TMI Blog1991 (11) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 44AB read with rule 6G has been obtained by 30-9-1985 ; and (ii) the self-assessment tax under section 140A has been paid within the period prescribed under section 139 for filing the return of income. The assessee paid self-assessment tax on 19-3-1986 and obtained the tax audit report as per section 44AB on 22-3-1986. Thus there was non-compliance with the provision of section 44AB. 3. The ITO issued show-cause notice bearing No. 1(3)/A-1379, dated 30-6-1988 to the assessee. In the said show-cause notice it is stated as under " You were required to get your a/cs audited under section 44AB by 30-9-1985 whereas you got the same done on 22-3-1986. You are therefore requested to show cause why penalty under section 271B will not be imposed on you. If no reasonable explanation is received by 26-7-1988 penalty will be imposed under section 271B without further reference. " Thus, it is evident from the show-cause notice that the ITO requested the assessee to show cause and give reasonable explanation before imposition of penalty under section 271B of the Act. Subsequently through his letter dated 7-9-1988 the assessee's authorised representative submitted an explanation stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. It is also mentioned by the CIT (Appeals) in the impugned order that as per section 273B which cast a burden on the assessee to prove that the failure to comply with section 44AB was without reasonable cause stands discharged no sooner the explanation is filed and causes shown. It is deemed that the burden which lay on it under section 273B of proving the failure is discharged. The burden thereafter shifts to the ITO to establish that the assessee is guilty for violation of the provision of section 44AB. The CIT (Appeals), therefore, came to the conclusion that the assessee had reasonable cause which is proved and, therefore, no penalty was imposable and deleted the same. 5. The revenue has filed the appeal before us and the learned departmental representative contends that the learned CIT (Appeals) ought not to have deleted the penalty since the assessee has failed to 'prove' that there was a reasonable cause for the failure to comply with the provision of section 44AB. Mere filing of an explanation with reasons and causes for the failure without anything further does not mean that the assessee has proved his case as laid down under section 273B. It was the duty of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings is not the same as in criminal cases while trying an accused for the crime or offence committed under the penal laws. Thus, according to assessee's counsel the assessee or the person concerned is not under section 273B expected to prove beyond reasonable doubt for the failure as in criminal cases. It is added by the assessee's counsel that the assessee had given causes which were reasonable in the circumstances of the case and, therefore, it has proved his case and not caught within the mischief of section 273B and, therefore, not liable for any penalty under section 271B. 7. We have heard the rival submissions made before us and also perused the paper book filed by the assessee's counsel at the time of hearing and after careful consideration we feel that the assessee is not liable for any penalty under section 271B. The ITO in order to impose a penalty issued a letter dated 30-6-1988 demanding causes and reasonable explanation from the assessee for the failure to obtain audit report within the stipulated time as per section 44AB of the Act. In compliance to such request of the ITO the assessee submitted and explained the causes and reasons for the delay namely, that si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (ii) there should be proof in respect of the reasonable causes. The question as to what is meant by reasonable cause and what is the importance thereof in the matter of imposition of penalty has been elaborately dealt by the Full Bench of the Andhra Pradesh High Court in Addl. CIT v. Dargapandarinath Tuljayya Co. [1977] 107 ITR 850 wherein the court pointed out : " We do not think that there is any material difference between the expression 'sufficient cause' and 'reasonable cause'. As to what is 'sufficient cause' is, therefore, always 'reasonable cause'." Even in Strout's Judicial Dictionary the word "reasonable" has in law the prima facie meaning of reasonable in regard to those circumstances of which the person is called upon to act reasonably or knows or ought not to know. If a cause is reasonable having regard to the circumstances in which it has occurred and with reference to the person who has conducted himself in the course of the act which is under examination and if that act or cause is found to be reasonable in the light of the circumstances by a reasonable man it is accepted as a sufficient cause. The Supreme Court in the case of Fedco (P.) Ltd. v. S.N. Bilgr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to effect from 10-9-1986 by virtue of Taxation Laws (Amendment and Miscellaneous Provision) Act, 1986. Now it was to be seen whether the assessee has to prove beyond reasonable doubt about the existence of reasonable causes in the same manner as it has to be proved beyond reasonable doubt in criminal cases or prosecution matters under the penal laws of the country. We have, therefore, to examine whether the penalty proceedings are criminal in nature and whether the standard of proof required is the same as is laid down in criminal cases. The Full Bench of the Andhra Pradesh High Court in the case of Dargapandarinath Tuljayya Co., referred elsewhere above while dealing with the question of imposition of penalty under section 271(1)(a) has held that proceedings under the Income-tax Act for levying penalty cannot be equated to that of prosecution attracting punishment and the penalty proceedings cannot be said to be criminal in nature. Almost identically the Madras High Court in the case of Cement Distributors (P.) Ltd. v. IAC [1973] 87 ITR 163 at page 170 has observed that the authorities functioning under the Income-tax Act in the process of assessment leading to the reckoning of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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