TMI Blog2005 (9) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... riod itself and the same were required to be deposited in the bank account within a period of three months. The bank account of the assessee could have been easily reconciled with the entries in the books of account." The facts of the case are that assessee was a Carriage contractor. Return of income along with statutory audit Report under section 44AB for the assessment year under reference were due on 31-10-1998. However, the assessee filed the same an 2-8-1999. The total contract receipts of the assessee aggregated to Rs. 3.36 crores. The Assessing Officer noted that as per provisions of section 44AB, the assessee was under a statutory obligation to get its accounts audited, obtain the audit report and furnish the same be fare the specified date i.e., 31-10-1998. However, the Assessing Officer observed that assessee had furnished the same on 2-8-1999. He, therefore, initiated penalty proceedings under section 271B. On reply to the show-cause notice, the assessee explained that it had to deal with army authorities, which were located at far flung areas at Srinagar, Kargil, Leh and besides FCI at Jammu. In order to clear accounts with the parties, assessee had to visit these pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Assessing Officer had imposed penalty under section 271B without taking into account these facts. The Ld. CIT(A) considered these submissions and cancelled the penalty by recording following findings in paras 4 and 4.1 of the impugned order:- "4. I have considered the submissions made by the authorized representative of the appellant. The issue that requires to be decided is whether on the facts and circumstances of the case the appellant can be said to be covered within the purview of 'REASONABLE CAUSE' as mentioned in section 273B of the Income-tax Act, 1961. 4.1 The appellant is a carriage contractor who deals with Army Authorities, Srinagar, Kargil, Leh and Ladakh and FCI at Jammu. Physical location of these at difficult geographical areas and difficulty in communicating with such parties due to bad weather and closure of routes to plain, pleaded as main causes for delay in getting the necessary information required for getting the audit work completed and to file the return in time. It is a fact that dealing with clients at these locations, communicating with them and getting information from them in the form of copies of account, TDS Certificates etc. does create probl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available with the assessee. Still the assessee delayed the filing of Audit Report by 9 Months. He submitted that reasons given by the assessee for the delay were general and not supported by and cogent and reliable evidence. He further submitted that CIT(A) was not correct in accepting the plea of the assessee that delay was only" of technical in nature. He submitted that the very fact that Law was amended to provide for filing the audit report before the specified date and not along with the return shows the intention of legislature to ensure that such accounts are audited and audit report must be filed or before the specified date. He further argued that Kargil was broke out at a much latter date i.e., in August, 1999. Therefore, delay could not be attributed to such irrelevant factors. 5. The Ld. AR, on the other hand, relied on the order of CIT(A) and reiterated the submissions made before the authorities below. He drew my attention to pages 1 to 2A of the paper book which is a copy of written submissions submitted before CIT(A). He submitted that assessee was a carriage contractor and had to deal with army authorities located at far flung and inhospitable areas like Kargil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial placed on record. I have also gone through the orders of authorities below and referred to the relevant pages of the paper book to which my attention has been drawn. The provisions of section 44AB as these stand for the assessment year under reference stipulate that assessee having turnover of Rs. 40 lakhs (in this case receipts were of Rs. 3.36 crores) must get its accounts audited by an accountant and furnish the same before specified date which in this case was 31-10-1998. Even if the return of income is not filed by the due date, the assessee is required to file the Audit Report before, the specified date. Penalty for the default under section 44AB has been spelt out under section 271B. I am in full agreement with the Ld. Counsel that levy of penalty under section 271B is not automatic. Section 273B provides that no order for imposing the penalty under section 271B can be passed without allowing an opportunity and such penalty is not exigible if assessee explains that default was due to a reasonable cause. Now the question that requires to be decided in this case is whether there was a reasonable cause for the delay in getting the accounts audited and filing the Audit Rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso inhospitable and sometimes accessibility is also difficult due to heavy snowfall and terrorist activity. Thus, the explanation given by the assessee for the delay appears to be reasonable. 9. Further, a copy of the statement of income is at page 6 and the same shown assessee had declared income of Rs. 3,10,761 on which tax payable was Rs. 1,08,766. As against the same TDS was Rs. 6,21,537 resulting in refund of Rs. 5,12,771. Income declared in the return has been accepted as it is. Therefore, the assessee did not derive any benefit in delaying the filing of Audit Report and return of income. On the contrary assessee was entitled to interest on excess TDS and for delayed filing of the return/TDS Certificates, the Department has not granted any interest under section 244A for the reason that delay in filing the return/TDS Certificates was attributable to the assessee: Thus, instead of getting any benefit, the assessee has lost interest due on the refund. 10. In the light of these facts and circumstances of the case and for the reasons given by the Ld. CIT(A) with which I agree, I am of the opinion that CIT(A) was justified in cancelling the penalty imposed under section 271B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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