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TMI Blog2006 (7) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed. In its reply dated March 10, 1997, the appellant contended that it had got its accounts audited by November 29, 1995, and the same were sent by registered post on November 30, 1995, and as an evidence attached a copy of receipt issued from Rajgarh Town Post Office and. therefore, the appellant had complied with the provisions of section 44AB of the Act and was not liable for penalty under section 271B of the Act. The Assessing Officer rejected the said contention of the appellant and held that the assessee has not been able to produce any cogent evidence as proof of furnishing of the audit report by the specified period and accordingly levied penalty of Rs. 1,00,000 (Rs. one lakh only) under section 271B of the Act, on the appellant. Aggrieved, the appellant filed Appeal No. IT-36/97-98/397, before the Commissioner of Income-tax (Appeals)-I,lndore, but by order dated October 6, 1997, the Commissioner of Income-tax dismissed the appeal of the appellant. Being aggrieved, the appellant filed Appeal No. I.T. A. 1102/IND/1997 before the Income-tax Appellate Tribunal, Indore, but the Tribunal also dismissed the appeal of the appellant, vide order dated December 30,2003. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years or a sum of one hundred thousand rupees, whichever is less". He submitted that the word "may" shows that a discretion is conferred on the Assessing Officer to impose the penalty or not to impose the penalty and in case he imposes the penalty then discretion has been further vested on the Assessing Officer to determine the quantum of penalty. He submitted that this discretion has to be exercised by the Assessing Officer judicially, considering the facts and circumstances of each case. He submitted that in this case the appellant had in fact had its accounts audited and has also obtained report of the audit of its accounts from the auditor, but the said report was required to be signed by the directors of the company as provided under section 215 of the Companies Act, 1956. He further submitted that in case the court holds that the amendment to section 44AB that in case the turnover of the assessee exceeds Rs. 40 lakhs, he has to furnish such report of audit to the Department before the specified date will apply to the assessment year 1995-96, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his business with turnover exceeding Rs. 40 lakhs by November 30, 1995, and hence the Assessing Officer has rightly exercised his discretion and imposed a penalty of Rs. 1 lakh, under section 271B of the Act, after having found the explanation of the assessee in the show cause reply for not furnishing the audit report by November 30, 1995, not at all believable. The findings of the Tribunal in the impugned order upholding the levied penalty of Rs. 1 lakh, on the appellant under section 271B of the Act are in paragraph 6 of the impugned order, which is quoted hereunder: "After considering the arguments advanced by the parties, averments of auditor Shri Dinesh Kasat, in affidavit, orders of the lower authorities and the decisions relied upon by the learned Authorised Representative, we are of the view that the explanation that the audit report after preparing of it on November 29, 1995, at Indore by the auditor was sent through the representative of the assessee to Biaora for the signature of both the directors residing there and after their signatures on it the same was posted on November 30, 1995, through registered post from the post office of Rajgarh i.e., around 20 kms. away f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case the behaviour of the auditor and the assessee do not reflect bona fide reason that they had made all the expected efforts to furnish the audit report in time. The judgments relied upon by the learned Authorised Representative are thus not relevant as the assessee has failed to furnish a bona fide reason which constitutes a reasonable cause for the delay. We thus, find no reason to interfere with the first appellate order upholding the penalty against the assessee. The same is affirmed. In result the appeal is dismissed." From a reading of the aforesaid findings of the Tribunal, it appears that the Tribunal has not found the explanation of the appellant that the audit report after being prepared on November 29, 1995, at Indore by the auditor had been sent to Biaorafor signatures of both the directors residing there, to be so convincing because there was no need of signatures of the directors on the audit report, when the auditor being a professional and conversant with the provisions of the law was very much aware that November 30, 1995, was the last date for furnishing the audit report. The Tribunal has taken a view that instead of sending the audit report to Biaora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." Since the aforesaid decision of the Supreme Court had been cited before the Tribunal by the appellant, the Tribunal should have applied its mind to the aforesaid law as well as the facts and circumstances of the case and should have recorded a finding whether the appellant had acted deliberately in defiance of the provisions of section 44AB of the Act and was guilty of conduct contumacious or dishonest, warranting imposition of penalty by the Assessing Officer under section 271B. For the aforesaid reasons, we set aside the impugned order dated December 31, 2003, of the Tribunal. We find that the appellant had not raised the contention before the Tribunal that the amendment to section 44AB requiring the assessee with a business turnover of more than Rs. 40 lakhs to "furnish" a report of audit of its accounts by the specified date came into force on July 1, 1995, and was not applicable to the assessment year 1995-96 and, therefore we have not considered this contention in this appeal. Since the matter is now remanded back to the Tribunal, it will be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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