COMMISSIONER OF INCOME TAX, BILASPUR vs. M/S BUKHARI ENTERPRISES, BILASPUR

order of the Cgymé’Was passed by H.L. Dattu, CJ. This appeal arises out of an order passed by Income Tax Appellate Tribunal. Jabalpur Bench, Jabalpur in LT.A. No.17OIJAB£7 for the assessment year 1994-95, dated 13.08.2003. By the'impugned order, the Tribunal has set aside the orders passed by the First Appellate Authority as well as by the Assessing Ofiicer levying penal»; under Section 271 B of the income Tax Act, 1961 ("Ant " for short). (2) The facis in brief are: The assesses had filed its return of income on 31 03.1996 along with the report of the auditor dated 25.01 .1 996. The Assessing Ofhc'er was of the opinion, that, the assessee had failed to comply with he provisions of Section 44 AB of the Income Tax Act, 1961 (“Act’ for short) and therefore, he had initiated proceedings under Section 271B > ar» Present : Shri B.K. Rawaf, counsel for the appellant. ORAL ORDER

“3‘ @ of the Act, by issuing a show-cause notice to the assessee, to show cause why penaity should not be Ievied under Section 271 B of the Act. The assesses had not replied to the show-cause notice. The Alssessing Officer thereafter, had proceeded to ievy penalty of R.s.1 ,00,000/- under Section 271 B of the Act, since the assessee had l failed to comply with the provisions of Section 44 AB of the Act. (3) ' Aggrieved by the said order passed by the Assessing Omcer,‘ the assessee had tiled the first appeal before the first appellate authority. The said authority has conflrmed'the order passed by the Assessing Officer, which necessitated the assessee to file second appeal before the income Tax Appellate Tribunal in l.T.A. No.170 of 1997. (4) The contention before the Tribunal by the assessee was, that, the books of accoun$ of the assessee for the relevant assessment year 1994-95 had been seized by the Income Tax Department and therefore, the assessee could not get its books audited by a Chartered Accountant within the specihed period. (5) The Tribunal taking into consideration the explanation offered by the assessee has thought it fit to reverse the itndings of the First Appellate Authority as well as the Assessing Authority. awe (6) The Department has tiled the present appeal being aggrieved by the orders passed by the income Tax Appellate Tribunal. (7) in the memorandum of appeal. the Revenue has raised the " following questions of law for our consideration and decision.

w Whether on the facts and in the circumstances of the case, leamed Income Tax Appeilate Tribunal was justified in law in deieting the penalty of Rs.1,00,000l- Ievied uls 271 B by the Assessing Omcer and confirmed by the CIT [A]? Whether on the facts and in the circumstances of the case, Ieamed Income Tax Appellate Tribunal was iustihed in law in considering the seizure of books ‘of accounts by the department to be a genuine cause for delay of 14‘ months in getting the accounts audited uls MAB?" (ii) 1 (8) in order to answer the aforesaid questions of law, provisions of Section 44 AB and the provisions of Section 271 B of the Act requires to be noticed and therefore, they are extracted. The same are as KV' under : “44 AB. Every person - (a1 carrying on business shail. if his total sales, turnover or gross receip$, as the case may be, in business exceed or exceeds forty lakh rupees in any previous year; or (b) carrying on profession shall, if his gross receipts in profession exceed ten lakh rupees in any previous years; or carrying on the business shall, if the prams and gains from the business are deemed to be the profis and gains of such person under section 44 AD or section 44 AE or section 44 AF, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be (c) ,/ I

I! pk‘, the profits and gains of his business. as the case may be, in any previous year, get his accounts of such previous year audited by an accountant before the specmcd date and fumish by that date the report of such audit in the prescribed form duly signed and verihed by such accountant and setting forth such particulars as may b Provided that this section shall not apply to the person, who derives income of the nature referred to in section 44 B or section 44 BB or section 44 BBA or section 44 BBB, on and from the 1" day of April, 1985 or, as the case may be, the date on which the elevant section came into force, whichever is later: Provided further that in a case where such person is required by or under any other law to get his accounts audited, it shall be suffiolent¢56rnpliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date {and fumishes by that date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this section. Explanation - For the purposes of this section - ‘v “accountant“ she'll have the same meaning as in the Explanation below sub-section (2)'"of section 288; e prescribed: “specihed date”, in reiation to the accounts of the assessee of the previous year relevant to an assessment year, means the 31" day of October of the assessment year. r

271 B. If any person falls to get his accounts audited in respect of any previous year qr years televant to an assessment year or furnish a report of such audit as required under. section 44 AB, the Assessing Ofncer may direct that such person shall pay, by way of penaity, a sum equal to one-half per cent of the toiai sales, turnover or gross receips, as the case may be, in business, or of the gross receipts in profession, in such previous year or s years or a sum of one hundred thousand rupees, whichever is less". i, i (9)} Under Section 44 AB of the Act, it is obligatory if a person carrying on business or profession to get his accounts audited by a Chartered Accountant before a specihed date and furnish by that date the report of such audit in the prescribed form by setting forth such particulars as may be prescribed under the R‘ules.».-* / :7' (1 0) Section 271 B of the Act provides that if any person fails to get his accountsiaudited in respect of any previous year or obtain a report —ofisuch audit as required or fails to furnish the report of such adu‘d along with the return of income filed under Section 139 (1) or‘along with the return of income tiled in response to a notice under Section 142 (1) (i) of the Act, the Assessing Authority may levy penalty. The legislature has used the expression ‘may’ in the section, which in our opinion gives discretion to the Assessing Officer. to levy or not to levy penalty depending on the reasonable cause made out for is failure to submit the audited accounts. ln the instant case, it was the specific case of the assesses before the Assessing Officer that since its books of accounts had been seized by the ofhcers-of the department under is» s

-é/ Section 132 of the Act, it was not in a position to get the books of accounts audited within the specihed date. The Assessing Officer Without considering the cause shown had mechanioaiiy proceeded to levy penalty. However, Tribunal taking into considerationrthe cause shown has found that the reason assigned by the assesses is not only i satisfactory but aiso reasonabie has set aside the penalty levied by the Assessing Officer, by its well considered and reasoned order. The x. . finding reached by the Tribunal is neithervperverse nor capricious. Therefore, in our view, the order passed by the Tribunal is not only justified but also in consonance with the provisions of the Act l Therefore, no interference with the said o‘rder is called for. Accordingly, the question of law raised by the Revenue is answeted against the Revenue and in favour of the assesses. Ordered accordingly. .s\ Chief Jusu'ce Judge i x / \ / ‘ i 7N; ——_ A /— ‘ r i .i l l V.’K.Shrivastava i ANA». .k-o