TMI Blog2003 (12) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... e specifically stated before the Assessing Officer that the return for 1992-93 had already been filed and acknowledgement thereof was available with the C.A., Shri R.K. Kapoor. He further specifically stated that the assessee-firm has not obtained the tax audit report under section 44AB but the same was available with the C.A. Shri R.K. Kapoor. On that very day the Assessing Officer also visited the office of the C.A. Shri R.K. Kapoor and came to know that Shri Kapoor was out of station for 3/4 days. Thereafter the Assessing Officer issued a show-cause notice under section 271B dated 5-11-1992 asking the assessee as to why the penalty should not be imposed against the assessee for non-compliance of the provisions of section 44AB. The assessee filed a reply dated 23-11-1992 and stated therein that though the IT return was filed on 9-11-1992 but the audit report has been obtained on 30-10-1992. In support thereof the assessee filed a certificate from the C.A. confirming that the audit report was given to the assessee on 30-11-1992. 3. The Assessing Officer rejected this explanation of the assessee and held that audit report had not been obtained by the assessee on 4-11-1992 because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Now, aggrieved with the order of CIT(A), the revenue is in appeal before us for setting aside the order of the CIT(A) and restoring that of the Assessing Officer. 7. According to the ld. DR for the revenue firstly the report is antidated and secondly when the partner of the firm, Shri Raj Kumar, in his statement recorded by the Assessing Officer on 4-11-1992 has categorically stated that the audit report has not been obtained till date then any subsequent explanation by the assessee asserting that the audit report was obtained by the assessee on 30-10-1992, was an after-thought and so the explanation of the assessee is liable to be rejected. He further contended that the CIT(A) has wrongly deleted the penalty on the reasoning that the statement of Shri Raj Kumar, recorded on 4-11-1992 by the Assessing Officer, wherein he stated that the audit report under section 44AB along with the audited accounts, has not been obtained by the assessee till date, was misunderstood by the Assessing Officer because had the audit report not been completed on 30-10-1992, Shri Raj Kumar would have not stated on 4-11-1992 that the said report was not with the assessee but was with the C.A. The ld. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eply given in response to notice under section 271B. 10. We have considered the rival submissions of both the parties, perused the records and carefully gone through the orders of lower authorities. 11. The simple question required to be decided by this Bench is whether a categorical statement made by a partner of the assessee-firm before the Assessing Officer, should be accepted or whether the retraction from the same by that very partner furnished subsequently in response to penalty notice issued by the Assessing Officer, in the form of explanation of the assessee, should be accepted. 12. In order to appreciate this controversy we have to again restate and revert to relevant facts of this case. In this case the audit report was to be completed and obtained by the assessee on or before 31-10-1992. When the Assessing Officer found that the assessee has not filed the audit report along with the return so he went to the business premises of the assessee on 4-11-1992 and recorded the statement of Raj Kumar, the partner of the assessee-firm. In his statement Shri Raj Kumar categorically stated "the books of account of the firm have been audited but the copy of the tax audit repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port on 30-10-1992 on behalf of the assessee. In these facts, the bare explanation of the assessee that the audit report was obtained by the assessee on 30-10-1992, does not prove the fact that the audit report was obtained on behalf of the assessee on 30-10-1992. 14. Hence we are of the opinion that the Assessing Officer was fully justified in rejecting the explanation of the assessee with regard to the fact that the assessee had obtained the audit report on 30-10-1992. He was also justified in imposing the penalty upon the assessee because by not obtaining the audit report within prescribed period, the assessee has violated the provisions of section 271-B. 15. For the reasons stated above, the order of Assessing Officer is restored and order of CIT(A) is set aside and ground of appeal taken by the revenue is allowed. 16. In the result, the revenue's appeal is allowed. Per Mehta - I have perused the order passed by the learned Judicial Member restoring the penalty under section 271-B levied by the Assessing Officer but which had been cancelled by the CIT(A). After receiving his draft order, I discussed the matter with him but unfortunately, I have not been able to persua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce ones. Accordingly, since 7th 8th were holidays, the return was filed by them on 9-11-1992. Sir, at the time of your honour's visit to our business premises, to the best of my remembrances I had told your honour that the audit had been completed and the return of income had also been filed. Your honour had also seen the books of account and even enquired from me about the tick marks which were on the books and I had explained that the same were by the auditors. Sir, it appears that by some mistake somewhere, your honour probably got the impression that the books of account were not audited. However, sir, how could I say that the return has been filed, if, on the other hand, to my knowledge even the books had not yet been audited and the audit report had not been received. Sir, we also attach herewith a certificate from the auditors in this regard. Sir, since the books of account had been got audited and the audit report in the prescribed form had also been obtained before 31-10-1992, and further that the audit report has also already been filed along with the return of income filed, it is humbly submitted that there is no default as contemplated under section 271-B and it is pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has stated and which is not rebutted by Revenue in the hearing before the Tribunal that the assessee filed a photocopy of receipt dated 30-10-1992 obtained by the Auditor while handing over the audit report to the assessee. 9. My learned colleague, the Judicial Member has relied heavily on the portion of the statement of Raj Kumar to which the Assessing Officer has adverted in levying the penalty and has attributed complete knowledge to him in running the affairs of the firm. He has also accepted at page 7 of his order that the certificate of the CA proves that the audit under section 44AB was completed on 30-10-1992 i.e., within the prescribed time but his view is that as per law the assessee should also be physically in possession of the audit report on 30-10-1992. This, in my opinion, is neither the import of the section and nor was it the intention of the law makers. Section 44AB was brought on the statute book to ensure that certain categories of assessees had the accounts audited in the specified proforma and the audit report was made available to the Assessing Officer for purposes of facilitating a proper assessment. There was in fact no requirement to even file such an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed my name as Third Member. The case was heard on 8-12-2003. 3. The learned Departmental Representative relied upon the reasons mentioned in the penalty order and the elaborate reasons given by the learned Judicial Member in his proposed order. He also placed heavy reliance on the statement of Shri Raj Kumar, partner of the respondent assessee in which he inter alia, admitted that tax audit report had not been obtained by the firm till that date. The learned Departmental Representative strongly urged that penalty levied by the Assessing Officer under section 271-B has rightly been confirmed by the learned Judicial Member. 4. The learned counsel for the respondent assessee strongly relied upon the elaborate reasons given in the order proposed by the learned Vice President directing the Assessing Officer to cancel the said penalty. He also placed reliance on the detailed reasons given in the order of the Commissioner of Income-tax (Appeals), who cancelled the said penalty. The learned counsel reiterated the arguments as were earlier made before the Tribunal. 5. I have carefully considered the rival submissions made by the representatives and have gone through the orders of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent assessee on 30-10-1992. The assessee vide letter dated 23-11-1992, stated before the Assessing Officer that the audit report in the prescribed form was obtained from the auditors on 30-10-1992 and the same was given along with other papers for filing income tax return to M/s. R.K. Kapoor Co., Chartered Accountants (Sh. Prem Kapoor/R.K. Kapoor). The return could not be filed by them before the due date for want of some TDS certificate. Therefore, the return of income was filed late on 9-11-1992 along with tax audit report. After submission of the said letter dated 23-11-1992, the Assessing Officer neither examined any of the partners of the respondent firm, nor examined the auditors, who were also their consultants engaged for preparation of income-tax returns etc. 8. The learned Vice President has reproduced the certificate given by the auditor as well as the contents of the aforesaid letter in paras 4 and 5 of his order. The learned Vice President thereafter has observed that the certificate given by the Chartered Accountants confirm the fact that the audit was completed by them on 30-10-1992 and the report was also handed over to the assessee on that day. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial requirement of section 44AB are (i) to get the audit of accounts completed before the specified date and also (ii) to furnish the said audit report before that date along with return of income. It is an undisputed fact that the audit report had duly been completed and signed on 30-10-1992 i.e., before the specified date. Thus there was a sufficient compliance of the provisions of section 44AB and no penalty under section 271B was then leviable for failure on the part of the assessee to furnish such audit report. The amendment made w.e.f. the cut-off date of 1-7-1995 cannot be applied in relation to assessment year 1992-93. It may also be relevant here to make a useful reference to the judgment of Hon'ble Punjab Haryana High Court in the case of ITO v. Kaysons India [2000] 246 ITR 489 and in the case of CIT v. Janta Service Station [2001] 251 ITR 347 in which the Hon'ble High Court had held that the Tribunal was justified in cancelling the penalty levied under section 271B in a case where the audit report had been obtained before the specified date but had been filed along with belated return under section 139(4) and not with the return filed under section 139(1). Ordinarily ..... X X X X Extracts X X X X X X X X Extracts X X X X
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