TaxTMI 
TaxTMI 
2006 (6) TMI 91
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....s for the relevant assessment years were filed in time along with necessary forms. But the Assessing Officer finding that there was no tax audit report enclosed with the necessary forms and further, finding from the tax returns, which were filed much later, i.e., only on that the audit reports were prepared only on February 28, 1997, for the year ending March 31, 1996, February 28, 1998, for the year ending March 31, 1997, and February 25, 1999, for the year ending February 28, 1998, concluded that the tax audit reports had been reduced to a "ritualistic exercise" and accordingly, by proceedings dated January 24, 2000, levied penalty under section 271B of the Income-tax Act. In response to the said proceedings, the assessee offered its e....
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....ribunal by order dated June 15, 2005, which is being challenged in the present appeals by the Revenue raising the following substantial question of law: "Whether on the facts and circumstances of the case, the Tribunal was right in deleting the penalty under section 271B?" To decide the above question of law, it is apt to refer to section 271B of the Act, which reads as follows: "271B. Failure to get accounts audited.- If any person fails to get his accounts audited in respect of any previous year or years relevant to an assessment year or furnish a report of such audit as required under section 44AB, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum equal to one- half per cent of the total sales....
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....le to appreciate the same. In the instant case, the assessee has clearly explained that he could not get the audit reports from its branch office at USA and therefore, they could not file the audit report in time. It is, therefore, to be seen whether there is any lack of bona fides on the part of the assessee for the delay in filing the audit reports, as they were not available in their hands or they committed any deliberate or wanton default in this regard. It is only to appreciate such facts and circumstances, the legislations have been enacted to enable the assessee to put forth their explanation for such a delay in filing the audit reports. Unless any deliberate or mala fide intention could be seen for the delay in filing the audit repo....
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....ble. While testing the reasonableness, the court should not usurp the role of the authorities and it should resist the temptation to draw the bounds too tightly according to its own opinion and therefore, must aim to apply the objective standard for testing the reasonableness with the measure of relevancy and this is the essence of Wednesbury's reasonableness/Wednesbury's unreasonableness. The following are some of the references, where the words "reasonable" and "reasonable cause" have been explained by courts in India. In Azadi Bachao Andolan v. Union of India [2001] 252 ITR 471 (Delhi), it is explained that reasonable cause can be reasonably said to be a cause which prevents a man of average intelligence and ordinary prudence, acting ....
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....n is only to mitigate the gravity of the non-compliance, such a cause cannot be extrapolated and treated as being good cause for the whole of the period of the delay in its entirety." The apex court in Collector v. P. Mangamma [2003] 4 SCC 488, while interpreting the word "reasonable" has observed as follows (headnote): "It would be hard to give an exact definition of the word 'reasonable'. Reason varies in its conclusions according to the idiosyncrasy of the individual and the times and circumstances in which he thinks. The reasoning which built up the old scholastic logic stands now like the jingling of a child's toy. But mankind must be satisfied with the reasonableness within reach; and in cases not covered by authority, the decis....