- (1.) THE Tribunal, Allahabad, has referred the following two questions of law under s. 256(1) of the IT Act, 1961 (hereinafter referred to as 'the Act') for opinion to this Court : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in cancelling the penalty under s. submitted on the plea that it was handed over to the counsel for preparation of the return ? 2. Whether, on the facts and in the circumstances of the case, assessee was under obligation to file his auditor's report within the time allowed under s. 139(1) of the Act - The reference relates to the asst. yr. 1989 -90.
(2.) BRIEFLY stated the facts giving rise to the present reference are as follows : The assessee respondent filed its return showing income of Rs. 1,13,630 which was accepted under s. 143(1)(a) of the Act. The sales during the previous year relevant to the assessment year in question was Rs. 3,63,83,738.82. The proceedings under s. 271B of the Act as the audit report was filed along with the return beyond the time. The assessee which was obtained before the prescribed day and the return was late by one and half months. The AO imposed a penalty of Rs. 1 lakh under s. 271B of the Act. The said order was confirmed in appeal by the CIT(A). The Tribunal in further appeal has set aside the penalty order on the ground that the account books had been audited in time and the the delay of one month has taken place because of the pressure of the work with the counsel.
(3.) HEARD Shri R.K. Upadhyaya, the learned standing counsel for the Department. The controversy involved in the present case is no longer res integra. This Court in the case CIT vs. Jai Durga Construction Co. (2000) 164 CTR (All) 512 : (2000) 245 ITR 857 (All) has held that requirement was that the audit report should have been obtained within the prescribed period. The mere fact that the audit report has been filed belatedly along with the belated return of income, it could not attract the imposition of penalty under s. 271B of the Act. Sec. 44AB and s. 271B of the Act as it stood at the relevant point of time, did not require to file audit report independently. The legislatures realized this lacunae of law and taken care by amending s. 44AB and s. 271B by Finance been further held that these amendments have not been made retrospective in operation, which fact also confirms that at the relevant point of time, filing of the audit report before the specified date was not requirement of law.;