THE COMMISSIONER OF INCOME TAX vs. M/S.NORTON INDS.JDR.

ITR/154/1999HC Punjab & HaryanaPHHC01038592199920 September 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages
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What did the High Court hold?

The High Court held that the issue was covered against the revenue by its prior judgment in Income-Tax Officer v. Kaysons India (2000) 246 (ITR) 489. The Court reasoned 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. It was not the revenue's case that the assessee failed to get 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 could be no default of not furnishing an audit report with a non-existent return. The assessee filed a return under Section 139(4) (belated return) on December 31, 1990, which was duly accompanied by the audit report obtained in accordance with Section 44AB. Therefore, the default for which penalty was levied was not covered by Section 271B, and the ITAT and CIT(A) were justified in holding no penalty was leviable. The questions of law were answered against the revenue and in favour of the assessee.

What were the facts?

This case involves a reference to the High Court of Punjab and Haryana at Chandigarh concerning an Income Tax Appellate Tribunal (ITAT) order dated September 29, 1998, for the assessment year 1989-90. The Commissioner of Income Tax (CIT), Jalandhar, is the petitioner (revenue), and M/s Norton Industries is the respondent (assessee). The ITAT's order addressed the applicability of Section 139(9) of the Income Tax Act, 1961, and the deletion of a penalty levied under Section 271B. The core of the dispute revolves around the assessee's failure to file the return along with the audit report by the specified date, and whether this constituted a default attracting penalty.

What were the issues?

The High Court was asked to decide two questions of law: 1. Whether, on the facts and in the circumstances of the case, the learned Tribunal is justified in law in holding that the provision of section 139(9) of the I.T. Act, 1961 was applicable to the case of the assessee? 2. Whether, on the facts and in the circumstances of the case, the learned Tribunal is justified in law in upholding the deletion of penalty under section 271B of the I.T. Act when neither the accounts were not audited nor the report of such audit was obtained by the assessee before the specified date as referred to in section 44AB of the I.T. Act, 1961? The revenue contended that the assessee had failed to comply with the audit requirements and file the return within the stipulated time, thus attracting penalty under Section 271B. The assessee's arguments, as reflected in the ITAT's decision and the High Court's reliance on precedent, likely centered on the nature of the default and the applicability of Section 139(9) and Section 271B to the specific facts, particularly regarding the filing of a belated return with a valid audit report.

Which sections of the Income-tax Act were involved?

Section 139(9),Section 271B,Section 44AB,Section 139(1),Section 142(1),Section 139(4)

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.154 of 1999 Date of decision: 20.09.2006 The Commissioner of Income Tax, Jalandhar. -----Petitioner Vs. M/s Norton Industries. -----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 questions of law have been referred for opinion of this Court by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, arising out of its order dated 29.09.1998 in I.T.A. No.742(ASR)/1992 in respect of assessment year 1989-90:- 1. “Whether, on the facts and in the circumstances of the case, the ld. Tribunal is justified in law in holding that the provision of section 139(9) of the I.T. Act, 1961 was applicable to the case of the assessee?”

2.

Whether, on the facts and in the circumstances of the case, the ld. Tribunal is justified in law in upholding the deletion of penalty under section 271B of the I.T. Act when neither the accounts were not audited nor the report of such audit was obtained by the assessee before the specified date as referred to in section 44AB of the I.T. Act, 1961?” We find that the issue stands

The order continues below.

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