ORDER
1. The Income Tax Appellate Tribunal, Allahabad, has referred the following two questions of law under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for opinion to this Court --
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in cancelling the penalty under Section 271B of Rs. 1,00,000 when the assessee has obtained the audited account on 28-10-1989 and the same was no submitted on the plea that it was handed over to the counsel for preparation of the return?
2. Whether, on the facts and in the circumstances of the case, assessee was under obligation to file his auditor's report within the time allowed under Section 139(l) of the Act ?"
The reference relates to the assessment year 1989-90.
2. Briefly stated the facts giving rise to the present reference are as follows:-
The assessee-respondent filed its return showing income of Rs. 1,13,630 which was accepted under Section 143(l)(a) of the Act. The sales during the previous year relevant to the assessment year in question was Rs. 3,63,83,738.82. The provisions of Section 44AB of the Act were clearly attracted. The assessee filed his return of income on 12-12-1989 alongwith the audited account which was signed by the Chartered Accountant on 28-10-1989. The assessing officer initiated penalty proceedings under Section 271B of the Act as the audit report was filed alongwith the return beyond the time. The assessee contested the penalty proceeding on the plea that he had filed income-tax return on 12-12-1987 alongwith the audit report which was obtained before the prescribed day and the return was late by one and half months. The assessing officer imposed a penalty of Rs. 1 lakh under Section 271B of the Act. The said order was confirmed in appeal by the Commissioner (Appeals), The Tribunal in further appeal has set aside the penalty order on the ground that the account books had been audited in time and the report of the auditor dated 28-10-1989 was handed over by the assessee to its counsel for preparation of return and the delay of one month has taken place because of the pressure of the work with the counsel.
3. Heard Shri R.K. Upadhyaya, the learned standing counsel for the department.
4. The controversy involved in the present case is no longer res integra. This court in the case CIT v. Jai Durga Construction Co. has held that requirement was that the audit report should have been obtained within the prescribed period. The mere fact that the audit report has been filed belatedly along with the belated return of income, it could not attract the imposition of penalty under Section 271B of the Act. Section 44AB and Section 271B of the Act as it stood at the relevant point of time, did not require to file audit report independently. The Legislatures realized this lacunae of law and taken care by amending Section 44AB and Section 271B by Finance Act, 1995 with effect from 1-7-1995, enjoining upon the assessee to furnish the audit report before the specified date. It has been further held that these amendments have not been made retrospective in operation, which fact also confirms that at the relevant point of time, filing of the audit report before the specified date was not requirement of law.
5. In view of the above discussion, we answer both the questions referred to us in affirmative, i.e., against the revenue and in favour of the assessee. There shall be no order as to costs.