High Court Of Madras
CIT vs. Apex Laboratories (P) Ltd.
Section 271B
Asst. Year 1993-94
P.D. Dinakaran & P.P.S. Janarthana Raja, JJ.
Tax Case (Appeal) No. 1565 of 2005
24th January, 2006
Counsel Appeared :
Mrs. Pushya Sitaraman, for the Appellant
JUDGMENT
P.P.S. Janarthana Raja, J. :
The present appeal is filed under s. 260A of the IT Act, 1961 by the Revenue, in ITA No. 879/Mad/1999, dt. 10th Feb., 2005, passed by the Tribunal, Madras “A” Bench raising the following substantial questions of law :
“1. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that no penalty is imposable under s. 271B for non-compliance with the provisions of s. 44AB on the ground that the returns were filed belatedly neither under s. 139 nor on a notice under s. 142 ?
2. Whether, on the facts and circumstances of the case, the Tribunal was right in deleting the penalty without giving a finding of fact as to whether the tax audit report had been obtained within the prescribed time by the assessee ?”
The facts leading to the above questions of law are as under : The relevant assessment year is 1993-94. The assessee filed its return of income on 13th March, 1997 along with the audit report under s. 44AB. As the return was a belated one and there was no income assessable for the assessment year under consideration, the same was treated as invalid. However, it was noticed that the audit report in Form No. 3CD was not furnished to the Department on or before the due date, namely, 31st Dec., 1994, as specified in the Act under s. 44AB. A show-cause notice under s. 271B was issued to the assessee calling for explanation as to why penalty under s. 271B should not be levied for the assessee’s failure to furnish the report of audit before the due date, as provided under s. 44AB of the IT Act. The assessee, by its reply has stated that no penalty is contemplated in the Act for assessees who have got the audit completed, and furnished the report of such audit and further stated that the delay in getting the accounts audited or in submission of audit does not attract penalty under s. 271B. The AO rejected the contention and held that it was a clear violation of the provisions under s. 44AB and penalty under s. 271B is leviable in this case, and levied a penalty of Rs. 1,00,000 under s. 271B of the Act. Aggrieved by the order, the respondent filed an appeal before the CIT(A) and held that no penalty was imposable under s. 271B as the section envisaged levy of penalty for failure to get the accounts audited, obtain a report and furnish the report along with the return filed under s. 139(1) or in response to a notice under s. 142(1). Since in this case, the report was filed under neither section, the question of specific date does not arise. The CIT allowed the appeal. The Revenue took up the matter to the Tribunal. The Tribunal held that it is sufficient if the audit report was obtained in time and the delay in filing the same would not lead to imposition of penalty, and dismissed the appeal.
We heard learned standing counsel appearing for the Revenue, who submitted that there cannot be a situation where a person files his appeal on time, but does not file his audit report on time, should be in a worse situation than a person who files both belatedly. She further submitted that the Tribunal ought to have given a finding of fact as to when the audit report was signed, and thereafter decided the issue on whether the audit report had been obtained within the time prescribed by the statute. In this case, the due, date for the return was 31st Dec., 1993. The assessee filed its return belatedly on 31st March, 1997. It may be seen that the return was not filed within the time-limit stipulated under s. 139(1). The return I for the asst. yr. 1993-94 was time-barred by 31st March, 1995, and the AO did not issue any notice under s. 142(1) calling for furnishing of the return for the said year and so, the return could not be taken as filed in response to a notice under s. 142 also. Since s. 271B envisage levy of penalty for failure to get his accounts audited, obtain a report of such audit and furnish the said report along with his return of income filed under s. 139(1) or in response to a notice under s. 142(1), the submission that the audit report should have been filed within the specified date was not correct, as the specified dates only arise to returns filed under s. 139(1) or response to a notice under s. 142(1)(i). Hence, when the return was not filed under the provision of law, no default could be made out under s. 44AB. In this case the penalty is leviable only if the assessee fails to get his accounts audited and obtain a report. In this case, the accounts were audited and also the assessee got the audit report, but the same was filed along with the return which was filed belatedly. Hence, penalty cannot be imposed under s. 271B of the Act. In the foregoing conclusions, we find no error in the order of the Tribunal and hence no substantial questions of law arise for consideration of this Court. Hence, we dismiss the above tax case. No costs.
[Citation : 284 ITR 364]
