TMI Blog2000 (1) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... section 44AB and obtain audit report in Form No. 3CD before due date, i.e. 31-12-1990. The assessee filed tax audit report on the basis of unaudited accounts and, therefore, tax audit report submitted by CA was deficient and not complete, as per provisions of section 44AB. Assessing Officer issued a show-cause notice for levy of penalty under section 271B. He asked the assessee-company to show-cause as to why penalty order be not passed. No reply was received and the case was again fixed for 7-2-1992 and notice served. However, nobody attended the proceedings nor any written submissions were filed. Assessing Officer ultimately imposed a penalty of Rs. 1 lakh under section 271B. 3. On first appeal, Id counsel submitted that Assessing Officer had erred in levying the impugned penalty. The assessee is a Government Corporation and its statutory auditors are appointed in consultation with the Comptroller and Auditor General of India. Despite best efforts, the assessee-corpn. could not get the auditors appointed and, therefore, in order to comply with section 44AB, got its accounts audited by Sushil K. Singla Co. and the same should have been treated as sufficient compliance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aini relied heavily on penalty order and submitted that the assessee did not appear before Assessing Officer and this by itself is sufficient ground for imposition of impugned penalty. He referred to the decisions in the case of P.N. Sikand v. CIT [1980] 126 ITR 202 (Delhi) and J.K. Baruah v. CIT [1983] 14 Taxman 135/[1984] 146 ITR 341 (Gauhati). He submitted that there is no reasonable cause with the assessee for not getting its a/cs audited in terms of the provisions of section 44AB and that actually it was a case of negligence. He referred to the decision in the case of CWT v. Sri Jagdish Prasad Choudhary [1995] 211 ITR 472 (Pat.) (FB), wherein it is observed at page 487 that--- "... 'reasonable cause' has not been defined under the Act but it could receive the same interpretation which is given to the expression 'sufficient cause'. Therefore, in the context of the penalty provisions, the word 'reasonable cause' would mean a cause which is beyond the control of the assessee. 'Reasonable cause' obviously means a cause which prevents a reasonable man of ordinary prudence acting under normal circumstances, without negligence or inaction or want of bonafide, from furnishing return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation. He, therefore, urged that the real purpose of audit contemplated under section 44AB is to assist Assessing Officer in completing assessment. He, therefore, urged that in order to fulfil its obligation in terms of provisions of section 44AB, the assessee appointed private auditors, even when statutory auditors were not being appointed by CAG. He submitted that CA who has done audit has certified that the prescribed particulars furnished in Form 3CD are true and correct. Ld. counsel tried to distinguish the said certificate, vis-a-vis certificate given by an accountant in other cases where it is stated that to the best of our information and according to the explanation given to us, the a/ cs give a true and fair view of the assessee's affairs. Ld. counsel thus urged that there was a reasonable cause with the assessee in filing Form No. 3CD on the basis of tax audit report under section 44AB done by Sushil K. Singla Co. and that Ld. CIT(A) rightly deleted the impugned penalty. Ld. counsel relied on the following decisions :--- (i) Solapur Zilla Vinkar Sahakari Federation Niyamit v. Dy. CIT [1999] 71 ITD 117 (Pune), wherein it was held that where the assessee Co-op. Societ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel submitted that the decision in U.P. Nalkoop Nigam Ltd.'s case, as relied upon by Ld. DR, is distinguishable on facts and that the same does not talk about appointment of auditors by CAG. 4.2 Ld. DR, in his reply, submitted that once the accounts are unaudited, the certificate given by CA cannot state that the particulars are true and correct. It could not be law of land that Govt.-corpns. always take time in getting their statutory audit done through auditors appointed by CAG. Even in the decision reported in U.P. Nalkoop Nigam Ltd. 's case, the CAG was involved in appointment of auditors. He referred to the provisions of section 44AB and submitted that the word used is 'shall' and it is mandatory for the assessee to comply with the said provisions. The affidavit filed by the Chairman-cum-MD of the assessee-corpn. is only a self-serving evidence, as per ld. DR. 5. I have carefully considered the submissions made by both the parties and have perused orders of the tax authorities and also seen the case law relied upon by them. I feel that the submissions made by ld. DR that Govt. corpn./companies should take steps to comply with the provisions of section 44AB by appointing pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Form No. 3CA and further report in Form No. 3CD are required to be signed by same auditors, as per scheme of rule 6G read with Form Nos. 3CA and 3CD. Thus, the scheme of legislation clearly shows that the audit in case of an assessee under any other law is required to be done, as per provisions of that law. Thus, where an assessee is required to get his accounts audited through auditors appointed by CAG, there is no obligation cast upon such assessee by the provisions of section 44AB read with rule 6G to get the accounts audited from a private auditor, as pleaded by ld. DR. Ld. D.R. has relied upon the decision in U.P. Nalkoop Nigam Ltd.'s case, wherein the Tribunal has observed at page 398 that the assessee was free to engage a private auditor for meeting its obligations relating to complying with the provisions of the Act and having failed to do so, it was the assessee and the assessee only who could be said to be responsible and not the State Govt. With utmost regard to the said decision, I feel that the said observations appear to have been made losing sight of the basic scheme of legislation, as mentioned above. I feel that there is no obligation on a Govt. corpn/ company wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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