Commissioner of Income Tax vs Gonda Transport and Forwarding Co.

The Income Tax Appellate Tribunal, Allahabad, has referred the following question of law u/s 256(1) of the Income Tax Act, 1961, hereinafter referred to as "the Act" for opinion to this Court:

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was legally correct in upholding the order of the first appellate authority cancelling the penalty of Rs. 1,00,000 imposed u/s 271B of the Act on the ground that no penalty under the said section is exigible if the audit report is obtained within the "specified date" though furnished along with the return filed u/s 139(4) of the Income Tax Act, 1961 ?

The present reference relates to the assessment year 1991-92.

The brief facts giving rise to the present reference are as follows:

In terms of Section 44AB of the Act the assessee was required to get his accounts audited and to obtain audit report before October 31, 1991. The audit report was obtained on October 24, 1991, but the same was filed along with the belated return furnished on March 31, 1992. Rejecting the plea of the assessee that the audit report having been obtained in time, no penalty was exigible, the Assessing Officer imposed a penalty of Rs. 1 lakh u/s 271B of the Act, vide his order dated April 22, 1993. The assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who relying on certain decisions of the Income Tax Appellate Tribunal, vide order dated December 23, 1993, had cancelled the penalty on the ground that as the audit report had been obtained before the specified date, penalty could not be imposed u/s 271B of the Act, even if it was filed along with the belated return, which order was upheld by the Tribunal in the appeal filed by the Revenue.

We have heard the learned Counsel for the parties.

We find that this Court in the case of Commissioner of Income Tax Vs. Jai Durga Construction Co., has held that the penalty u/s 271B of the Act, as it stood at the relevant point of time prior to its amendment by the Finance Act, 1995, which came into existence with effect from 1st July, 1995, was not exigible in case the audit report has been obtained within the specified date and the return of income has been filed beyond time.

Respectfully following the aforesaid decision of this Court, we are of the considered opinion that the penalty u/s 271B of the Act has rightly been deleted.

We, accordingly, answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue. There will be no order as to costs.