CIT HY. vs. M/S SHIV SHANKAR RICE MIILLS G

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ITR/125/1998HC Punjab & HaryanaPHHC01037910199807 November 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the Tribunal was right in confirming the cancellation of the penalty under Section 271B. The Court relied on its previous judgment in Income-Tax Officer v. Kaysons India (2000) 246 ITR 489. The reasoning was that Section 271B is attracted by a default or failure to file the return along with the audit report on or before the specified date. In this case, the assessee had not failed to get the accounts audited or obtain the report within the specified date. Furthermore, no return had been filed under Section 139(1) or in response to a notice under Section 142(1). The return filed was under Section 139(4), which was accompanied by the duly obtained audit report. Therefore, the default for which the penalty was levied was not covered by the provisions of Section 271B. 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?

This case involves an Income Tax Reference filed by the Commissioner of Income-tax, Panchkula, against M/s Shiv Shanker Rice Mills, Yamuna Nagar. The reference arises from an order of the Income Tax Appellate Tribunal (ITAT) dated August 6, 1997, concerning assessment years 1989-90 and 1990-91. The dispute centers on the cancellation of a penalty levied under Section 271B of the Income Tax Act. The assessee obtained the audit report under Section 44AB on or before the specified date but filed it along with a belated return under Section 139(4), not the original return under Section 139(1). No notice under Section 142(1) was issued to the assessee to file the return.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the view taken by the CIT(A) to cancel the penalty under Section 271B on the ground that the same was not leviable in a case where the audit report under Section 44AB had been obtained on or before the specified date but the same had been filed along with a return under Section 139(4) and not under Section 139(1), and no notice being issued under Section 142(1) asking the assessee to file the return of income? Assessee's Contention: The assessee argued that the penalty under Section 271B was not leviable because the audit report was obtained within the prescribed time. The filing of the report with a belated return under Section 139(4), in the absence of a notice under Section 142(1), did not constitute a default attracting penalty, as the primary requirement of obtaining the audit report was met. Revenue's Contention: The revenue contended that the filing of the audit report along with a return under Section 139(4) instead of Section 139(1) constituted a default, making the penalty under Section 271B leviable. The revenue likely argued that the intention of Section 271B was to ensure the audit report accompanies the return filed within the stipulated time or in response to a notice.

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
I.T.R. No.125 of 1998 -1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.125 of 1998 Date of decision: 07.11.2006 The Commissioner of Income-tax, Panchkula -----Applicant Vs. M/s Shiv Shanker Rice Mills, Distt. Yamuna Nagar -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL Present: Mr.Yogesh Putney, Advocate. -----

ORDER: Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh , arising out of its order dated 6.8.1997 in I.T.A. Nos.608 & 609/Chandi/1994 in respect of assessment year 1989-90 & 1990-91:- “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the view taken by the CIT (A) to cancel the penalty u/s 271B on the ground that the same was not leviable in a case where the audit report u/s 44AB had been obtained on or before the specified date but the same had been filed alongwith a return u/s 139(4) and not u/s 139(1) and no notice being issued u/s 142(1) asking the assessee to file the return of income?” 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:-

I.T.R. No.125 of 1998 -2- **** “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 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 7,2006 (Rajesh Bindal) Pka Judge

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