Tax audit report filed before assessment bars penalty under section 271B and defeats revisionary direction under section 263.

Where the tax audit report was already before the Assessing Officer before completion of assessment, the compliance purpose of section 44AB read with section 139 was treated as satisfied. On those facts, levy of penalty under section 271B was considered unwarranted, because the report had been furnished in time for assessment and the legislative object had been met. The attempted use of revisionary jurisdiction under section 263 to direct such penalty was therefore held unjustified and was quashed in favour of the assessee.

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Issues: Whether revisionary jurisdiction under section 263 of the Income-tax Act, 1961 could be invoked to direct levy of penalty under section 271B when the tax audit report had been furnished before completion of assessment.

Analysis: The tax audit report was available to the Assessing Officer before completion of assessment. The purpose of the audit-report requirement under section 44AB read with section 139 stood satisfied on these facts, and the filing of the report during assessment was treated as serving the legislative purpose. On that basis, levy of penalty under section 271B was held unwarranted, and the order directing such penalty was found to be without justification.

Conclusion: The invocation of section 263 to direct levy of penalty under section 271B was not justified and was quashed, in favour of the assessee.

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