Madhya Pradesh High Court
Staywell Hotels P. Ltd. vs Commissioner Of Income-Tax And Anr. on 21 March, 2005
Equivalent citations: [2006]283ITR92(MP)
Author: A.M. Sapre
Bench: A.M. Sapre
JUDGMENT A.M. Sapre, J.
1. This is an appeal filed by the assessee under Section 260A of the Income-tax Act, 1961 against an order, dated February 21, 2003, passed by the Income-tax Appellate Tribunal (hereinafter referred to as the Tribunal) in I. T. A. No. 543/Ind/1997 for the assessment year 1995-96. This appeal was admitted for final hearing on the following substantial question of law:
Whether the provisions of Section 44AB of the Act, which requires furnishing of the audit report on the specified date, was mandatory so as to attract penalty under Section 271B of the Act. If so, whether the order passed by the Tribunal is justiciable?
2. Heard Shri S.K. Pawnekar, learned Counsel for the appellant and Shri R.L. Jain, learned senior counsel with Ku. v. Mandlik, for the respondents.
3. In short, the question that arises for consideration in this appeal is, whether imposition of penalty under Section 271B of the Act for the assessment year involved is justified?
4. The assessment year involved is 1995-96. It is not in dispute that the assessee is under legal obligation to comply with the provisions of Section 44AB of the Income-tax Act. It is also not in dispute that the assessee has complied with the provisions but late. In other words, the assessee filed the report in Form No. 3CD on January 27, 1996, in place of November 30, 1995, resulting in delay of about two months. It is this event that led the Assessing Officer to issue notice for imposition of penalty under Section 271B and accordingly a penalty of Rs. 51,470 was imposed. Though this was set aside by the Commissioner of Income-tax (Appeals), the same was restored by the Tribunal by the impugned order giving rise to filing of this appeal by the assessee.
5. Having heard learned Counsel for the parties and having perused the record of the case, we are of the view that the appeal deserves to be allowed.
6. In our opinion, the use of the expression "may" in Section 271B confers discretion on the Assessing Officer to impose penalty for the breach of Section 44AB. This, therefore, contemplates as to whether the explanation sought from the assessee in not complying the requirement of Section 44AB is to be accepted or not by the Assessing Officer. In other words, though compliance with Section 44AB is mandatory for the assessee its non-compliance within time attracts rigour of Section 271B, i.e., penalty. However, on a sufficient cause being shown, the Assessing Officer is vested with the discretion to condone the delay and relieve the assessee from payment of penalty amount. It then depends upon the facts of each case as to whether a case for acceptance of explanation is made out by the assessee or not.
7. In our opinion, the explanation offered by the assessee in this case ought to have been accepted being a sufficient one. The delay in filing certain form was not inordinate. It was hardly of two months. Secondly, there was an explanation offered for such delay. The delay thus did not have any deliberate intention on the part of the assessee, nor could their conduct be regarded as contumacious or with a view to evade payment of tax. If at all, there is any breach it was technical or venial in nature. In the facts of this case, no case of penalty under Section 271B was made out.
8. Accordingly and in view of the aforesaid discussion, the appeal succeeds and is allowed. Impugned order dated February 21, 2003, passed by the Tribunal in I. T. A. No. 543/Ind/1997 is set aside.
9. No costs.
Ashok Kumar Tiwari J.
10. I agree.