- Appellant
Versus
Deputy Commissioner of Income Tax
Chandigarh.
--- Respondent
CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL
HON'BLE MR. JUSTICE AJAY KUMAR MITTAL
---
Present: None for the appellant.
Ms. Urvashi Dhugga, Standing Counsel
for the respondent.
---
AJAY KUMAR MITTAL, J.
This appeal under Section 260A of the Income-Tax Act, 1961 (for short "the Act") has been filed by the assessee against the order dated 31.7.2000, passed by the Income Tax Appellate Tribunal Chandigarh Bench 'A' Chandigarh (in short "the Tribunal") in ITA No. 1266/CHANDI/93, relating to the assessment year 1989-90.
The following substantial questions of law have been claimed for determination of this Court:
Income Tax Appeal No. 111 of 2001 2
1- Whether the Tribunal was justified in law in taking a different view in the same set of facts and circumstances relating to the same appellant for the assessment year 1990-91 vis-à-vis 1989-90?
2- Whether the filing of the Tax Audit Report on the basis of un-audited accounts is sufficient compliance of Section 44AB, thus, giving reasonable cause to the appellant for not filing the tax audit report along with return on the basis of statutory audit?
3- Whether the non-appointment of statutory auditors was beyond the control of the appellant?
4- Whether the penalty proceedings initiated against the appellant are barred by limitation as per Section 275(1)(c) of the Income Tax Act?
5- Whether the imposition of penalty is illegal and arbitrary and, thus, unsustainable in law?
The facts, in brief, necessary for adjudication, as narrated in the appeal are that assessee filed its return of income for the assessment year in question declaring loss of Rs. 61,16,677/-. Along with the return, the assessee had appended a provisional tax audit report. The assessing officer observed that the said audit report was deficient and incomplete as per provisions of Section 44AB of the Act. The assessing officer initiated penalty proceedings under Section 271B of the Act and vide order dated 29.9.1992, imposed a penalty of Rs. 1,00,000/- on the assessee. The appeal preferred by the assessee was dismissed by the Commissioner of Income-tax Income Tax Appeal No. 111 of 2001 3 (Appeals) {in short "the CIT(A)"}, and consequently, imposition of penalty was upheld, vide order dated 6.7.1993. The assessee carried appeal before the Tribunal. The Tribunal also dismissed the appeal of the assessee, vide order dated 31.7.2000.
We have heard learned counsel for the respondent and have perused the record.
The learned counsel for assessee had pleaded that there was a reasonable cause within the meaning of Section 273B, which was inserted by Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986 w.e.f. 10.9.1986, as the statutory auditors of the appellant Company were appointed belatedly by the Government of India. It was further the case of the assessee that on a similar account, the penalty which was levied under section 271B for the assessment year 1990-91, the same explanation was found to be reasonable. It was argued that the Tribunal was not correct in upholding the penalty under section 271B of the Act.
The point for consideration in this case is, whether the assessee was liable for penalty under section 271B of the Act for getting its accounts audited belatedly.
We find force in the submission of learned counsel for the assessee.
The appellant-assessee had raised ground No.4 which reads as under:
"4.That the Ld. Tribunal in the same facts and circumstances relating to the appellant but for a different assessment year i.e. 1990-91 has dismissed the appeal of Income Tax Appeal No. 111 of 2001 4 the Revenue against the deletion of the penalty by the CIT (Appeals). The Ld. Tribunal therein has categorically held that the appellant had a reasonable cause in not submitting the audit report u/s 44AB on the basis of statutory audited accounts as the Company Law Board did not appoint the auditors in time."
Further, the assessee had produced a copy of the order dated 13.3.2000 passed in Income Tax Appeal No. 166/Chandi/92, relating to the assessment year 1990-91, where the Tribunal held under similar circumstances that there existed reasonable cause for the assessee in not getting its accounts audited within permissible time. It was also recorded that in such a situation, no penalty under Section 271B of the Act was exigible. The relevant findings recorded in the context in paras 2.3 and 2.4 thereof read thus:
"2.3. The learned counsel relied heavily on the orders of the learned CIT(A). He submitted that there is no default vis-a-vis the provisions of Section 44 AB and that the assessee had filed tax audit report along with the return of income. He further submitted that the assessee had reasonable cause as it was consistently writing to the C&AG of India for appointment of auditors. He relied on the decisions of the Tribunal reported in 68 ITD 560 and 71 ITD 117 as also the decision of the Hon'ble Kerala High Court reported in 235 ITR 481.
2.4. I have carefully considered the rival submissions and have perused the orders of the tax authorities. I have also Income Tax Appeal No. 111 of 2001 5 seen the case law relied upon by both the parties. I may mention that similar issue had come up before the Tribunal in the case of DCIT Vs. Goindwal Industrial and Investment Corporation of Punjab Ltd. In ITA No. 1694/Chandi/92 for AY 1990-91 wherein under similar circumstances the Tribunal held that the assessee had reasonable cause as it filed return within due date and also filed the audit report u/s 44AB along with return. The submissions of the ld. Counsel are also supported by the decision of the Tribunal in the case of Solapur Zilla Vinkar Sahkari Fed. Niyamit Vs. DCIT (Pune Bench) 71 ITD 117. In view of the foregoing I decline to interfere with the order of the Ld. CIT(A)."
In view of the above, this Court is of the opinion that the authorities below erred in holding that there was no reasonable cause for the assessee in not getting its accounts audited within permissible time. Accordingly, the questions of law are answered in favour of the assessee and the appeal is allowed. No costs.
(AJAY KUMAR MITTAL)
JUDGE
(ADARSH KUMAR GOEL)
December 7, 2010 JUDGE
*rkmalik*