2003 (4) TMI 48

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..... 257 of 2001 is in the matter of imposition of penalty under section 271B of the Income-tax Act for not obtaining tax audit report under section 44AB in time for the assessment year 1992-93. For the sake of convenience, we would refer to the facts in I. T. A. No. 257 of 2001. Facts: Shri Swastik Steels Private Limited was incorporated in 1986. It manufactures steel ingots from steel scrap. The assessee filed its return of income for the year ending March 31, 1992, relevant to the assessment year 1992-93, on March 31, 1994, along with the accounts and the audit report dated March 29, 1994, under section 44AB of the Act. The due date for obtaining the audit report was December 21, 1992. However, it was obtained on March 29, 1994. Accor....

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....s arbitrary as it was passed without giving opportunity of hearing. That, the company was managed by two family groups, namely, the Gandhi group and the Jaju group, and there were differences amongst the: directors after November, 1991, and on account of these differences, Shri Pukharaj Gandhi has served a legal notice on August 10, 1992, raising various issues. That, Pukharaj Gandhi had also written a letter to the United Western Bank complaining against mismanagement of the company in June/July, 1993. That Pukharaj Gandhi had, withdrawn his personal guarantee in respect of facilities granted to the assessee. That, on July 22, 1993, the United, Western Bank had addressed a letter to the assessee seeking explanation regarding the alleged mi....

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....g which was fixed on May 10, 1995. However, one has to examine this matter in the light of totality of the facts and circumstances of this case. The assessee filed its return of income for the year ending March 31, 1992, along with the accounts and the audit report dated March 29, 1994, obtained under section 44AB of the Act. The audit report was obtained after a lapse of 14 months. The Income-tax Officer was, therefore, justified in issuing show cause notice to the assessee on February 6, 1995, calling upon the assessee as to why penalty should not be imposed under section 271B. As per the said show cause notice, the hearing was fixed on February 14, 1995. On that date, the assessee sought an adjournment. The adjournment was granted. The m....