TMI Blog1998 (11) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... section 271B were initiated by the Assessing Officer because of the aforesaid default by the assessee. In response to the Show Cause Notice, it was explained by the assessee videos letter dated 1st May, 1989 that the assessee was required to get its accounts audited by a statutory auditor as per section 81 of the MCSA. Since the statutory audit was still pending, it was unable to file tax audit report as prescribed under section 44AB. The Assessing Officer rejected the plea of the assessee and imposed a penalty of Rs, 1,00,000, It was observed by him that the assessee got its internal audit done by n Chartered Accountant which was completed on 14th December, 1985 and, therefore, there was no reason for not obtaining the tax audit report from such Chartered Accountant. The order of the Assessing Officer was confirmed by the Commissioner of Income-tax(A) for the reasons given by the Assessing Officer- Aggrieved by the same, the present appeal has been filed before the Tribunal by the assessee. 3. The Seamed counsel for the assessee contended before us that the assessee being a co-operative society was under obligation to get its accounts audited under section 81 of the Maharashtra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... auditor appointed under MCSA. Therefore, delay on the part of statutory auditor could not be considered as sufficient cause. In this connection, he drew our attention to the decision of Patna Bench Tribunal in the case of Deputy. Commissioner of Income-tax vs Bihar State Leather Development Corpn. (P.) Ltd [1996] 58 ITD 276 (para 12). It was also his contention that if internal audit could be done by a chartered accountant, there was no reason for not getting its accounts audited by it by such chartered accountant. Accordingly, it was prayed by him that penalty levied by the Assessing Officer be confirmed. 5. Rival submissions as well as the material placed before us have been considered carefully. In order to levy the penalty under section 271B, there must be a failure on the part of the assessee to get its accounts audited by a chartered accountant before the specified date as required by section 44AB. Section 273B provides that it such failure is because of sufficient cause, then penalty shall not be imposed. However, the Legislature has reduced the rigour of such requirements in the second proviso to section 44AB which provides that if the assessee is required under any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the second proviso provides an alternative in those cases where audit of books of account is governed by some other law in order to avoid the audit of such books twice; one under the Special Law and the other section 44AB as no useful purpose would have been served by the second audit. The purpose of the Legislature in enacting section 44AB is to have a detailed scan of accounts of the assessees in higher brackets with a view to detect evasion, if any, and to ensure expeditious assessment. It is to ensure that financial statements are presented in accordance with generally accepted accounting principles and the information disclosed in the financial statements are reasonable and adequate to give a true and fair view of the financial affairs of an assessee. The similar object is achieved by the audits done under other special enactments such as Company's Act and Cooperative Societies' Act. It is because of this reason, that the Legislature reduced the rigour of the main provision of section 44AB by introducing the second proviso. 8. In order to strengthen the above view, the reference may be made to the decision of the Gujarat High Court in the case of Rajkot Engg. Associations vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r accounts further audited again by another chartered accountant for the purposes of section 44AB. It will be sufficient compliance if tax audit report is obtained from the statutory auditors. 11. However, we find that a different view has been taken by the Patna Bench of the Tribunal in the case of Bihar State Leather Development Corpn. (P.) Ltd, (supra) by making the following observations : 'The Act is a self-contained code and it is not necessary to go into the provisions of the Companies Act in order to implement it. The second proviso below section 44AB only provides an alternative and reduces the rigours of audit where audit has already been conducted under any other law. There is nothing to indicate that the assessee is bound to adopt the alternative course and is helpless if audit under the other law has not been done or is being delayed." 12. It is well-settled proposition that where the language of the taxing provision is capable of more meanings than one, then the Court has to adopt that interpretation which favours the assessee, more particularly so, where the provision relates to the imposition of penalty. Such view has been taken by the Hon'ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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