High Court Of Madras
CIT vs. L.S. Lakshmanaswamy
Section 44AB, 271B, 273B
Asst. Year 2001-02
P.D. Dinakaran & P.P.S. Janarthana Raja, JJ.
Tax Case (Appeal) No.476 of 2007
9th June, 2007
Counsel Appeared :
T. Ravi Kumar, for the Appellant
JUDGMENT
P.P.S. Janarthana Raja, J. :
This appeal is filed under s. 260A of the Income Tax Act, 1961 by the Revenue, against the order of the Tribunal, Bench ‘D’, Chennai in ITA No. 1522/Mad/2004 dt. 28th Sept., 2006 raising the following substantial questions of law :
“1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the penalty imposed under s. 271B of the IT Act for the asst. yr. 2001-02 was not proper ?
Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the penalty imposed under s. 271B of the IT Act especially when the assessee had been taken different stands before the AO, CIT(A) and the Tribunal ?
Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the accountant had became nervous and could not file the 44AB report along with the return, without any material record to establish that fact ?
2. The facts leading to the above substantial questions of law are as under : The assessee is the proprietor of M/s S.S. Corporation, trading in yarn and fabrics. The relevant assessment year is 2001-02 and the corresponding accounting year ended on 31st March, 2001. The assessee filed return of income on 31st Dec., 2001 showing total income as Rs. 6,71,234. While processing the return of income under s. 143(1) of the IT Act (“Act” in short), it is seen that this proprietary firm’s trading account reflects a sales turnover of Rs. 4,14,17,456. The assessee was therefore required to furnish the tax audit report under s. 44AB of the Act by 31st Oct., 2001. He failed to do so. Hence penalty proceedings under s. 271B was initiated and notice was also issued on 6th Nov., 2002. The assessee sent explanation by letter dt. 25th Nov., 2002. The explanation was rejected and the AO levied penalty of Rs. 1,00,000. Aggrieved by the order of levying penalty, the assessee filed an appeal to the CIT(A). The CIT(A) dismissed the appeal and confirmed the order of the AO. Aggrieved, the assessee filed an appeal to the Tribunal (“Tribunal” in short). The Tribunal deleted the penalty on the ground that there was a reasonable cause for filing the report belatedly by only two months and hence held that there was no justification for levying penalty. Hence the present appeal is filed by the Revenue.
Learned standing counsel appearing for the Revenue submitted that the audit report is dt. 31st Oct., 2001 and the same was required to be filed on or before 31st Oct., 2001, but the same was filed only on 31st Dec., 2001. Hence there was a delay of two months. He further submitted that the reason offered by the assessee is not convincing and it is only an afterthought. The assessee has got a turnover of more than Rs. 4 crores. Hence, he ought to have more vigilant in filing the audit report. Hence the AO is justified in levying penalty. Heard the counsel. The assessee had filed tax audit report under s. 44AB of the Act on 31st Dec., 2001. The assessee had misplaced the tax challan. Therefore the return could not be filed in time and the tax audit report was also not filed in time, even though the tax audit report was ready before the due date. An affidavit was also filed by the assessee stating that the advance tax challan had been misplaced by the accountant of the concern who was trying to locate the same. It was stated that the return could not be filed in the absence of such challan and the accountant had become little nervous and therefore, even the tax audit report could not be filed on the due date. Such an explanation offered by the assessee was accepted by the Tribunal. The matter was entrusted to the employee who is not an educated person and also he did not know the consequences for which the assessee would be exposed on account of the failure to file the tax audit report. The assessee was under the firm belief that the tax audit report would have been filed in time. Only at the time of filing the return, the assessee came to know that the tax audit report was not filed by the employee, as instructed. The reasons given by the assessee was accepted by the Tribunal and the Tribunal, after considering the materials and evidence came to the conclusion that there is a reasonable cause in filing the report belatedly. Sec. 273B of the IT Act, reads as under : “Notwithstanding anything contained in the provisions of cl. (b) of sub-s. (1) of s. 271, s. 271A, s. 271AA, s. 271B, s. 271BA, s. 271BB, s. 271C, s. 271D, s. 271E, s. 271F, s. 271FA, s. 271FB, s. 271G, cl. (c) or cl. (d) of sub-s. (1) or sub-s. (2) of s. 272A, sub-s. (1) of s. 272AA or s. 272B or sub-s. (1) of s. 272BB or sub-s. (1) of s. 272BBB or cl. (b) of sub-s. (1) or cl. (b) or cl. (c) of subs. (2) of s. 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.”
From a reading of the above, it is clear that if the assessee shows sufficient cause for belated filing of audit report, the assessee is not subject to levy of penalty under s. 271B of the Act. In the present case, the explanation offered by the assessee was accepted by the Tribunal as a sufficient one. There is only a delay of two months. Whether there is a sufficient cause for belated filing of a report or not, is a pure question of fact. The Tribunal held that there is a sufficient cause for belated filing of the tax audit report. Findings given by the Tribunal are based on valid materials and evidence and we do not find any error or illegality in the order of the Tribunal so as to warrant interference.
5. Under the circumstances, no substantial questions of law arise for consideration of this Court and accordingly, the tax case is dismissed. No costs.
[Citation : 296 ITR 591]
