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2005 (12) TMI 204 - AT - Income TaxPenalty levied u/s 271B - delay of four months and 27 days in obtaining the audit report - onus to prove - difference of opinion - Third Member Order - Whether, the ld. CIT(A) was justified in cancelling the penalty levied u/s 271B, holding that there was a 'reasonable cause' within the meaning of section 273B of the Act? - HELD THAT:- Accountant Member - The onus to establish reasonable cause lies squarely on the assessee. However, we find that in the present case the assessee has completely failed to furnish any evidence apart from the seizure of its records in August, 1992, which it got back in December 1992. However, how could, the dislocation, or complete suspension, even if we were to presume so, by four months (August 1992 to November 1992), require 21 (twenty one) months [and not 24, i.e., from December 1992 to (now) September 1994 (and not November 1994) the accounts of financial year 1992-93 being only finalized thereat] to be finalized is difficult to accept, specially with no material brought-forth to establish the same. Secondly, a further period of six months (October 1994 to March 1995) to obtain the audit report of accounts for 12 months (previous year 1993-94) and which was held up only for want of correct carry forward of opening balances, and which became available latest by (now) September 1994, and knowing that the matter stand already delayed, for the second year in running, is again, difficult to understand. Finally, the non-submission of the audit report dated 27-3-1995 immediately thereafter or upon the amendment in law, making the furnishing of the report mandatory, is nothing but a conscious disregard of its statutory obligations. In conclusion, we uphold the levy of penalty and the order of the CIT(A) is dismissed - In result, the appellant succeeds. Judicial Member - It is also not the case of revenue that the assessee has committed default of non-furnishing audit report as per amended provisions of section 44AB which stood amended by Finance Act, 1995 with effect from 1st July, 1995 as revenue did not base its penalty under amended provisions. Moreover, it will be a point of debate that whether the said provision is applicable for assessment year 1994-95 and in case of debatable point benefit of doubt, as per well-settled law, should go in the favour of assessee particularly in the case of levy of penalty. Therefore, on this ground also levy of penalty cannot be held justified. Thus, ld. CIT(A) has rightly deleted the penalty and his order should be upheld. The departmental appeal is, therefore, liable to be dismissed and is dismissed. Third Member Order - It is also to be kept in mind that after the audit of the earlier year's accounts on 29-10-1994, the assessee took about 4 to 5 months in getting the accounts audited for the year under consideration on 27-3-1995. This period also cannot be said lo be unreasonable as the audit for the whole year's account generally takes this much time and that is probably the reason of allowing seven month period for getting the accounts audited after the close of the year, namely, the accounts are closed on 31st March of a particular year and the audit is required to be done on 31st October of that year. In my opinion, it would also not be advisable to comment on the action of the auditor and attempt lo find reasons as to why he has taken that much time, particularly when the Legislature itself provides for a time-limit of 7 months in obtaining the audit after the close of the accounts at the end of the accounting year. In the case of Rajasthan Rajya Vidyut Prasaran Nigam[2003 (3) TMI 76 - RAJASTHAN HIGH COURT] the assessee had received the audit report for assessment year 1989-90 on August 28, 1990. It took time to adjust accounts of the assessment year 1990-91 in conformity with the audit report received for the assessment year 1989-90 and submitted the accounts of assessment year 1990-91 for audit for on 29-12-1990 and obtained the audit report on 20-1-1992. This period of 4 months in submission of the accounts for audit of assessment year 1990-91 and almost 1 year thereafter in obtaining the audit report was held to be reasonable. The court held that the assessee had a reasonable cause for the delay in submission of the report for assessment year 1990-91 and for similar reasons also for assessment year 1991-92. The penalty has been levied by the Assessing Officer under the pre-amended provisions. At that time, the requirement was to obtain the report on or before the specified date. Therefore, any delay in furnishing the same as is made a requirement under the amended provisions with effect from 1-7-1995 by the Finance Act, 1995 would not be of any consideration. Thus, this is not a fit case for levying the penalty. In view of the majority opinion, the order of the CIT(A) is upheld and, accordingly, the levy of penalty is deleted. In the result, the Revenue's appeal is dismissed.
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