AGGARWAL AGRICULTURAL INDUSTRIES Vs. INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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N.K. Agrawal, Member -
(1.) THESE are two appeals by two different assessees. Since the issue involved is common, these are being decided by this consolidated order for the sake of convenience. In both the cases, penalty has been imposed under Section 271B of the Income-tax Act. The Assessing Officer noted that the assessee did not file the audit report along with the return and, therefore, proceedings were initiated for levy of penalty for violation of Section 271 B.
(2.) In the case of M/s Aggarwal Agricultural Industries, the facts are like this. The assessee's accounting year ended on 31-3-1990 and the audit report was prepared by the auditors on 17-8-1990. The last date for filing of the return was 31-10-1990 but it was filed on 18-1-1991. The return was processed under Section 143(1) on 15-7-1991. Thereafter, penalty proceedings were initiated by issuing notice on 11-5-1992. Penalty was levied on 15-3-1993 at Rs. 92,830. In the case of M/s United Wine Traders, the year ending relating to assessment year 1991-92 was 31-3-1991 and the audit report had been prepared by the auditors on 20-10-1991. Due date for the filing of return was 31 -10-1991 but it was filed on 20-11 -1991. Assessment was made on 28-12-1992 under Section 143(3). A penalty of Rs. 1 lakh was imposed under Section 27 1B for failure to file audit report.
The ld. counsel representing both the assessees has contended before us that the returns in both the cases had been actually filed under Section 139(4) and not under Section 139(1) of the Act. Since it was a belated return, It could not be treated to have been filed under Section 139(1). There was no notice also under Section 142(1) to the assessee in either case. Therefore, the first plea raised by the ld. counsel is against the applicability of Section 27 1B of the Act. It will be appropriate to read the section so as to understand its applicability in the present case. Section 27IB of the Act reads as under :-
271B. If any person fails to get his accounts audited in respect of any previous year or years relevant to an assessment year or obtain a report of such audit as required under Section 44AB or furnish the said report along with the return of his income filed under Sub-section (1) of Section 139, or along with the return of income furnished in response to a notice under Clause (i) of Sub-section (1) of Section 142, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum equal to one-half per cent of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years or a sum of one hundred thousand rupees, whichever is less.
A plain reading of the section makes it clear that the penalty is leviable if an assessee failed to furnish the audit report along with return of income filed either under Section 139(1) or in response to a notice under Section 142(1)(i). There is no mention of Section 139(4) in Section 271B. The ld. counsel has, therefore, raised a contention that no penalty was leviable in the present cases inasmuch as the returns had been filed after the expiry of due dates. In the case of M/s Aggarwal Agricultural Industries, due date for filing of return was 31-10-1990 but it was filed on 18-1 -1991. Similar is the situation in the case of M/s United Wine Traders, where the return was filed 20 days after the due date. Since in both the cases, returns were filed after the expiry of due dates, these could never be treated to have been filed under Section 139(1) of the Act. Since the returns were also not filed in response to any notice under Section 142(1)(i), the two cases under appeal do not fall in the second category also as is specified in Section 271B.
(3.) THE second contention raised by the ld. counsel is that the audit report had actually been obtained by the assessee on 20-10-1991 in the case of M/s United Wine Traders and on 17-8-1990 in the case of M/s Aggarwal Agricultural Industries. Section 44AB lays down the date on or before which the assessee must obtain the audit report. Section 44AB lays down two requirements, one, to get the accounts audited by an accountant before the specified date; and second, to obtain the report of such audit in the prescribed form duly signed and verified by such accountant before the specified date. THE 'specified date' has been defined in the Explanation below Section 44AB as under :-
(iii) 'specified date', in relation to the accounts of the previous year relevant to an assessment year, means,-
(a) Where the assessee is a company, 31st December of the assessment year ;
(b) In any other case, 31st October of the assessment year.
THE present assessees are in the status of partnership firms and, therefore, the specified date in these two cases shall be treated to be October 31. In both the cases, the audit report had been obtained before the said specified date. It may be noted that the specified date and the due date for filing of return are the same. Since the assessee did not fail to obtain the report before the specified date as required under Section 44AB, there is no violation of Section 44AB. In this light, it has been argued by the ld. counsel that the assessee, by making compliance of Section 44AB, did not commit any default so far as the submission of the report is concerned. It is only a default in the filing of the return. Section 271B did not lay down any requirement regarding the filing of the return. It simply laid down three conditions :-
(i) THE assessee must get his accounts audited ;
(ii) THE assessee must obtain a report of the audit as required under Section 44AB; and
(iii) THE assessee must furnish audit report along with the return of income.
THEre is no mention of any time-limit in Section 271B for the furnishing of the report before the Assessing Officer. THE ld. counsel has, therefore, submitted that the assessee did commit a default in filing of the return but that will not entitle the revenue to impose penalty under Section 27 1B. It may be noted that there was no provision requiring the assessee to file the audit report independently or separately. THE report had to be filed along with the return and if, for any reason, the return could not be filed in time, that would be a default under a different provision of the Act but that could not be treated to be a default in respect of furnishing of the audit report.;
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