Commissioner of Income Tax vs Cheema Filling Station

Rakesh Kumar Garg, J.—This order shall dispose of IT Appeal Nos. 454 and 455 of 2007. The revenue has filed these appeals u/s 260A of the Income Tax Act, 1961 challenging order dated 5-4-2007 passed by the Tribunal, Amritsar Bench, Amritsar, in TTA Nos. 94 and 95/Asr/2002 in case of the assessee for the assessment year 1996-1997 by raising the following substantial question of law:

(i) Whether on the facts and in the circumstances of the case and in law, the order of the Tribunal deleting the penalty of Rs. 1,00,000 imposed u/s 271B of the Act for assessee''s failure to get its books of account audited before the specified date and to furnish the same by the specified date as per Section 44AB of the Act was not perverse ?

The brief facts of the case are that the respondent/assessee is a firm running a petrol pump. No return of income was filed by the assessee for the year ending 31-3-1996 relevant to assessment year 1996-97. Notice u/s 148 was issued and served upon the assessee. The assessee filed the return of income along with audit report on 21-12-1999 declaring loss of Rs. 371. The returned income was accepted u/s 143(1) of the Income Tax Act Since the total turnover exceeded Rs. 40 lacs, it was obligatory on the part, of the assessee to get its books of account audited before the specified date and to furnish the same by the specified date in view of the provisions of Section 44AB of the Income Tax Act. A show-cause notice was issued to the assessee on 5-3-2001 for imposing penalty u/s 271B Income Tax Act.

In response to this notice, the assessee filed a written reply. In the reply, it was submitted by the assessee that the assessee firm though had not submitted its Income Tax return due to some unavoidable circumstances but had got its accounts audited from the chartered accountant well in advance and also sent the audited report Under Postal Certificate (UPC) to the department. The Income Tax Officer, Dasuya, vide his order dated 19-9-2001 imposed a penalty of Rs. 1,00,000 on the assessee u/s 271B of the Income Tax Act.

Feeling aggrieved against this order, the assessee filed an appeal before the Commissioner (Appeals), Jalandhar. The said appeal was dismissed by the Commissioner (Appeals), Jalandhar vide order dated 20-2-2002. The assessee further filed an appeal before the Tribunal. The Tribunal vide its order dated 5-4-2007 passed in ITA Nos. 94 and 95/Asr/2002 partly allowed the appeal and held that the levy of penalty u/s 271B was uncalled for and thus the penalty was deleted The relevant part of the judgment of the Tribunal is reproduced as under:

We have heard the parties and have perused the material on record. The issue under consideration is as to whether the penalty u/s 271B has rightly been levied oh the assessee. The case of the assessee is that certified copy of the TAR had been despatched well in time to the department. The assessee has produced on record copies of the UPCs.

The version of the assessee has been disbelieved, since the person sending the UPCs could be produced by the assessee, nor his name and. address was furnished. The inability of the assessee in this regard was due io the fact that the said person was a part-time accountant, who had later: on left the job with the assessee. The authenticity of the UPCs had not been doubted. It is also not the case of the department that the UPCs were, of a date beyond the specified date.

In Kalyani Selecaon (supra), it has been held that where a valid return was despatched within the prescribed time under certificate of posting and was correctly addressed, a presumption of the return having been filed within, time would arise, and that in such a case, levy of penalty was invalid. In the present case too, the department has not been able to repel the UPCs produced on record by the assessee, showing that the TAR had been duly despatched within time to the department. Therefore, levy of penalty is uncalled for.

We have heard Shri Sanjiv Bansal, advocate, learned Counsel for the revenue.

Learned Counsel for the revenue has vehemently argued that as per the provisions of Section 44AB it was obligatory for the assessee to obtain its audit report before the due date and submit the same before the specified date. However, the assessee had not been able to adduce evidence and hence the default committed by the assessee stood obviously established. We find no force in the contention of the learned Counsel for the revenue. A finding of fact has been recorded by the Tribunal that the assessee has sent a certified copy of the tax audit report to the department well in time Under Postal Certificate (UPC) and the authenticity of the UPC has not been doubted by the -department. It is (sic-not) a case of the department that the UPC was of a date beyond the specified date. Even before us, the learned Counsel for the revenue was unable to challenge the said finding of fact recorded by the Tribunal. Thus the department has not been able to repel the said contention of the assessee and therefore, levy of penalty is uncalled for.

Thus no substantial question arises in the present appeal and the same is dismissed.