CIT PATIALA vs. MANJIT SINGH CHATHA MOHALI

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ITR/19/1998HC Punjab & HaryanaPHHC01037984199822 November 2006Bench: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the ITAT was correct in its decision. The Court referred to its own judgment in Income-Tax Officer v. Kaysons India (2000) 246 ITR 489. The Court reasoned 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. However, in this case, the assessee had obtained the audit report and filed it along with a return filed under Section 139(4) of the Act. The default, if any, was in not furnishing the audit report along with a return filed under Section 139(1) or in response to a notice under Section 142(1). Since no such return was filed, and the return under Section 139(4) was duly accompanied by the audit report, the penalty under Section 271B was not leviable. The question of law was answered against the revenue and in favour of the assessee. The reference was disposed of.

What were the facts?

This case involves a reference to the High Court of Punjab and Haryana concerning an order passed by the Income Tax Appellate Tribunal (ITAT) on May 27, 1997, in ITA No. 2011/Chandi/1992. The assessment year in question is 1988-89. The Commissioner of Income-tax, Patiala (the applicant/revenue) challenged the ITAT's decision regarding a penalty levied on Shri Manjit Singh Chatha (the respondent/assessee). The core of the dispute revolves around the assessee's delay in obtaining and submitting an audit report as required by Section 44AB of the Income Tax Act, 1961, and whether this delay attracted a penalty under Section 271B.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the delay on the part of the assessee to get the accounts audited and also to obtain an audit report as per the provisions of Section 44AB, is not punishable under Section 271B of the Income Tax Act, 1961? Assessee's Contention: The judgment does not explicitly record the assessee's arguments. However, the High Court's reasoning implies that the assessee contended that the delay in filing the return along with the audit report, when the return was filed under Section 139(4) and accompanied by the audit report, did not constitute a default punishable under Section 271B. Revenue's Contention: The revenue contended that the assessee's delay in obtaining the audit report and filing it attracted the penalty under Section 271B. The judgment does not explicitly detail the revenue's specific arguments beyond the implication of the penalty being levied.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

I.T.R. No.19 of 1998 -1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.19 of 1998 Date of decision: 22.11.2006 The Commissioner of Income-tax, Patiala -----Applicant Vs. Shri Manjit Singh Chatha, Mohali -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL Present: Dr.N.L.Sharda, Advocate. ----- ORDER: Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, ChandigarhBench, Chandigarh, arising out of its order dated 27.5.1997 in I.T.A. No.2011/Chandi/1992 in respect of assessment year 1988-89:-. “Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the delay on the part of the assessee to get the accounts audited and also to obtain audit report as per the provisions of Section 44AB, is not punishable u/s 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:-

I.T.R. No.19 of 1998 -2- *** “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 (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 22,2006 (Rajesh Bindal) Pka Judge

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