Subhash Kirana Stores vs Commissioner of Income Tax

This is an application for making reference u/s 256(2) of the Income Tax Act, 1961, on the following question of law :

"Whether, on the facts and in the circumstances of the case, any penalty u/s 271B is leviable even though the audit report had been obtained within time ?"

The applicant was given a notice u/s 142(1) dated December 28, 1990. In compliance with it, the assessee has filed its return of income with audit report as required u/s 44AB on March 27, 1991. The Assessing Officer imposed penalty u/s 271B. This provision was amended with effect from 1st July, 1995.

The order was upheld by the Tribunal. The applicant filed an application to refer the question of law referred to above before the Tribunal. The application has been rejected. Now the application has been filed u/s 256(2) of the Income Tax Act.

We have heard Sri Satish Mandhyan, learned counsel for the applicant, and Sri Prakash Krishna, learned counsel for the respondent.

Learned counsel for the applicant submitted that the audit report was prepared on October 26, 1990, and the date of obtaining the report was 31st October, 1990, and he had complied with the requirement of Section 44AB. It is further submitted that the petitioner had submitted the return u/s 139 and keeping in view Section 139(4) if any person who has not furnished a return within the time allowed to him under Sub-section (1), or within the time allowed under a notice issued under Sub-section (1) of Section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier and in view of the said provision if the applicant had not filed the return as required under Sub-section (1) of Section 142 of the Act, he is not liable for penalty.

Considering the facts and circumstances of the case we are of the opinion that a substantial question of law arises. We direct the Income Tax Appellate Tribunal, Allahabad, to draw up statement of facts in the present case and refer the question of law as framed above for opinion of this court.