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TMI Blog2005 (1) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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, 1990, but the said report was filed with the return on December 26, 1990, i.e., after 26 days of the specified date (November 30, 1990). The Assessing Officer issued notice under section 271B of the Income-tax Act, 1961 (for short, "the Act"), proposing to impose penalty on the ground of violation of section 44AB. After considering the assessee's explanation, the Assessing Officer vide his order dated September 13,1991 imposed penalty of Rs. 54,269. The Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 return along with the audit report within the time specified under sub-section (1) of section 139 and consequently no penalty for such a default has been provided in section 271B. Penal provisions have to be construed strictly and penalty can be levied only for the defaults provided therein. Neither can any additional default be read in a provision on the ground of logic nor can a default pro vided therein be ignored on the ground of hardship." In Mohan Trading Co. v. Union of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts 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 reasonable cause' was omitted with effect from September 10, 1986. By the said 1986 Act section 273B was introduced in the Act. This section provides that no penalty shall be imposed under section 271B if the assessee is able to prove that there was reasonable cause for the said failure. Section 271B mandates imposition of penalty on the failure, but, by reason of the rule of evidence provided in section 273B, such imposition of penalty is dependent on the proof that there was no reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 liability is created. If the liability reveals a civil liability only to ensure compliance through a coercive manner, then it is definitely a civil liability without any criminal implication. But as soon as criminal liability is imposed by reason of default in compliance of a particular provision and there is some element of criminality involved in the default, the proceeding can be said to be a quasi-criminal one. The presence of the element of criminality is one of the factors tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 the assessee or cause shown by it for delayed filing of the return and/or audit report. To put it differently, the Assessing Officer has the discretion in the matter of imposition of penalty and he may not impose penalty if he is satisfied with the explanation given by the assessee for not getting its accounts of previous year audited by an accountant before the specified date and/or filing thereof along with the return." In CIT v. Punjab Financial Corporation [2002] 254 ITR 6, a Full ..... X X X X Extracts X X X X X X X X Extracts X X X X
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