COMMISSIONER OF INCOME-TAX Versus PRABHU DAYAL AND BROTHERS [2009 -TMI - 34957 - ALLAHABAD HIGH COURT]

Section 44B read with Rule 6G

Section 140A read with Section 139(1)

Section 271B

Section 119 and Circular dated June 19, 1985

Relevant Dates

Due Date of filing of Return and audit report: 31^st July 1985

Application filed seeking extension of time for filing of return

Audit Report obtained: 27^th September 1985

Tax Deposited: 4^th February 1986

Return filed: 7^th March 1986

Based on the above facts, AO imposed penalty u/s 271B equal to Rs. 1,00,000/-.

Held that:

It is not in dispute that in terms of the circular dated June 19, 1985, issued by the Central Board of Direct Taxes which is binding upon all the authorities under section 119 of the Act, the respondent-assessee had obtained the audit report on September 27, 1985. The assessee had filed several applications from time to time seeking extension of time for filing the return up to March 31, 1986, and the return was filed on March 7, 1986, and the tax under section 140A of the Act was paid on February 4, 1986. This court in the case of CIT v. Jai Durga Construction Co. [2008 -TMI - 15036 - ALLAHABAD High Court], has held that penalty under section 271B of the Act was not imposable where the audit report has been obtained within the stipulated period. As in the present case, in view of the circular of the Board the audit report has been obtained on September 30, 1985, that would be sufficient compliance with section 44AB of the Act

Penalty not to be imposed.

For full text of judgment:

Visit: COMMISSIONER OF INCOME-TAX Versus PRABHU DAYAL AND BROTHERS [2009 -TMI - 34957 - ALLAHABAD HIGH COURT]

Audit report compliance under section 44AB upheld where report obtained within extended time; penalty under section 271B not imposed The CBDT circular dated June 19, 1985, binding under section 119, provided that obtaining the audit report within the period recognized by the circular constitutes compliance with the tax audit requirement; where an assessee obtained the audit report in late September after seeking extensions, deposited tax before filing and filed the return within the extended period, that sequence sufficed for compliance and the penalty for failure to get accounts audited was not imposable.