Commissioner of Income Tax vs Ram Niwas Agrawal

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 learned Tribunal was justified in deleting the penalty of Rs. 31,663 levied u/s 271B of the Income Tax Act, 1961 for assessment year 1990-91?

The reference relates to the assessment year 1990-91.

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

The last date of filing of audit report being 31-10-1990, the assessee filed such report dated 15-10-1990, on 16-6-1991 along with the belated return of his income. Penalty u/s 271B of the Act imposed by the assessing officer in a sum of Rs. 31,663 and confirmed during first appeal, was deleted by the Tribunal on the following premise:

Most of the Tribunal Benches have been taking the view that if a report of audit timely obtained is filed by an assessee even late along with a belated return does not entail apenalty, inasmuch as at the relevant time there did not exist any provision whereunder an assessee could have filed audit report independent of his return of income and sensing this lacuna in law of legislation change was brought about by amending Section 271B by Finance Act, 1995 with effect from 1-7-1995 which as against the obtainment of such report enjoined upon the assessee to furnish a report of such audit by a particular date.

In view of the aforesaid no penalty is imposable. The same is deleted.

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 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.