Commissioner of Income Tax vs Apex Laboratories P. Ltd.

K. Raviraja Pandian, J.—The correctness of the order of the Income Tax Appellate Tribunal dated February 10, 2005, I. T. A. No. 880/Mds/1999 is put in issue by formulating the following questions of law:

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that no penalty is imposable u/s 271B for non-compliance with the provisions of Section 44AB on the ground that the returns were filed belatedly neither u/s 139 nor on a notice u/s 142 of the Act ?

Whether on the facts and in the circumstances of the case, the Tribunal was right in deleting the penalty without giving a finding of fact as to whether the tax audit report had been obtained within the prescribed time by the assessee ?

The relevant assessment year is 1994-95. Learned standing counsel appearing for the Revenue fairly submitted that the assessee''s own case involving similar questions of law for the assessment year 1993-94 has been decided against the Revenue in Commissioner of Income Tax Vs. Apex Laboratories P. Ltd., , wherein by a judgment dated January 24, 2006, a Division Bench of this Court has dismissed the appeal filed by the Revenue by observing thus (page 366):

We heard the learned standing counsel appearing for the Revenue, who submitted that there cannot be a situation where a person files his appeal on time, but does not file his audit report on time, should be in a worse situation than a person who files both belatedly. She further submitted that the Tribunal ought to have given a finding of the fact as to when the audit report was signed, and thereafter decide the issue on whether the audit report had been obtained within the time prescribed by the statute. In this case, the due date for return was December 31, 1993. The assessee filed his return belatedly on March 31, 1997. It may be seen that the return was not filed within the time limit stipulated u/s 139(1). The return for the assessment year 1993-94 was time barred by March 31, 1995, and the Assessing Officer did not issue any notice u/s 142(1) calling for furnishing of the return for the said year and so, the return could not be taken as filed in response to notice u/s 142 also. Since Section 271B envisage levy of penalty for failure to get his accounts audited, obtain a report of such audit and furnish the said report along with his return of income filed u/s 139(1) or in response to notice u/s 142(1), the submission that the audit report should have been filed within the specified date was not correct, as the specified dates only arise to return filed u/s 139(1) or response to notice u/s 142(1)(i). Hence, when the return was not filed under the provision of law, no default could be made out u/s 44AB. In this case, the penalty is leviable only if the assessee fails to get his accounts audited and obtain a report. In this case, the accounts were audited and also the assessee got the audit report, but the same was filed along with the return which was filed belatedly. Hence, penalty cannot be imposed u/s 271B of the Act.

In view of the decision of this Court cited supra, the appeal is dismissed. No costs.