- (1.) This appeal filed by the department against the order of the learned Commissioner (Appeals)-II, Lucknow, dt. 19-8-1994, for the assessment year 1990-91 is directed against the cancellation of penalty of Rs. 1,00,000 imposed under section 271B of the Income Tax Act, 1961.
(2.) The facts concerning this matter are that in view of the provisions of section 44AB of the Income Tax Act the assessee Corporation was required to get its accounts audited and to obtain the audit report before the specified date which was 31-12-1990 for the assessment year under consideration. The assessee obtained audit report on 31-12-1990, from its chartered accountants M/s P. Bhargava & Co. The report on Form No. 3CA allongwith Form No. 3CD was filed on 31-12-1990. However, it was specified in the report that statutory audit of the corporation has not been conducted in pursuance of the provisions of the Companies Act,' 1956,: hence it has annexed unaudited copy of the P &L a/c for the year ending 31-3-1990, along with other documents. While completing the assessment, the assessing officer held that this report could not be treated as tax audit report under section 44AB of the Income Tax Act. Penalty proceedings under section 271B of the Act were, therefore, initiated against the assessee vide order dt. 23-3-1993, passed under section 144 of the Income Tax Act. In reply to the show cause notice dt. 18-4-1994 the assessee claimed that as the assessment dt. 23-3-1993 passed under section 144 of the Income Tax Act had bed set aside by the Commissioner (Appeals)-II vide his order dt. 14-10-1993, there was no cause of action for continuing with the penalty proceedings. The version of the assessee was not accepted by the assessing officer who held that the assessee had failed to get the books of account audited within the due date as provided under section 44AB of the Income Tax Act, 1961, for which it was liable to be penalised as per the provisions of section 271B of the Income Tax Act. A penalty of As. 1 lakh was imposed by him vide his order dt. 29-4-1993.
(3.) The assessee challenged the finding of the assessing officer before the learned first Appellate Authority. The learned first Appellate Authority considered the plea of the assessee and held that the assessee was prevented by reasonable cause from making compliance of the provisions of section 44AB . The learned first Appellate Authority, therefore, cancelled the penalty vide his order dt. 19-8-1994.;