Commissioner of Income Tax, Meerut vs Jagdish Chandra

The income tax Appellate Tribunal, Delhi has referred the following question of law u/s 256(1) of the income tax Act, 1961 hereinafter referred to as the Act for the opinion of this Court:-

"Whether on facts and in the circumstances of the case, the Hon''ble ITAT was legally correct in holding that the delay in filing the audit report but obtained within time could not be the cause for imposing the penalty u/s 271B of the income tax Act.?"

The reference relates to the assessment year 1992-93 in respect of the penalty proceedings initiated u/s 271B of the income tax Act.

Briefly stated facts giving rise to the present case are as follows:-

The facts of the case are that the assessee enjoys income from manufacture of sugar mill parts and fabricated goods. The return of income was filed on 2-11-1992 showing turnover at Rs. 1,32,78,835. AS the turnover of the assessee exceeded Rs. 40 lakhs, he was required u/s 44AB of the income tax Act to file audited report along with the return on or before the specified dated i.e., 31-10-1992, but the return has been filed on 2-11-1992 along with the audited report. Before the Assessing Officer the assessee submitted that he had duly obtained the audit report on 30-10-1992 i.e., before the specified date but the same could not be submitted within the time as prescribed u/s 139(1) of the Act. The Assessing Officer, therefore, initiated penalty proceedings for violation of section 44AB and after rejecting the submission of the assessee imposed penalty of Rs. 66,394 u/s 271B of the Act. In appeal before the Commissioner of income tax (Appeals), the assessee submitted that the return of income filed were not u/s 142(1) had been issued. The Commissioner of income tax (Appeals) deleted the penalty following the orders of the Tribunal in the case of ITO v. Mohinder Kumar [1992] 42 ITD 384 (Delhi) (SMC); (1992) 43 ITD 259 and (1993) 45 ITD 251 . The Tribunal also following the above decisions, upheld the order of the Commissioner (Appeals).

We have heard Shri A.N. Mahajan, learned counsel for the revenue and learned counsel for the respondent assessee.

The controversy raised in the present petition is clearly covered by the decision of a Division Bench of this Court in the case of CIT v. Jai Durga Construction Co. [2000] 245 ITR 857 1 wherein this Court has stated that no penalty u/s 271B was exigible during the period prior to the amendment made by the Finance Act, 1995 which came into force on 1-7-1995 where the audit report required u/s 44AB has been obtained before the specified date but filed along with the return. Respectfully following the aforesaid decision, we answer the question referred to us in affirmative i.e., in favour of the assessee and against the revenue. There shall be no order as to costs.