COMMISSIONER OF INCOME TAX JALANDHAR vs. M/S ARIHANT COTTON PRESSING &

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ITR/527/1995HC Punjab & HaryanaPHHC01032515199527 October 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 legally correct in dismissing the Department's appeal and that no penalty was leviable under Section 271B. The Court relied on its own 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 hit by Section 271B. The Court noted that the revenue had not contended that the assessee failed to get its accounts audited or obtain the audit report in terms of Section 44AB before the specified date. Furthermore, no return had been filed under Section 139(1) or in response to a notice under Section 142(1), meaning there was no default of not furnishing an audit report with a non-existent return. The assessee had filed a return under Section 139(4) on December 31, 1990 (after the due date of November 30, 1990), which was duly 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, justifying the cancellation of the penalty by the CIT(A) and the Tribunal. The question was answered against the revenue and in favour of the assessee.

What were the facts?

This case involves an Income Tax Reference (ITR) filed by the Commissioner of Income-tax, Jalandhar (the revenue) against M/s Arihant Cotton Pressing & Oil Mills (the assessee) for the assessment year 1991-92. The revenue challenged an order passed by the Income Tax Appellate Tribunal (ITAT), Amritsar Bench, which had dismissed the Department's appeal against the order of the Commissioner of Income-tax (Appeals) [CIT(A)]. The CIT(A) had cancelled a penalty of Rs. 44,740/- levied under Section 271B of the Income-tax Act, 1961. The ITAT's order being challenged was dated 04.11.1993 in I.T.A. No.300(ASR)/1993.

What were the issues?

The Tribunal had to decide the following question of law: Whether, on the facts and in the circumstances of the case, the Tribunal is legally correct in law in dismissing the Department’s appeal against CIT(A)’s order cancelling the penalty of Rs.44,740/- which has been levied under section 271B of the Income-tax Act, 1961? The revenue contended that the penalty under Section 271B was leviable. The assessee argued that the penalty was not leviable. The judgment does not explicitly detail the specific arguments of each side beyond the general nature of the dispute concerning the levy of penalty under Section 271B. However, the High Court's reasoning indicates the core of the dispute revolved around whether the assessee's conduct constituted a default attracting penalty under Section 271B, particularly concerning the filing of the audit report with a belated return.

Which sections of the Income-tax Act were involved?

Section 271B,Section 44AB,Section 139,Section 142

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.527 of 1995 Date of decision: 27.10.2006 The Commissioner of Income-tax, Jalandhar. -----Applicant Vs. M/s Arihant Cotton Pressing & Oil Mills. -----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 04.11.1993 in I.T.A. No.300(ASR)/1993 in respect of assessment year 1991-92:- “Whether, on the facts and in the circumstances of the case, the Tribunal is legally correct in law in dismissing the Department’s appeal against CIT(A)’s order cancelling the penalty of Rs.44,740/- which has been levied under section 271B of the Income-tax Act, 1961.?” 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.527 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 October 27, 2006 ( RAJESH BINDAL ) ashwani JUDGE Pag e

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