ORDER P.N. Parashar, J.M.:
This appeal filed by the department against the order of the learned Commissioner (Appeals)-II, Lucknow, dt. 19-8-1994, for the assessment year 1990-91 is directed against the cancellation of penalty of Rs. 1,00,000 imposed under section 271B of the Income Tax Act, 1961.
2. The facts concerning this matter are that in view of the provisions of section 44AB of the Income Tax Act the assessee Corporation was required to get its accounts audited and to obtain the audit report before the specified date which was 31-12-1990 for the assessment year under consideration. The assessee obtained audit report on 31-12-1990, from its chartered accountants M/s P. Bhargava & Co. The report on Form No. 3CA allongwith Form No. 3CD was filed on 31-12-1990. However, it was specified in the report that statutory audit of the corporation has not been conducted in pursuance of the provisions of the Companies Act,' 1956,: hence it has annexed unaudited copy of the P&L a/c for the year ending 31-3-1990, along with other documents. While completing the assessment, the assessing officer held that this report could not be treated as tax audit report under section 44AB of the Income Tax Act. Penalty proceedings under section 271B of the Act were, therefore, initiated against the assessee vide order dt. 23-3-1993, passed under section 144 of the Income Tax Act. In reply to the show cause notice dt. 18-4-1994 the assessee claimed that as the assessment dt. 23-3-1993 passed under section 144 of the Income Tax Act had bed set aside by the Commissioner (Appeals)-II vide his order dt. 14-10-1993, there was no cause of action for continuing with the penalty proceedings. The version of the assessee was not accepted by the assessing officer who held that the assessee had failed to get the books of account audited within the due date as provided under section 44AB of the Income Tax Act, 1961, for which it was liable to be penalised as per the provisions of section 271B of the Income Tax Act. A penalty of As. 1 lakh was imposed by him vide his order dt. 29-4-1993.
2. The facts concerning this matter are that in view of the provisions of section 44AB of the Income Tax Act the assessee Corporation was required to get its accounts audited and to obtain the audit report before the specified date which was 31-12-1990 for the assessment year under consideration. The assessee obtained audit report on 31-12-1990, from its chartered accountants M/s P. Bhargava & Co. The report on Form No. 3CA allongwith Form No. 3CD was filed on 31-12-1990. However, it was specified in the report that statutory audit of the corporation has not been conducted in pursuance of the provisions of the Companies Act,' 1956,: hence it has annexed unaudited copy of the P&L a/c for the year ending 31-3-1990, along with other documents. While completing the assessment, the assessing officer held that this report could not be treated as tax audit report under section 44AB of the Income Tax Act. Penalty proceedings under section 271B of the Act were, therefore, initiated against the assessee vide order dt. 23-3-1993, passed under section 144 of the Income Tax Act. In reply to the show cause notice dt. 18-4-1994 the assessee claimed that as the assessment dt. 23-3-1993 passed under section 144 of the Income Tax Act had bed set aside by the Commissioner (Appeals)-II vide his order dt. 14-10-1993, there was no cause of action for continuing with the penalty proceedings. The version of the assessee was not accepted by the assessing officer who held that the assessee had failed to get the books of account audited within the due date as provided under section 44AB of the Income Tax Act, 1961, for which it was liable to be penalised as per the provisions of section 271B of the Income Tax Act. A penalty of As. 1 lakh was imposed by him vide his order dt. 29-4-1993.
3. The assessee challenged the finding of the assessing officer before the learned first Appellate Authority. The learned first Appellate Authority considered the plea of the assessee and held that the assessee was prevented by reasonable cause from making compliance of the provisions of section 44AB. The learned first Appellate Authority, therefore, cancelled the penalty vide his order dt. 19-8-1994.
3. The assessee challenged the finding of the assessing officer before the learned first Appellate Authority. The learned first Appellate Authority considered the plea of the assessee and held that the assessee was prevented by reasonable cause from making compliance of the provisions of section 44AB. The learned first Appellate Authority, therefore, cancelled the penalty vide his order dt. 19-8-1994.
4. Before us, the learned departmental Representative submitted that the assessee had failed to get the Accounts audited within the specified time and, therefore, penalty was rightly imposed by the assessing officer under section 271B of the Income Tax Act, The learned departmental Representative further submitted that the Commissioner (Appeals) was not justified in deleting the penalty.
4. Before us, the learned departmental Representative submitted that the assessee had failed to get the Accounts audited within the specified time and, therefore, penalty was rightly imposed by the assessing officer under section 271B of the Income Tax Act, The learned departmental Representative further submitted that the Commissioner (Appeals) was not justified in deleting the penalty.
5. Before us, the learned counsel for the assessee submitted that compliance of the provisions contained in section 44AB has been made on behalf of the assessee. Our attention was invited by the learned counsel for the assessee to the report dt. 31-12-1990 and Form 3CD dt. 31-12-1990, which were filed before the assessing officer. The learned counsel for the assessee has further contended that Form No. 3C is to be filled by the assessee whose accounts of the business have been audited under any other law. Note 2 of this form requires that where any of the matters stated in this report is answered in the negative or with a qualification, the report shall state the reasons thereof. According to the learned counsel for the assessee it was in this context that the C. As. in their report dt. 31-12-1990 stated, the reasons about non-audit of the accounts under the Companies Act, 1956. The learned counsel for the assessee has vehemently argued that the assessee had discharged the statutory obligation in making the compliance for filing the tax audit report,
5. Before us, the learned counsel for the assessee submitted that compliance of the provisions contained in section 44AB has been made on behalf of the assessee. Our attention was invited by the learned counsel for the assessee to the report dt. 31-12-1990 and Form 3CD dt. 31-12-1990, which were filed before the assessing officer. The learned counsel for the assessee has further contended that Form No. 3C is to be filled by the assessee whose accounts of the business have been audited under any other law. Note 2 of this form requires that where any of the matters stated in this report is answered in the negative or with a qualification, the report shall state the reasons thereof. According to the learned counsel for the assessee it was in this context that the C. As. in their report dt. 31-12-1990 stated, the reasons about non-audit of the accounts under the Companies Act, 1956. The learned counsel for the assessee has vehemently argued that the assessee had discharged the statutory obligation in making the compliance for filing the tax audit report,
6. We have carefully considered the facts and circumstances of case and the rival submissions. The report in Form No. 3CA is dt. 31-12-1990, along with this report Form No. 3C1) was also filed which was dt. 31-12-1990. Thus, the assessee obtained the tax audit report from its Accountants on the due date i.e. 31-12-1990. Coming to the aspect of statutory audit report, the reasons assigned for the delay are fully convincing. The assessee had to depend upon the decision of the Government for the appointment of the statutory auditors. However, it did its best in obtaining the audit report from its accountants before the date specified for that purpose. The assessee could not be expected to do more. In our considered view, the assessing officer was not justified in treating this report as no report under section 44AB. Further, the reasons advanced by the assessee for submitting the report in Form Nos. 3CA and 3CD on the basis of unaudited P&L a/c and balance sheet, etc. are quite convincing. We also agree with the findings of the learned first Appellate Authority that the assessee was prevented by reasonable cause in obtaining the statutory audit report within the time. In any case, in the entirety of the circumstances and particularly in view of the fact that audit report was filed in compliance with the provisions of section 44AB by the assessee within the specified time, we are of the considered opinion that no penal liability can be fastened on the assessee under section 271B of the Income Tax Act. We, therefore, uphold the findings of the learned first Appellate Authority and sustain the deletion of penalty.
6. We have carefully considered the facts and circumstances of case and the rival submissions. The report in Form No. 3CA is dt. 31-12-1990, along with this report Form No. 3C1) was also filed which was dt. 31-12-1990. Thus, the assessee obtained the tax audit report from its Accountants on the due date i.e. 31-12-1990. Coming to the aspect of statutory audit report, the reasons assigned for the delay are fully convincing. The assessee had to depend upon the decision of the Government for the appointment of the statutory auditors. However, it did its best in obtaining the audit report from its accountants before the date specified for that purpose. The assessee could not be expected to do more. In our considered view, the assessing officer was not justified in treating this report as no report under section 44AB. Further, the reasons advanced by the assessee for submitting the report in Form Nos. 3CA and 3CD on the basis of unaudited P&L a/c and balance sheet, etc. are quite convincing. We also agree with the findings of the learned first Appellate Authority that the assessee was prevented by reasonable cause in obtaining the statutory audit report within the time. In any case, in the entirety of the circumstances and particularly in view of the fact that audit report was filed in compliance with the provisions of section 44AB by the assessee within the specified time, we are of the considered opinion that no penal liability can be fastened on the assessee under section 271B of the Income Tax Act. We, therefore, uphold the findings of the learned first Appellate Authority and sustain the deletion of penalty.
7. In the result, the appeal is dismissed.
7. In the result, the appeal is dismissed.