CIT, JALANDHAR vs. M/SB.C.JAIN AND SONS

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ITR/130/1995HC Punjab & HaryanaPHHC01032184199508 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal was justified in confirming the CIT(A)'s order cancelling the penalty. The Court relied on its own judgment in Income-Tax Officer v. Kaysons India (2000) 246 ITR 489. The reasoning was that Section 271B applies to a failure to get accounts audited or to obtain the audit report before the specified date, or to furnish the audit report along with a return filed under Section 139(1) or in response to a notice under Section 142(1). In this case, the assessee filed a return under Section 139(4) (a belated return) on December 31, 1990, which was duly accompanied by the audit report obtained in accordance with Section 44AB. The Court found that the default for which the penalty was levied was not covered by Section 271B, as there was no failure to get the accounts audited or obtain the report, and the audit report was filed with the belated return. Therefore, the CIT(A) and the Tribunal were justified in holding that no penalty was leviable. The question of law was answered against the revenue and in favour of the assessee.

What were the facts?

The Commissioner of Income-tax, Jalandhar (Revenue) has filed an Income-Tax Reference (ITR) before the High Court of Punjab and Haryana at Chandigarh, challenging an order of the Income Tax Appellate Tribunal (ITAT), Amritsar Bench. The ITAT's order, dated April 21, 1993, in I.T.A. No.872(ASR)/1992, confirmed the order of the Commissioner of Income-tax (Appeals) [CIT(A)] which had cancelled a penalty of Rs.38,082/-. This penalty was levied under Section 271B of the Income-tax Act, 1961, for the assessment year 1990-91. The assessee is M/s B.C. Jain & Sons (HUF), Jalandhar City.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the CIT(A)'s order cancelling the penalty of Rs.38,082/- which had been levied under section 271B of the Income-tax Act, 1961 in respect of assessment year 1990-91? Assessee's contentions: The judgment does not record specific arguments made by the assessee before the High Court. However, the reasoning of the High Court implies that the assessee contended that the penalty under Section 271B was not leviable. Revenue's contentions: The revenue contended that the penalty under Section 271B was rightly levied. The judgment does not detail the specific arguments of the revenue, but it is implied they were in support of the penalty.

Which sections of the Income-tax Act were involved?

Section 271B,Section 44AB,Section 139(1),Section 139(4),Section 142(1)

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. I.T.R. No.130 of 1995 Date of decision: 08.11.2006 The Commissioner of Income-tax, Jalandhar. -----Applicant Vs. M/s B.C. Jain & Sons (HUF), Jalandhar City. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL Present: Dr. N.L. Sharda, Advocate for the revenue. -----

ORDER: Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, arising out of its order dated 21.04.1993 in I.T.A. No.872(ASR)/1992 in respect of assessment year 1990-91:- “Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the CIT(A)’s order cancelling the penalty of Rs.38,082/- which had been levied under section 271B of the Income-tax Act, 1961 in respect of assessment year 1990-91?” We find that the issue stands covered against the revenue by the judgment of this Court in Income-Tax Officer v. Kaysons India (2000) 246 ITR

489.

After considering the relevant provisions, this Court observed at page 492:- “It is, therefore, evident that the default or failure to file the return along with the audit report on or before the specified date is not hit by the provisions of section 271B. It is not the case of the Revenue that the assessee has failed to get the accounts audited or has failed to obtain the report of such audit

I.T.R. No.130 of 1995 in terms of section 44AB before the specified date. It is also evident that no return had been filed either under sub-section (1) of section 139 or in response to any notice under clause (i) of sub-section (1) of section 142 and as such there could possibly be no default of not furnishing the audit report along with such a non-existent return. The return under sub-section (1) of section 139 in this case could be filed up to November 30, 1990. However, the assessee had filed the return on December 31, 1990, which was a return filed under sub-section (4) of section 139 and this return was duly accompanied by the audit report obtained by the assessee in accordance with the provisions of section 44AB. Thus, according to us, the default for which penalty had been levied was not covered by the provisions of section 271B and the Commissioner of Income- tax (Appeals and the Tribunal were justified in holding that no penalty was leviable.” Accordingly, the question is answered against the revenue and in favour of the assessee. ( ADARSH KUMAR GOEL ) JUDGE November 08, 2006 ( RAJESH BINDAL ) ashwani JUDGE Pag e

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