TMI Blog2005 (1) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... . S. SINGHVI., VINEY MITTAL. JUDGMENT The judgment of the court was delivered by G.S. Singhvi J.- At the instance of the Commissioner of Income-tax, Haryana, Rohtak, the Income-tax Appellate Tribunal (Delhi Bench "C" New Delhi) (for short, "the Tribunal"), has referred the following question of law for the opinion of this court: "Whether on the facts and in the circumstances of the case, the hon'ble Tribunal was right in law in interpreting the provisions of section 271B and thereby confirming the order of the learned Commissioner of Income-tax (Appeals), who deleted the penalty of Rs. 54,269 imposed under section 271B by the Assessing Officer?" For the assessment year 1990-91, the assessee got its accounts audited on July 14, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged by the Legislature by virtue of amendments made in sections 44AB and 271B by the Finance Act, 1995. A further obligation has been cast on an assessee who is required to obtain the accounts audited under section 44AB, also to furnish the audit report to the Assessing Officer before the specified date. Similarly, section 271B has also been amended so as to cover the default of failure to furnish the audit report within the specified time. Prior to the amendment in 1995, there was no requirement to submit the audit report before the specified date and naturally there was no provision for levy of penalty for failure to submit such audit report under section 271B. Even after these amendments, section 44AB does not require filing of such retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e person or the assessee, as the case may be, for any failure referred to in the said provision if he proves that there was reasonable cause for the said failure." In CIT v. Capital Electronics (Gariahat) [2003] 261 ITR 4, a Division Bench of the Calcutta High Court interpreted section 271B of the Act and held: "Section 271B of the Income-tax Act, 1961, inserted with effect from April 1, 1985, began with the phrase 'if any person fails without reasonable cause, to get his accounts audited' within the time stipulated, then the concerned income-tax authority 'may direct that such person shall pay by way of penalty' the sum mentioned therein. By the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, the phrase 'without reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil matters assume quasi-criminal character has of late undergone a change. In fact, the question is dependent on the characteristic of the proceedings. A distinction has to be drawn between the two kinds of proceedings in order to ascertain whether the proceeding is a quasi-criminal one or simply a coercive method to secure compliance of a particular provision. If a penalty provided appears to be a provision for securing compliance by introducing coercive process, it is something implicating a penal interest. If instead of penalty interest was payable, in that event, it would not assume the characteristic of quasi-criminal proceedings. Therefore, the nature of the proceeding has to be examined having regard to the context under which the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of any previous year or years relevant to an assessment year or to furnish the audit report as per the requirement of section 44AB. However, there is nothing in the language of that section from which it can be inferred that the levy of penalty is mandatory in all cases of non-compliance with section 44AB and that in no case, the Assessing Officer can accept the cause shown by the assessee. Rather, the use of the expression 'reasonable cause' (this expression was omitted by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, and the word 'may' shows that it is only an enabling provision and the Assessing Officer is not under an obligation to impose penalty in each and every case ignoring the explanation given by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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