TaxTMI 
TaxTMI 
2005 (1) TMI 82
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....ircumstances of the case, the hon'ble Tribunal was right in law in reversing the order of the learned Commissioner of Income-tax (Appeals) who confirmed the penalty of Rs. 20,064 imposed under section 271B of the Income-tax Act, 1961 by the Assessing Officer?" In terms of section 44AB of the Act, the assessee was required to file a return for the assessment year 1993-94 along with the audit report on or before October 31, 1993. However, he filed the return on March 8, 1994, i.e., after a delay of more than 4 months. While finalising the assessment, the Assessing Officer issued notice under section 271B of the Act proposing to impose penalty on account of delayed filing of the audit report. In the reply filed on behalf of the assessee, it....
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....horised Representative. Respectfully following the aforesaid decision, we would delete the penalty as confirmed by the learned Commissioner of Income-tax (Appeals)." We have heard Shri Rajesh Bindal, learned counsel for the Revenue, and perused the record. In ITO v. Kaysons India [2000] 246 ITR 489, a Division Bench of this court interpreted the provisions of sections 44AB, 139 and 271B of the Act and held: "Prior to April 1, 1989, the failure to furnish the return of income within the time specified under sub-section (1) of section 139 of the Income-tax Act, 1961, attracted penalty under section 271(1)(a). However, with effect from April 1, 1989, the said provision was omitted and section 234A was incorporated which provided for a st....
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....Pradesh and the Calcutta High Courts held that imposition of penalty under section 271B of the Act is not automatic and in an appropriate case, the competent authority, on being satisfied with the explanation given by the assessee, is free not to impose penalty. In ITO v. Nanak Singh Guliani [2002] 257 ITR 677, a Division Bench of the Madhya Pradesh High Court interpreted section 271B along with section 44AB of the Act and held: "The provision of section 271B of the Income-tax Act, 1961, makes it clear that the imposition of penalty for non-compliance with the provision of section 44AB is not mandatory. The word 'may' used in that section gives the discretion to the Assessing Officer to impose penalty or not to impose penalty. Further....
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....orporation thereof in the procedural law bears the legislative intent to make the provision of section 271B coercive instead of penal. This amendment was intended to remove the scope of any confusion with regard to the characteristics and nature of the proceedings under section 271B. The word 'may' has been used only to accommodate the procedural law enabling the assessee to prove that there was reasonable cause for the failure. Unless it is proved that there was reasonable cause for the failure, there is no escape from the imposition of penalty. Section 271B does not leave any discretion with the authority except as provided in section 273B. It is only when reasonable cause for failure is proved, that the penalty can be avoided. A combined....
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.... the stipulated time. There is nothing in the section to make it incumbent to furnish the audited accounts within the stipulated time. Failure to furnish, therefore, will not attract the mischief of section 271B though failure to get the accounts audited within the stipulated time would attract penalty." In I.T.R. No. 61 of 1995- CIT v. Ashoka Dairy, decided on January 7, 2005, a Division Bench of this court, of which one of us (G.S. Singhvi, J.) was a member, interpreted sections 44AB and 271B of the Act and observed: "A reading of section 44AB reproduced above shows that it imposes a duty on every person carrying on business and/or profession to get his accounts audited by an accountant before the specified date and furnish the repo....