2002 (1) TMI 952 - AT - Income Tax

Assessee's Appeal Succeeds: Penalty Invalidated for Audit Report Delay

The appeal by the assessee was allowed, and the penalty under section 271 B for not obtaining the audit report within the specified time was deemed ... Penalty under section 271B - Requirement of obtaining audit report within specified date - Distinction between obtaining and furnishing the audit report - Burden of proof in quasicriminal penalty proceedings - No presumption as to date of obtaining audit report without evidencePenalty under section 271B - Requirement of obtaining audit report within specified date - Burden of proof in quasicriminal penalty proceedings - No presumption as to date of obtaining audit report without evidence - Distinction between obtaining and furnishing the audit report - Validity of levy of penalty under section 271B for alleged failure to obtain the audit report within the specified date - HELD THAT: - The Tribunal held that section 271B does not import the specific requirement that initiation of penalty proceedings or a record of the Assessing Officer's satisfaction must appear in the assessment order (unlike the formal requirement present in section 271(1)). The assessee produced an audit report dated 5-6-1991 (i.e., before the due date of 31-10-1991). Where an audit report bears a date within the prescribed time, the revenue must produce evidence to rebut that date and prove that the report was obtained after the specified date. In quasicriminal penalty proceedings there is no scope for drawing an adverse presumption against the assessee without materials; the department bears the onus to disprove the asserted date of obtaining. The revenue produced no material to contradict the dated audit report or to show that the audit report was in fact obtained after the due date. Following the decision of the ITAT, Ahmedabad (66 TTJ 180), the Tribunal found the penalty unsustainable and deleted it. [Paras 6, 7]Penalty under section 271B deleted and the assessee's appeal allowed.Final Conclusion: The Tribunal allowed the appeal for assessment year 1991-92, deleting the penalty under section 271B because the audit report bore a date within the prescribed time and the revenue failed to rebut that date or produce evidence that the report was obtained after the due date. Issues:Levy of penalty under section 271 B for non-obtaining audit report within time.Analysis:The appellant contested the penalty under section 271 B for not obtaining the audit report within the specified time. The appellant argued that the assessment order did not mention the initiation of penalty proceedings, thus rendering the penalty invalid. The appellant cited legal precedents to support the argument that penalty initiation and levying must align with the specific default committed. It was emphasized that penalty proceedings are quasi-criminal, shifting the burden to the department to prove the assessee's conduct. The appellant also presented reasonable cause for the delay, citing meager profits, lack of awareness, and personal circumstances affecting timely filing.The revenue department countered the appellant's arguments by asserting that the initiation of penalty need not be explicitly mentioned in the assessment order. They challenged the appellant's claim of timely obtaining the audit report, stating that the burden of proof lies with the assessee. The revenue department questioned the bona fide belief of the appellant and relied on the lower authorities' decisions to support their stance.Upon reviewing the contentions from both sides and the relevant legal decisions, the judge noted that the specific requirements for penalty initiation under section 271-B differ from those under section 271(1). The judge highlighted a precedent where obtaining the audit report, not its filing, was crucial. Despite the appellant's failure to provide evidence of the audit report's date, the judge emphasized that the burden of proof rested with the revenue department to demonstrate any delay in obtaining the report beyond the specified date. As the revenue department failed to substantiate their claim, the judge ruled in favor of the appellant, deeming the penalty unsustainable and consequently deleting it.In conclusion, the appeal by the assessee was allowed, and the penalty under section 271 B for not obtaining the audit report within the specified time was deemed invalid and deleted based on the lack of evidence presented by the revenue department to support their claim of delay in obtaining the audit report.