CI.T ASR vs. M/S SARASWATI SALES CORP

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ITR/49/1997HC Punjab & HaryanaPHHC01035422199702 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 legally correct in dismissing the Revenue's appeal. The Court relied on its own prior judgment in Income-Tax Officer v. Kaysons India (2000) 246 ITR 489. The reasoning was that the default or failure to file the return along with the audit report on or before the specified date is not covered by Section 271B. The Court noted that the assessee had not failed to get the accounts audited or obtain the audit report. Furthermore, no return was filed under Section 139(1) or in response to a notice under Section 142(1). The assessee filed a return under Section 139(4) (belated return) on December 31, 1990, which was accompanied by the audit report obtained in accordance with Section 44AB. Therefore, the default for which the penalty was levied was not covered by Section 271B, and the CIT(A) and the Tribunal were justified in holding that no penalty was leviable. The question of law was answered against the revenue.

What were the facts?

The Commissioner of Income-tax, Amritsar (Revenue) filed an Income Tax Reference (ITR) No. 49 of 1997 before the High Court of Punjab and Haryana at Chandigarh. The reference arose from an order dated 20.03.1996 passed by the Income Tax Appellate Tribunal (ITAT), Amritsar Bench, in I.T.A. No.8(ASR)/1996. The ITAT had dismissed the Revenue's appeal against the order of the Commissioner of Income-tax (Appeals) [CIT(A)] which had cancelled a penalty of Rs. 43,350. This penalty was levied under Section 271B of the Income-tax Act, 1961, for failing to file the Audit Report under Section 44AB along with the return of income within the stipulated period under Section 139(1). The assessment year in question was 1993-94. The High Court was asked to decide a specific question of law.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal has been legally correct in law in dismissing the revenue’s appeal against the CIT(A)’s order cancelling the penalty of Rs.43350/- which has been levied u/s 271B of the Income-tax Act, 1961 for not filing the Audit Report u/s 44AB alongwith the return of income required to be filed within the stipulated period allowed in sub-section (1) of section 139. Contentions: Assessee: The judgment does not record any specific contentions made by the assessee before the High Court. However, the reasoning of the High Court implies that the assessee argued that the penalty under Section 271B was not leviable in the given circumstances. Revenue: The Revenue contended that the penalty under Section 271B was rightly levied for the failure to file the audit report along with the return of income within the due date prescribed under Section 139(1).

Which sections of the Income-tax Act were involved?

Section 271B,Section 44AB,Section 139,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.49 of 1997 Date of decision: 02.11.2006 The Commissioner of Income-tax, Amritsar. -----Applicant Vs. M/s Saraswati Sales Corporation, Kotkapura. -----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 20.03.1996 in I.T.A. No.8(ASR)/1996 in respect of assessment year 1993-94:- “Whether, on the facts and in the circumstances of the case, the Tribunal has been legally correct in law in dismissing the revenue’s appeal against the CIT(A)’s order cancelling the penalty of Rs.43350/- which has been levied u/s 271B of the Income-tax Act, 1961 for not filing the Audit Report u/s 44AB alongwith the return of income required to be filed within the stipulated period allowed in sub-section (1) of section 139.” 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

I.T.R. No.49 of 1997 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 02, 2006 ( RAJESH BINDAL ) ashwani JUDGE Pag e

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