Commissioner of Income Tax vs Ishwar Das Madho Prasad

R.K. Agrawal, J.—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 Hon|ble Income Tax Appellate Tribunal was justified in cancelling the penalty of Rs. 56,798 levied u/s 271B, of the Income Tax Act, 1961, when the assessee had clearly failed to comply with the provisions of Section 44AB read with Section 271B of the Income Tax Act, 1961?

The reference relates to the assessment year 1990-91.

Briefly stated, the facts giving rise to the present reference are as follow:

Return due to be filed in respect of the assessment year 1990-91 by 30-11-1990 was filed by the assessee on 12-12-1990 along with their audit report obtained u/s 44AB of the Act. This audit report was obtained u/s 44AB by the assessee on 29-10-1990. The explanation for the late filing of the audit report did not find favour with the assessing officer and the penalty of Rs. 56,798 was imposed, which was deleted during the first appeal. In the department|s appeal, the Tribunal confirmed the deletion of the penalty mainly on the ground that the audit report having been obtained by the assessee timely, no provision existed whereby the assessee in respect of the relevant assessment year could have filed the audit report independent of the return and realising this lacuna in law. Section 44AB was amended by the Finance Act, 1995 with effect from 1-7-1995 to provide that not only the tax audit should be complied by the specified date but such report should also be furnished by that date irrespective of the fact as to whether the return of income was filed by the assessee by the due date or not.

We have heard Sri A.N. Mahajan, learned Standing counsel for the revenue.

We find that this court in the case of Commissioner of Income Tax Vs. Jai Durga Construction Co., , has held that prior to the amendment by the Finance Act, 1995, with effect from 1-7-1995, no penalty was exigible u/s 271B for not filing the audited report along with the return.

Respectfully following the aforesaid decision, we answer the question referred to us in favour of the assessee and against the revenue. There shall be no order as to costs.