Commissioner of Income Tax, Meerut vs Agrawal Rice Mills

The income tax Appellate Tribunal Delhi Bench, ''C'' Delhi has referred the following question of law u/s 256(1) of the income tax Act, 1961 for opinion of this Court:- Whether, on the facts and in the circumstances of the case, the Hon''ble ITAT was legally correct in holding that the delay in filling the audit report, but obtained within time could not be the case for imposing the penalty u/s 271-B of IT Act?

The reference relates to the assessment year 1990-91.

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

The assessee enjoys income from the sale and purchase of rice and paddy respectively. Return of Income was filed on 30th March, 1992 showing turnover of Rs. 68,55,276. As per provisions of section 44AB, the audited accounts were required to be filed along with the return before the specified date given u/s 139(1) of the IT Act i.e., 31-10-1990 but the same has been filed along with the return filed belatedly on 30-3-1992. The Assessing Officer initiated penalty proceedings and held since the return filed by the assessee falls within the purview of section 139(4) of the Act, therefore, the penalty is leviable. So he imposed penalty u/s 271B. This was challenged before the CIT (Appeals). The CIT (Appeals) following the decision of the Tribunal in the case of ITO v. Mohinder Kumar [1992] 42 ITD 384 (Delhi) (SMC) set aside the order of the Assessing Officer and deleted the penalty. On further appeal by the department the Tribunal confirmed the order of the CIT (Appeals) deleting the penalty by following the aforesaid order in the case of Mohinder Kumar (Supra).

We have heard the learned Standing Counsel for the Revenue. The question referred to this Court is squarely covered by the decision of this Court in the case of Commissioner of Income Tax Vs. Jai Durga Construction Co., , wherein this Court has held that prior to 1995 i.e., before the Amendment made in section 44AB by the Finance Act, 1995 no penalty was leviable on the ground that Audit report though obtained before due date was not filed along with the Return. We are, therefore, of the considered opinion that the order of the Tribunal is in conformity with the decision of this Court. In view of the aforesaid discussion we answer the question referred to us in the affirmative, i.e., favour of the assessee and against the Revenue.