V KATHIRVEL Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) This assessee's appeal arises out of the order dated 12-8-1996, of the Deputy Commissioner (Appeals) for the assessment year 1993-94 against the confirmation of the penalty levied by the assessing officer under section 271B of the Income Tax Act, 1961, amounting to Rs. 30,165.

(2.) The assessee had filed his return of income for the assessment year 1993-94 admitting a loss of Rs. 21,450 and agricultural income of Rs. 1,36,500 on 21-12-1994 along with the tax audit report conducted under section 44AB of the Income Tax Act, 1961 (hereinafter referred to as 'the Act), dated 21-9-1993. As per the assessing officer the audit report had to be filed by the assessee by 31-10-1993, but since the audit report had not been filed by the specified date he initiated penalty proceedings under section 271B. The assessee on initiation of such proceedings replied to the assessing officer that the assessee has obtained the audit report as required under section 44AB within the stipulated time, but he could not file it since he could not file the income tax return earlier. The assessing officer did not agree with the argument of the assessee and imposed the penalty on the assessee under section 271B stating: "the assessee should have taken due care to get his accounts audited and 44AB report should have been filed in time".

(3.) The assessee's authorised representative argued before us that section 44AB has been amended with effect from 1-7-1995, by substituting the words 'furnished by' in place of 'obtained before'. According to the authorised representative under section 44AB the assessee was required only to get his 'accounts' audited before the specified date if his turnover exceeds a specified limit and he has also to obtain the audit report. In the case of the assessee the assessee has to obtain the audit report by 31-10-1993, and the assessee has obtained the audit report on 21-9-1993. This fact has not been disputed by the assessing officer. Since the assessee has not made any default under section 44AB and has complied with the provisions of section 44AB, no penalty under section 271B is imposable on the assessee. According to him the assessee has not filed any return within the time allowed under section 139(1) of the Act. The return has been filed late in the case of the assessee under section 139(4) and the audit report has been enclosed along with the return as stipulated by section 271B of the Act. Further, he argued that no notice under section 142(1) of the Act was issued in the case of the assessee. Therefore, the audit report filed by the assessee cannot be regarded as having been filed along with the return of income furnished in response to notice under clause (i) of sub-section (1) of section 142 of the Act. He, therefore, argued that the assessee has not made any default which makes him liable to penalty under section 271B of the Act.