Commissioner of Income Tax, Allahabad vs Siraj Ahmad and Sons

Affidavit of service filed today may be taken on record. By means of the present Income Tax Appeal filed u/s 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act), the, Commissioner of Income Tax, Allahabad has raised the following question said to be the substantial question of law, which arises out of the order of the Income Tax Appellate Tribunal dated 22nd December, 1998:-

Whether on the facts and circumstances of the case and materials on record, was the I. Tax Appellate Tribunal legally justified on facts and in law in taking the view that no penalty is imposable u/s 271-B of the I. Tax, 1961.

The facts of the case are that the respondent assessee had obtained the audit report u/s 44-AB of the Act on 9th July, 1989. It had filed its return of income tax on 21.7.1989 before the prescribed date. However, the audit report was not filed along with the return and it was subsequently filed on 16th January, 1990. Penalty proceedings u/s 271-B of the Act was initiated and the Income Tax Officer, Ward No. 1, Allahabad vide order dated 20th July, 1990 imposed a sum of Rs. 28,623 as penalty. The respondent assessee, feeling aggrieved, preferred an appeal before the Commissioner of Income Tax Appeal, who vide order dated 30th April, 1993 dismissed the appeal and affirmed the order of penalty. Feeling aggrieved, the respondent assessee preferred an appeal before the Income Tax Appellate Tribunal, Allahabad, which vide order dated 22nd December, 1998 has allowed the appeal and quashed the penalty. It has held that penalty provisions u/s 271-B of the Act are not attracted where the audit report is obtained prior to the specified date and filed subsequently. The amendment made by Finance Act, 1995 was made effective from 1st July, 1995. The provision was made for filing the audit report before the specified date, the violation of which was made punishable.

We have heard Shri Shambhu Chopda, learned Standing Counsel for the revenue. In spite of affidavit of service having been filed, nobody has appeared on behalf of the respondent assessee.

We find that the order of the Tribunal is in conformity with the view taken by this Court in the case of Commissioner of Income Tax Vs. Jai Durga Construction Co., . This Court has held that

The obligation created by section 44AB of the income tax Act, 1961, as it stood prior to July 1, 1995, was merely to get the account audited before the specified date. There was no obligation to furnish that audit report before the Assessing Officer before the specified date. This obligation has been created by substituting the words ''furnish by'' for the words ''obtain before'' by the Finance Act, 1995, with effect from July 1, 1995. Thus, prior to the amendment the obligation of an assessee to whom u/s 44AB applied was merely to get the accounts audited and obtain an audit report before the specified date.

Held accordingly, dismissing the appeal, that the view that if the report has not been filed before the Assessing Officer before the specified date, the assessee becomes liable to penalty u/s 271B was not sustainable from the language of section 44AB or Section 271B and the Tribunal had taken the correct legal view, (P.857)

As the order of the Tribunal is In conformity with the view taken by this Court In the case of Jai Durga Construction Co. (supra), we are of the considered opinion that the order of the Tribunal does not give rise any question of law much less any substantial question of law. The appeal is, therefore, dismissed in limine.