2008 (2) TMI 326 - HC - Income Tax

High Court upholds Tribunal's decision on tax penalty deletion under Section 271B emphasizing evidence and audit compliance

The High Court dismissed the appeal, upholding the Tribunal's decision to delete the penalty under Section 271B of the Income Tax Act. The Court ... Assessee’s failure to get its books of account audited before the specified date and to furnish the same by the specified date as per section 44AB - penalty u/s 271B - finding of fact has been recorded by the Tribunal that the assessee has sent a certified copy of the Tax Audit Report to the Department well in time under postal certificate (UPC) & the authenticity of the UPC has not been doubted by the department - Revenue was unable to challenge the said finding of fact – penalty not justified Issues:1. Challenge to the deletion of penalty under Section 271B of the Income Tax Act for failure to get books of account audited and furnish them by the specified date as per Section 44AB.Analysis:Issue 1: Challenge to the deletion of penalty under Section 271BThe case involved appeals filed by the Revenue challenging the order of the Income Tax Appellate Tribunal deleting the penalty imposed under Section 271B of the Income Tax Act. The respondent, a firm running a Petrol Pump, had not filed its income tax return for the relevant assessment year. The assessee got its accounts audited and sent the audited report to the department, but a penalty was imposed under Section 271B. The Tribunal partly allowed the appeal and deleted the penalty, citing that the certified copy of the Tax Audit Report had been dispatched to the department in time. The Tribunal held that the levy of penalty was uncalled for as the department failed to provide evidence to refute the submission of the assessee regarding the dispatch of the report.Analysis:The Tribunal considered the contention of the Revenue that the assessee failed to provide evidence regarding obtaining the audit report before the due date. However, the Tribunal upheld that the assessee had sent a certified copy of the Tax Audit Report to the Department in time under postal certificate (UPC), and the authenticity of the UPC was not questioned by the department. The Tribunal found that the department did not challenge the fact that the UPC was dated beyond the specified date. The Tribunal concluded that since the department could not refute the submission of the assessee and failed to provide evidence against it, the levy of penalty under Section 271B was unwarranted. The Tribunal relied on precedents to support its decision, emphasizing the importance of timely dispatch of documents and the presumption of filing within time when dispatched correctly.Conclusion:The High Court dismissed the appeal, stating that no substantial question arose in the case. The Court upheld the decision of the Tribunal to delete the penalty under Section 271B, emphasizing that the department had not been able to challenge the findings regarding the timely dispatch of the Tax Audit Report by the assessee. The judgment highlighted the significance of providing evidence to support penalties imposed under tax laws and the importance of timely compliance with audit requirements.