CIT PATIALA vs. JIT SINGH INDER PAL SINGH KURA

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ITR/59/1998HC Punjab & HaryanaPHHC01038037199831 October 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the issue was covered against the revenue by its own prior judgment in Income-Tax Officer v. Kaysons India (2000) 246 ITR 489. The Court reiterated the reasoning from that judgment, stating that a default or failure to file the return along with the audit report on or before the specified date is not hit by Section 271B. It was noted that the assessee had obtained the audit report in terms of Section 44AB before the specified date. The return was filed under Section 139(4) on December 31, 1990, which was a delayed return, but it was duly accompanied by the audit report. The Court found that the default for which the penalty was levied was not covered by Section 271B, and both the Commissioner of Income-tax (Appeals) and the ITAT 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, Patiala (the revenue) filed an Income Tax Reference Application (I.T.R. No.59 of 1998) before the High Court of Punjab and Haryana at Chandigarh. The reference arose from an order dated 25.03.1997 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, in I.T.A. No.2033/Chandi/1992. The assessment year in question was 1990-91. The dispute concerned the imposition of a penalty, which the ITAT had held to be barred by time due to unavoidable circumstances for the delayed filing of the audit report under Section 44AB.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law that proceedings are barred by time and filing of audit report u/s 44AB was delayed due to some unavoidable circumstances? The revenue contended that the ITAT was not right in holding the proceedings barred by time and that the penalty was leviable. The assessee's position, as reflected in the ITAT's order and subsequently affirmed by the High Court, was that the delay in filing the audit report was due to unavoidable circumstances, and therefore, no penalty was leviable under Section 271B. The revenue relied on the general provisions of the Income Tax Act, 1961, while the assessee's defense centered on the interpretation of Section 271B and the circumstances of the delay.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 271B,Section 139(4),Section 139(1),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.59 of 1998 Date of decision: 31.10.2006 The Commissioner of Income-tax, Patiala. -----Applicant Vs. M/s Jit Singh Inder Pal Singh, Kurali. -----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, Chandigarh Bench, Chandigarh, arising out of its order dated 25.03.1997 in I.T.A. No.2033/Chandi/1992 in respect of assessment year 1990-91:- “Whether, on the facts and in the circumstances of the case, the ITAT was right in law that proceedings are barred by time and filing of audit report u/s 44AB was delayed due to some unavoidable circumstances?” 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 in terms of section 44AB before the specified date. It is also evident that no return had been filed either under sub-section I.T.R. No.59 of 1998 (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 October 31, 2006 ( RAJESH BINDAL ) ashwani JUDGE Pag e

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