Income Tax Appellate Tribunal - Jodhpur
Income Tax Officer vs Gulabdass Stores on 31 July, 2000
ORDER
S. R. Chauhan, J.M.
1. This appeal by Revenue for asst. yr. 1991-92 is directed against the order of CIT(A), Jodhpur, dt. 11th February, 1994, whereby he deleted the penalty levied by AO under s. 271B.
2. We have heard the arguments of both the sides and also perused the records.
3. The Revenue has raised only one ground of appeal before us disputing the cancellation of penalty of Rs. 23,616 imposed under s. 271B by AO for contravention of s. 44AB. The learned Departmental Representative of Revenue has contended that this case is not covered by the decision of this Bench dt. 29th June, 2000, rendered in ITA No. 2480 (Jp) of 1994, for asst. yr. 1993-94 in Asstt. CIT vs. M/s. Shankerlal Agarwal & Co. [reported at (2000) 69 TTJ (Jd) 463]. He has contended that the audit report though obtained on 16th August, 1991, was not furnished along with return. He has contended that the assessment under s. 143(1) was completed on 30th September, 1991. He has contended that the AO initiated proceedings for penalty under s. 271B on 10th September, 1992, and it was then that the audit report under s. 44AB was filed by the assessee on 10th September, 1992, itself. He has also contended that prior to 10th September, 1992, the AO had issued notices twice and on each of the two earlier dates the assessee failed to file the audit report which he had not filed along with the return. He has contended that the assessee's return of income was filed on 26th August, 1991, i.e., under s. 139(1). He has contended that the assessee had not given any satisfactory reason as to why the audit report was not filed for as long a period as one year. As against this, the learned authorised representative of assessee has contended that the notices were not given specifically to furnish the audit report but were given for seeking information from the assessee. He has furnished a copy of this Tribunal's order dt. 29th June, 2000, passed in ITA No. 2480 (Jp) of 1994 in the case of M/s. Shankerlal Agarwal & Co. referred to above and referring to para 6 on its p. 4 has contended that on parity of sub-s. (6A) of s. 139. Here also notice under s. 139(9) was required to be given. He has also contended that even if notice is not considered necessary to be given by AO the return remains defective and so invalid. He has contended that in the instant case no notice was given to the assessee. He has referred to cl. (bb) of Explanation below s. 139(9) and contended that if audit report required under s. 44AB is not attached with the return then return is defective and so notice under s. 139(9) was necessary to be given for rectifying the mistake whereas no such notice under s. 139(9) was given to the assessee in this case and so the penalty cannot be levied under s. 271B as the same will contravene the principle of natural justice as has been held by this Bench in respect of s. 139(6A) in the above referred decision. He has also contended that apart from the above legal lacuna in the instant case, the assessee has also pleaded reasonable cause for there being a mistake of assessee's counsel. He has contended that the audit report got detached from the return in the office of the assessee's counsel and was though mistake placed in the office file of the assessee's counsel and so it could not be furnished along with the return. He has contended that for the mistake of the counsel the assessee could not suffer. He has contended that the assessee's counsel's mistake constituted a reasonable cause. He has cited the following decisions in support of his contention and has also furnished copies of the same :
(1) Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC); (2) Rajkot Engg. Association & Ors. vs. Union of India & Ors. (1986) 162 ITR 28 (Guj); (3) Imran-Ur-Rehman Kidwai vs. ITO (1997) 58 TTJ (Del) 537 : (1997) 62 ITD 33 (Del); (4) CIT vs. Shah Bros. (2000) 243 ITR 455 (Kar);
(5) Indian Handloom Textiles vs. ITO (1999) 64 TTJ (Cal) 13 : (1999) 68 ITD 560 (Cal); and (6) Saroj Agarwal vs. CIT (1985) 156 ITR 497 (SC)
4. We have considered the rival contentions, relevant materials on record as also the cited decisions. In this case the return of income was filed under s. 139(1) and not under s. 139(4). The matter involved in our earlier order dt. 29th June, 2000, in ITA No. 2480 (Jd) of 1994 in the case of Asstt. CIT vs. Shankerlal Agarwal & Co. (supra) was of a return filed under s. 139(4) and not one filed under s. 139(1). The category of returns being filed under s. 139(1) or in compliance with notice under s. 142(1) stood, in the fact-situation of that case, excluded as is also clear from the discussions made in para 9 on page 7 of the said order. Besides, the requirement of furnishing of the audit report under s. 44AB along with the return, that was considered in the cited decision in para 6 on pages 4 and 5 of the said order was, one arising from sub-s. (6A) of s. 139, and it was the said provision of sub-s. (6A) which provided that the prescribed form of return shall require the furnishing of audit report. As such in the situation postulated under sub-s. (6A), or for that matter, being considered by this Tribunal in para 6 on pp. 4 and 5 of the above referred decision dt. 29th June, 2000 the requirement for furnishing the audit report arose from the return itself and not independently. We may however, make the legal position regarding the requirement of issuing notice under s. 139(9) and on failure thereof the resultant violation of principle of natural justice, further clear that the position with respect to a requirement in sub-s. (6A) of s. 139, or for that matter, with respect to a requirement arising from the return itself is on a different footing from the situation wherein the requirement regarding the filing of audit report arises independent of the return itself, and such other situation deserves to be treated differently. One such different situation is that postulated under s. 44AB as applicable w.e.f. 1st July, 1995, whereby the furnishing of audit report has been made essential i.e., the furnishing of audit report under s. 44AB, w.e.f. 1st July, 1995, is independent of the requirement of the return and may also be filed separately and independently. Another situation of an independent requirement of filing of the audit report under s. 44AB is also postulated in s. 271B as amended w.e.f. 1st April, 1989, necessitating the filing of the audit report under s. 44AB along with return which is filed under s. 139(1) or s. 142(1). Besides, we may also make it clear that the issuance of notice under s. 139(9) for rectification of defect regarding the non-furnishing of the audit report and the related obligation on the part of the AO arises only when the AO tends to consider the return as defective, and that the situation of the return being treated invalid or "no return" may be entailing on non-compliance of the said notice. However, in case the AO does not consider the return to be defective for the default of non-furnishing of the audit report along with the return and proceeds further with the return for the purpose of assessment/intimation, requirement of notice under s. 139(9), related with the correction/rectification of the return as it is, comes to a halt and the said requirement may not thereafter have any material impact. In the instant case the AO did not consider the return to be defective and rather proceeded further with the return and did issue intimation under s. 143(1). Besides, the return filed in the instant case was under s. 139(1) and in the situation of a return being filed under s. 139(1) it was the provision of s. 271B which provided for the requirement of filing of the audit report under s. 44AB along with the return which was independent of the requirement of the return itself as postulated in s. 139. Here we may incidentally also note that cl. (e) of Explanation below sub-s. (9) of s. 139 speaks of the copy of the auditor's report and not the audited report itself, though all these defects situations as mentioned in the said Explanation no more have any impact when the AO does not treat a return as defective and proceeds further with the return, as we have already discussed above. In that view of the matter we are of the considered opinion that the instant case is not covered by the decision dt. 29th June, 2000, by this Bench, rendered in ITA No. 2480 (Jp) of 1994, referred to above, regarding the requirement of notice under s. 139(9) being there and on failure thereof the penalty under s. 271B being not leviable due to contravention of the principle of natural justice.
5. Now we may consider the reasonable cause aspect. The learned authorised representative of the assessee Shri Vikas Balia has contended that the default regarding non-furnishing of the audit report along with return was caused due to mistake of the assessee's counsel and not by the mistake of the assessee and so the assessee should not be penalised for his counsel's default as the counsel's mistake should be treated as a reasonable cause for the failure and that the learned CIT(A) has rightly treated the assessee's counsel's failure as a reasonable cause. Although on turning pages on file we neither found any affidavit of the counsel nor even a simple letter of the counsel claiming the mistake to be on the part of the counsel or his office, by way of evidence supportive of the reason, yet the assessee's learned authorised representative Shri Vikash Balia who argued the appeal before us, being the counsel hailing from the same office and raising contention attributing the mistake to the counsel, we may treat the mistake as having been claimed/owned by the assessee's counsel. As such considering all the facts and circumstances of the case together with the legal position as emanating from the cited decisions as also the fact in particular that the learned CIT(A) has, on consideration of facts, taken the view of treating reason for the said failure to be a reasonable cause and has cancelled the penalty, we feel persuaded to view that the assessee was prevented to furnish the audit report along with return due to a reasonable cause. In the circumstances, we find the impugned order of the learned CIT(A) cancelling the penalty under s. 271B to be quite proper. We, therefore, decline to interfere with the same.
6. In the result, this appeal of Revenue is dismissed.