COMMISSIONER OF INCOME TAX vs PRABHULAL SAHU

By the court

The assessee is a wholesale dealer in vegetable oil, ghee, etc. His total turnover for the assessment year 1990-91 was Rs. 1,29,38,844 and, as such, he was required to get his account audited as per the provisions of section 44AB of the Income Tax Act. He filed the return of his income duly accompanied with an audit report, dated 30-9-1991, on 25-11-1991, but it was beyond the due date, the due date being 31-10-1990. The assessing officer initiated the penalty proceedings for his default for getting the accounts audited beyond the specified date. The assessee also did not respond to the penalty notice and accordingly, summons u/s 131 of the Income Tax Act were issued against him. The assessing officer examined the concerned chartered accountant and came to the conclusion that the assessee had failed to get the accounts audited by the specified time. He, therefore, levied a penalty of Rs. 65,000 for the assessee''s default u/s 271B of the Income Tax Act. The penalty was confirmed on an appeal, but it was marginally reduced to Rs. 64,694. On a further appeal, the Tribunal observed that since the default committed by the assessee was purely a technical default and he had not acted in disregard of his statutory obligation and there was no proof of his fraudulent or contumacious conduct, and he justified before the Tribunal valid reasons as to why there was delay in submitting the return, the penalty levied u/s 271B was found not proper and, as such, the penalty was struck down by the Tribunal. The Commissioner (Appeals) initially made an application u/s 256(1) of the Income Tax Act for making a reference before the Tribunal, but the Tribunal rejected the same holding inter alia that no question of law was involved. In the present application also, the following questions are raised:

"1. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in cancelling the penalty u/s 271B amounting to Rs. 64,694 ?

Whether, on the facts and in the circumstances of the case, the Tribunal''s finding that the assessee had a reasonable cause in getting his accounts audited beyond the specified date is not perverse ?

Whether, the Hon''ble Tribunal is right in cancelling the penalty u/s 271B observing that the default was only a technical default and, therefore, no penalty was imposable, ignoring the basic intention of the statute for making the provisions of section 44AB mandatory ?

Whether, for imposition of penalty u/s 271B of the Income Tax Act the) existence of fraudulent and/or contumacious conduct of the assessee is necessary T''

With due application of mind, we find that all the questions are basically questions of fact and no abstruse question of law does appear in the facts of the present case.

In view of this position of law, we reject the present application.