COMMISSIONER OF INCOME TAX vs. MAHIPAL SINGH

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ITA/723/2008HC Punjab & HaryanaPHHC01080743200822 December 2008Author: MR. JUSTICE L.N. MITTAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the finding of the Tribunal that the non-filing of the audit report was for bonafide reasons is a pure finding of fact. Therefore, the Court found itself unable to hold that any substantial question of law arises from the ITAT's order. The Tribunal had set aside the penalty, accepting the bonafides of the assessee. The Court's reasoning was based on the principle that factual findings by the Tribunal, when supported by evidence and not involving misinterpretation of law, are not amenable to challenge as substantial questions of law under Section 260A. The ratio decidendi is that an appellate court should not interfere with a pure finding of fact by the Tribunal unless it is perverse or based on an error of law. The appeal was dismissed, and no operative directions were issued by the High Court as the appeal itself was dismissed.

What were the facts?

The Revenue, Commissioner of Income Tax, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 18.07.2007 passed by the Income Tax Appellate Tribunal (ITAT), Delhi Bench. The appeal pertained to assessment year 2002-03 and challenged the ITAT's deletion of a penalty of Rs. 25,577/- levied by the Assessing Officer (AO). The assessee, Sh. Mahipal Singh, filed his return as the proprietor of two business concerns but submitted an audit report for only one of them. The AO had levied the penalty under Section 271B for non-compliance with Section 44AB, which was initially upheld by the CIT(A). The ITAT, however, set aside the penalty, accepting the assessee's bonafides.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT erred in law by deleting the penalty of Rs. 25,577/- under Section 271B, despite the assessee violating Section 44AB by not obtaining an audit report for all businesses and furnishing it within the stipulated time, considering that an audit report for only a part of the business could not be considered a valid report under Section 44AB as turnover pertains to an assessee and not a specific business? 2. Whether the ITAT was correct in law in holding that the assessee's view of not auditing the accounts of M/s Raj Engg. Works was reasonable, even though the gross receipts from both proprietorship concerns exceeded Rs. 40 Lacs? Assessee's contentions: The judgment does not record specific arguments made by the assessee before the High Court. However, the ITAT accepted the bonafides of the assessee for not filing the audit report. Revenue's contentions: The Revenue argued that the assessee clearly violated Section 44AB by not getting accounts of all businesses audited and furnishing the report within time. They contended that an audit report for only a part of the business is not a valid report under Section 44AB, as turnover is assessed for the assessee as a whole, not for individual businesses. They also questioned the reasonableness of the assessee's view regarding not auditing M/s Raj Engg. Works when total receipts exceeded Rs. 40 Lacs.

Which sections of the Income-tax Act were involved?

Section 260A,Section 44AB,Section 271B

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.M. No.22816-CII of 2008 in/and I.T.A. No.723 of 2008 Date of decision: 22.12.2008 Commissioner of Income Tax. -----Appellant Vs. Sh. Mahipal Singh. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE L.N. MITTAL Present:- Mr. Yogesh Putney, Sr. Standing Counsel for the appellant. -----

ORDER:

Delay condoned.

The revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order dated 18.7.2007 passed by Income Tax Appellate Tribunal, Delhi Bench ‘G’, New Delhi in I.T.A. No.1741/Del/2006 for the assessment year 2002-03, proposing to raise following substantial questions of law:- “1. Whether the Hon’ble ITAT has erred in law in deleting the penalty of Rs.25,577/- levied by the AO on the assessee u/s 271B although the assessee had clearly violated the provisions of section 44AB by not getting his accounts of all the businesses audited by the accountant and furnishing the report of such audit within the time specified and the audit report of only a I.T.A. No.723 of 2008 part of the business filed by the assessee could not be considered as report u/s 44AB of the Income Tax Act because the concept of the turnover is concerning an assessee (person) and not a concern or a particular business?

2.

Whether, the Hon’ble ITAT was right in law in holding that the assessee’s view of not getting the accounts audited of M/s Raj Engg. Works was reasonable though gross receipts from both the proprietorship concerns exceeds Rs.40 Lacs?” The assessee filed his return as proprietor of two concerns but audit report was filed in respect of one concern. The Assessing Officer levied penalty under Section 271B of the Act, which was affirmed by the CIT(A). The Tribunal, however, set aside the penalty, accepting the bonafides of the assessee.

The finding recorded by the Tribunal that non-filing of audit report was for bonafide reasons being pure finding of fact, we are unable to hold that any substantial question of law arises.

The appeal is dismissed. ( ADARSH KUMAR GOEL ) JUDGE December 22, 2008 ( L. N. MITTAL ) ashwani JUDGE 2

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