- (1.) The present appeal is filed by the Department against the order dated August 20, 1999, passed by the Income-tax Appellate Tribunal, Allahabad, in I.T.A. No. 403 (Alld.) for the assessment year 1987-88 where the penalty of Rs. 1,00,000 imposed under section 271B was cancelled. The appeal was admitted on the following substantial questions of law: "(a) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally correct in holding that the Assessing Officer was not justified in initiating the proceedings for imposition of penalty under section 271B of the Income-tax Act at a time when no assessment proceedings or any other proceedings were pending? (b) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally correct in cancelling the penalty of Rs. 1,00,000 (rupees one lakh only) imposed on the asses-see under section 271B of the Income-tax Act, 1961, by the Assessing Officer and confirmed in the first appeal by the Commissioner of Income-tax (Appeals)? (c) Whether having regard to the fact that section 271B of the Income-tax Act, 1961, or any other provision of the Income-tax Act, 1961, nowhere prescribes a limitation for the initiation of penalty proceedings under section 271B of the Income-tax Act, 1961, and nowhere provides that the penalty proceedings under section 271B of the Income-tax Act, 1961, should be initiated during the course of assessment proceedings or any other proceedings under the Income-tax Act, 1961, the Income-tax Appellate Tribunal was legally correct in taking a view to the contrary and in cancelling the penalty under section 271B of the Income-tax Act, 1961, imposed by the Assessing Officer and confirmed in the first appeal by the Commissioner of Income-tax Act (Appeals)?"
(2.) The brief facts of the case are that for the assessment year under consideration, the assessee had filed its return. The Assessing Officer found that the audit report under section 44AB was not obtained well on time so he levied the penalty which was upheld by the first appellate authority. However, the Tribunal has cancelled the penalty. Not being satisfied the department has filed the present appeal.
(3.) With this background, heard Sri Shambhu Chopra, learned counsel for the appellant-Department. He submits that time to time extension was granted for filing the return along with the tax audit report but it was not filed well in time. In earlier assessment year, the assessee has filed the belated tax audit report along with the return. The assessee is in the habit of not complying with the mandatory provision of law.;