Income Tax Appellate Tribunal - Amritsar
Jagtar Singh Sadhu Singh vs Ito on 28 April, 2000
Equivalent citations: (2001)71TTJ(ASR)659
ORDER
H.L. Karwa, J.M. This appeal by the assessee is directed against the order of the Commissioner (Appeals), Bhathinda, dated 15-1-1998, confirming the penalty of Rs. 1 lakh imposed by the assessing officer under section 271B of the Income Tax Act, 1961.
2. The facts giving rise to the present appeal are that the assessee filed its return of income on 29-3- 1994, along with the audit report dated 30-10-1992. The assessee failed to furnish its return of income under section 139(1) on or before 31-10-1992, along with the audit report and, therefore, the assessing officer initiated penalty proceedings under section 271B of the Act. A notice under section 274 read with section 271B was issued to the assessee to show cause as to why penalty under section 271B of the Act should not be imposed for the default committed by it. In response to the said notice, the assessee filed its letter dated 6-9-1994, stating that in the case of the assessee, no penalty under section 271B was leviable. It was also contended that the assessee got audited its accounts and obtained the report within the specified time as per the provisions of section 44AB of the Act. It was also contended that the assessee had not filed the return of income under section 139(1) of the Act or in response to notice under section 142(1)(i) of the Act and, therefore, no penalty under section 271B was leviable. The assessing officer did not find any merit in the submission made by the assessee and he accordingly levied the penalty of Rs. 1 lakh under section 271B of the Act.
3. On appeal, the learned Commissioner (Appeals) confirmed the penalty imposed by the assessing officer. The learned Commissioner (Appeals) while confirming the order of the assessing officer, held that in the instant case, the assessee has failed to get the accounts audited or has failed to obtain the report of such audit before the specified date, i.e., 31-10-1992. He further observed that assessee has failed to file the return of income immediately after the receipt of the audit report.
4. Before us, Shri Ravish Sood, the learned counsel for the assessee, reiterated the submissions made before the authorities below. He further submitted that both the authorities below have not correctly appreciated the relevant provisions of law and, therefore, the impugned order may be set aside and penalty under section 271B may be deleted or cancelled. Shri Ravish Sood further pointed out that both the authorities below were not justified in holding that the audit was not completed before 31-10-1992, particularly, when the audit was completed on 31-10-1992, by Shri Jagjiwan Lal, chartered accountant, who had put the date at the time of signature. In support of above contention, Shri Ravish Sood, the learned counsel for the assessee, also drew our attention to the statement of Shri Jagjiwan Lal, chartered accountant dated 3-10-1996, recorded by the assessing officer. In the said statement, it has been specifically stated by Shri Jagjiwan Lal, chartered accountant, that "The audit report was handed over to the party on 30-10-1992, i.e., Shri Jagtar Singh at Moga". He further stated that he had received Rs. 2,000 towards the audit fees on the same date. The learned counsel for the assessee further submitted that as per the provisions of section 44AB. The only requirement was to get the accounts audited within the time. Since the assessee duly complied with this requirement, penalty under section 271B of the Act was not leviable. However, it was also submitted that the return of income was filed under section 139(4) of the Act along with the audit report dated 30-10-1992, and, therefore, in view of the decision of the Honble Punjab & Haryana High Court in the case of ITO v. Kaysons India, Gur Mandi, Sonepat in the IT appeal No. 39 of 1999, dated 3-2-2000 (2000) 18 DTC 421 (P&H-HC) : (2000) 246 ITR 489 (P&H) no penalty under section 271B of the Act was leviable. He accordingly urged that the impugned penalty may be cancelled.
5. Shri S.C. Pahwa, the learned Departmental Representative strongly supported the orders of the authorities below. He also invited our attention to the statement of Shri Jagjiwan Lal, chartered accountant dated 3-10-1996, and submitted that from his statement, it would be clear that he has not completed the audit before the specified date. According to the learned Departmental Representative as per statement of Shri Jagjiwan Lal, chartered accountant, the relevant records viz cash books, ledger, journal, etc. were received for the purpose of audit between 16-10-1992, to 29-10-1992, and thereafter it was not possible for him to complete the audit within such a short period particularly when voluminous work was involved. He accordingly submitted that the assessee failed to get the accounts audited in time, as required by section 44AB of the Act.
6. We have carefully considered the rival submissions and have also gone through the orders of the authorities below. The assessee has also filed a copy of statement of Shri Jagjiwan Lal, chartered accountant, recorded on 3-10-1996. The said statement is reproduced hereinafter :
"Q. When the books/papers/documents were received by you for audit ?
A. I cant recollect at present when the books/papers/documents were received by me from M/s Jagtar Singh Sadhu Singh, B.P. However, I remember that the books were received for audit after 16-10-1992 to 29-10-1992, because I shifted my office from Moga Mandi to Railway Road on 16-10-1992. "Cash book, ledger and journal. No receipt register or dispatch register is maintained by me.
Q. When the report was handed over by you to the assessee and when you received the audit fee ?
A. The audit report was handed over to the party on 30-10-1992, i.e., Shri Jagtar Singh at Moga. The audit fee of Rs. 2,000 was received by on the same date which is duly entered in cash book p. 16, dated 30-10-1992 (in the name of Sadhu Singh Jagtar Singh). No receipt book is maintained but it is given on the letter pad itself.
Q. What book of account are maintained by you ?
A. I being the proprietor of M/s Lal & Associates, maintain ledger and cash book only.
Q. What was the mode of receipt of audit fee ?
A. The audit fee of Rs. 2,000 was received in cash.
Q. How much time you take to prepare the audit report in such cases ?
A. Generally, a weeks time is taken for the finalising of the audit report. However, if any case comes on 30th October then the same is disposed of on the same date with the help of old employees.
From the above statement, it is crystal clear that the audit report was handed over to the assessee on 30-10-1992. It is also clear that the relevant books of accounts were received by Shri Jagjiwan Lal, chartered accountant for the audit purpose between 16-10-1992, to 29-10-1992. He also received Rs. 2,000 towards the audit fee, which was duly reflected in the cash book at p. 16 dated 30-10-1992. He has also stated that generally a weeks time is taken for finalisation of the audit report. The assessing officer has not brought any evidence on record to show that the statement given by Shri Jagjiwan Lal, chartered accountant was not reliable or he has made a false statement before him. In our considered view, in the absence of any evidence to contrary, date mentioned in the audit report had to be accepted as correct date of getting the account audited and as per this date i.e., 30-10-1992, the audit was within time. Thus, it cannot be said that assessee has failed to obtain the report of such audit in terms of section 44AB before the specified date. Furthermore, it is an admitted fact that no return has been filed either under section 139(1) of the Act or in response to any notice under section 142(1)(i) of the Act and as such there could possibly be no penalty for not furnishing the audit report along with such a non-existent return. It is also relevant to point out that prior to the amendment of section 44AB by the Finance Act, 1995, with effect from 1-7-1995, there was no requirement to submit the audit report before the specified date and, therefore, the authorities below were also not justified in holding that the assessee failed to submit the audit report immediately after obtaining the same. In our opinion, the decision of the Honble Punjab & Haryana High Court in the case of Kaysons India (supra) relied upon by the learned counsel for the assessee squarely applicable to the facts of the present case. We, therefore, hold that no penalty under section 271B of the Act can be levied in this case particularly when the assessee has obtained the audit report before the specified date and the same was furnished along with the return of the income-tax under section 139(4) of the Act. It is true that where an assessee does not file any return under section 139(1) or in response to notice under section 142(1)(i) of the Act, but files a belated return together with the audit report, no penalty under section 271B can be levied.
7. In view of the above, we do not see any justification for imposing the penalty under section 271B of the Act and accordingly, we cancel the same.
8. In the result, the appeal is allowed.