High Court Of Bombay
S.V. Pathak & Company vs. N.C. Tiwari, Commissioner Of Income Tax & Ors.
Section 44AB, 264, 271B
Asst. Year 1990-91 to 1993-94
Dr. D.Y. Chandrachud & J.P. Devadhar, JJ.
Writ Petn. No. 3794 of 1996
29th June, 2010
Counsel Appeared : Hemant P. Ghadigaonkar, for the Petitioner : Vimal Gupta, for the Respondents
JUDGMENT
DR. D.Y. CHANDRACHUD, J. :
The petitioner seeks to challenge orders passed by the CIT, Kolhapur, on 28th Sept., 1995 and on 25th March, 1996. By the first of those orders, the CIT rejected an application filed by the petitioner under s. 264 questioning the imposition of a penalty on him under s. 271B. By the second of those orders, an application for rectification that was filed by the petitioner was dismissed.
The facts insofar as they are relevant fall within a narrow compass. The petitioner filed his return of income for asst. yrs. 1990-91 to 1993-94 together with audit reports under s. 44AB on 19th Nov., 1993, 23rd July, 1993 and 30th Dec., 1993. The position as it emerges from the record of this proceeding is that the petitioner had obtained the tax audit reports under s. 44AB before the specified date. The specified dates for the aforesaid four assessment years, for obtaining tax audit reports were 31st Oct., 1990, 31st Oct., 1991, 31st Oct., 1992 and 31st Oct., 1993 respectively. There is no dispute about the fact that the tax audit reports were obtained before these dates or about the fact that the tax audit reports were, as a matter of fact, filed with the return of income.
The petitioner was subjected to a penalty under s. 271B for the aforesaid four assessment years. The CIT while rejecting the representation filed by the petitioner has held that under s. 271B, it is obligatory to get the accounts audited, to obtain a report of audit as required under s. 44AB and to furnish the report.
The contention that was urged on behalf of the petitioner by learned counsel is that the obligation to furnish the tax audit report under s. 44AB by the date specified was inserted by the Finance Act, 1995 w.e.f. 1st July, 1995. It is urged that prior to the amendment the requirement was to obtain the tax audit report by the specified date under s. 44AB. This requirement, it was submitted, was complied with. Sec. 44AB provides inter alia that every person carrying on business shall, if his total sales turnover or gross receipts, as the case may be, in business exceeds forty lakh rupees in any previous year, get his accounts of such previous years audited by an accountant before the specified date. Prior to the amendment of the provision by the Finance Act of 1995, there was an obligation to obtain by the specified date, a report of the audit in the prescribed form duly signed and verified by an accountant. By the Finance Act of 1995, the requirement of obtaining the audit report before the specified date was made more stringent and by the amendment it has now been provided that the report has to be furnished by the specified date. The words “furnish by” were substituted for the words “obtain before” by the Finance Act of 1995. Sec. 271B provides that if a person fails to get his accounts audited in respect of any previous year or years relevant to an assessment year or submit a report of such audit as required under s. 44AB, the AO may impose a penalty as stipulated therein. In s. 271B, as it now stands, the requirement is that the tax audit report has to be furnished as required under s. 44AB. The requirement to furnish the report has been brought in by the Finance Act of 1995 w.e.f. 1st July, 1995. Prior thereto, the requirement was that the tax audit report had to be obtained as required under s. 44AB and the assessee had to furnish the report along with the return of income filed under s. 139(1) or in response to a notice under s. 142(1)(i). The provision in s. 271B prior to its amendment was consistent with the obligation imposed by s. 44AB. At the material time to which the proceedings relate, the requirement of furnishing the tax audit report by the specified date had not been incorporated and it was brought in only later, by the Finance Act of 1995, w.e.f. 1st July, 1995. As we observed earlier, in the present case, it has not been disputed on record that the assessee had, as a matter of fact, obtained the tax audit reports under s. 44AB by the specified date and that the reports were filed with the returns of income. In these circumstances, there is merit in the submission that the jurisdictional condition for the imposition of a penalty under s. 271B has not been fulfilled.
6. In his application for rectification, the petitioner had drawn the attention of the CIT to the fact that the requirement of furnishing the tax audit report by the specified date was introduced only w.e.f. 1st July, 1995. The application was rejected on 25th March, 1996 without recording any reasons.
7. In the circumstances, rule is made absolute by quashing and setting aside the orders dt. 28th Sept., 1995 and
25th March, 1996 passed by the CIT, Kolhapur. There shall be no order as to costs.
[Citation : 330 ITR 410]
