CIT,ROHTAK vs. M/S C.R.FOUNDARY,FARIDABAD

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ITR/44/1998HC Punjab & HaryanaPHHC01038017199807 November 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal was right in law in reversing the order of the CIT(A) and consequently, the penalty imposed under Section 271B was not leviable. The Court relied on its previous judgment in Income-Tax Officer v. Kaysons India (2000) 246 ITR 489. The reasoning was that Section 271B penalizes failure to get accounts audited or failure to obtain the audit report in terms of Section 44AB before the specified date. In this case, the assessee had obtained the audit report in accordance with Section 44AB and filed the return under Section 139(4) (belated return) along with the audit report. 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, nor was there a failure to furnish the audit report along with a non-existent return under Section 139(1) or Section 142(1). The Court answered the question against the revenue and in favour of the assessee. The reference was disposed of.

What were the facts?

This case concerns an Income Tax Reference (ITR) filed by the Commissioner of Income-tax, Rohtak (the Revenue) against M/s C.R. Foundry (the Assessee) for the assessment year 1992-93. The Revenue is challenging an order of the Income Tax Appellate Tribunal (ITAT), Delhi Bench, dated December 11, 1996, which reversed the order of the Commissioner of Income-tax (Appeals) [CIT(A)]. The CIT(A) had confirmed a penalty of Rs. 27,700 imposed by the Assessing Officer under Section 271B of the Income Tax Act, 1961. The ITAT's decision is the subject of the reference to the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in reversing the order of the CIT(A) who confirmed the penalty of Rs. 27,700/- imposed u/s 271-B of the I.T. Act, 1961 by the Assessing Officer? Assessee's Contention: The judgment does not record any specific arguments made by the assessee before the High Court. However, the reasoning of the High Court implies that the assessee's position, as accepted by the ITAT and CIT(A), was that the penalty under Section 271B was not leviable. Revenue's Contention: The Revenue's contention, as inferred from the reference, is that the penalty under Section 271B was rightly imposed and confirmed by the CIT(A), and the ITAT erred in reversing this decision. The Revenue likely argued that the assessee committed a default that attracted the penalty under Section 271B.

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.44 of 1998 -1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.44 of 1998 Date of decision: 07.11.2006 The Commissioner of Income-tax, Rohtak. -----Applicant Vs. M/s C.R.Foundary, 23-B, Ind.Area,NIT, Faridabad -----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, Delhi Bench, 'C', New Delhi , arising out of its order dated 11.12.96 in I.T.A. No.3509/Del/1996 in respect of assessment year 1992-93. “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in reversing the order of the CIT(A) who confirmed the penalty of Rs.27,700/- imposed u/s 271-B of the I.T.Act, 1961 by the Assessing Officer?” 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 I.T.R. No.44 of 1998 -2- *** 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. The reference is disposed of. (Adarsh Kumar Goel) Judge November 7,2006 (Rajesh Bindal) Pka Judge

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