C I T vs. M/S CHEEMA FILLING STATION

This order shall dispose of ITA No.454 and 455 of 2007.The Revenue has filed these appeals under Section 260-A of the Income Tax Act,1961 challenging order dated 5.4..2007 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar in ITA No.94 & 95(ASR)/2002 in case of the assessee for the assessment year 1996-97 by raising the following substantial questions of law:- i) Whether on the facts and in the circumstances of the case and in law, the order of the ITAT deleting the penalty of Rs.1,00,000/- imposed under Section 271B of the Act for assessee's failure to get its books of account audited before the specified date and to furnish the same by the specified date as per section 44AB of the Act was not perverse ?”

The brief facts of the case are that the respondent/assessee is a firm running a Petrol Pump. No return of income was filed by the assessee for the year ending 31.3.1996 relevant to Assessment Year 1996-97. Notice under Section 148 was issued and served upon the assessee. The assessee filed the return of income along with audit report on 21.12.1999 declaring loss of Rs.371/-. The returned income was accepted under Section 143(1) of the Income Tax Act. Since the total turn over exceeded Rs.40 lacs, it was obligatory on the part of the assessee to get its books of account audited before the specified date and to furnish the same by the specified date in view of the provisions of Section 44AB of the Income Tax Act. A show cause notice was issued to the assessee on 5.3.2001 for imposing penalty under Section 271 B of the Act.

In response to this notice, the assessee filed a written reply. In the reply, it was submitted by the assessee that the assessee firm though had not submitted its Income Tax Return due to some unavoidable circumstances but had got its accounts audited from the Chartered Accountant well in advance and also sent the audited report under postal certificate(UPC) to the department. The Income Tax Officer, Dasuya vide his order dated 19.9.2001 imposed a penalty of Rs.1,00,000/- on the assessee under Section 271B of the Income Tax Act.

Feeling aggrieved against this order, the assessee filed an appeal before the Commissioner of Income Tax(Appeals), Jalandhar. The said appeal was dismissed by the Commissioner of Income Tax(Appeals), Jalandhar vide order dated 20.2.2002. The assessee further filed an appeal before the Tribunal. The Tribunal vide its order dated 5.4.2007 passed in ITA No.94& 95(ASR)/2002 partly allowed the appeal and held that the levy of penalty under Section 271B was uncalled for and thus the penalty was deleted. The relevant part of the judgment of the Tribunal is reproduced as under:- “

We have heard Shri Sanjiv Bansal, Advocate, learned counsel for the Revenue.

Learned counsel for the Revenue has vehemently argued that as per the provisions of Section 44AB, it was obligatory for the assessee to obtain its audit report before the due date and submit the same before the specified date. However, the assessee had not been able to adduce evidence and hence the default committed by the assessee stood obviously established. We find no force in the contention of the learned counsel for the Revenue. A finding of fact has been recorded by the Tribunal that the assessee has sent a certified copy of the Tax Audit Report to the Department well in time under postal certificate(UPC) and the authenticity of the UPC has not been doubted by the department. It is a case of the department that the UPC was of a date beyond the specified date. Even before us, the learned counsel for the Revenue was unable to challenge the said finding of fact recorded by the Tribunal. Thus the department has not been able to repel the said contention of the assessee and therefore, levy of penalty is uncalled for. Thus no substantial question arises in the present appeal and the same is dismissed. (RAKESH KUMAR GARG)