Commissioner of Income Tax vs Pratapgarh Auto Stores

The Income Tax Appellate Tribunal, Allahabad, has referred the following two questions of law u/s 256(2) of the Income Tax Act, 1961 (hereinafter ref erred to as the Act) for opinion to this Court:

Whether delay on the part of the auditor in completing the audit of books of account constitute a reasonable cause?

Whether the books of account are only to be handed over to the auditor for audit purpose before the specified date or the report of auditor along with his certificate in prescribed form are to be obtained and submitted along with return of income before the specified date?

The present reference relates to the assessment year 1985-86.

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

The assessing officer imposed a penalty of Rs. 63,368 on the respondent assessee u/s 271B of the Act on the respondent-assessees failure to have its accounts audited before the specified date, i.e., 30-9-1985 in this case. On appeal the penalty was deleted by the Commissioner (Appeals) but on a departments appeal, the Tribunal restored the issue to the file of the Commissioner (Appeals) who eventually confirmed the penalty. However, in the second round the Tribunal deleted the penalty.

We have heard Sri A.N. Mahajan, learned standing counsel for the revenue. Nobody has appeared on behalf of the respondent-assessee.

We find that this Court in the case of Commissioner of Income Tax Vs. Jai Durga Construction Co., has held as under:

The obligation created by Section 44AB of the Income Tax Act, 1961, as it stood prior to 1-7-1995, was merely to get the accounts audited before the specified date. There was no obligation to furnish that audit report before the assessing officer before the specified date. This obligation has been created by substituting the words furnish by for the words obtain beforeby the Finance Act, 1995, with effect from 1-7-1995. Thus, prior to the amendment the obligation of an assessee to whom u/s 44AB applied was merely to get the accounts audited and obtain an audit report before the specified date.

We do not find any infirmity in the order of the Tribunal, which is in conformity with the aforesaid decision.

In view of the aforesaid discussion, we answer both the questions referred to us in the affirmative, i.e., in favour of the assessee and against the revenue. However, there shall be no order as to costs.