C RAMASWAMY Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) These two assessee's appeals arise out of the common order dt. 26th Dec., 1995, of the Dy. CIT(A) for the asst. yrs. 1990-91 and 1991-92, by which the Dy. CIT(A) has confirmed the levy of penalty under s. 271B of the IT Act, 1961, by the AO. Since the issue involved in both these appeals is common, these appeals are consolidated together and disposed of by this common order for the sake of convenience.

(2.) The brief facts of the case are that the assessee, who is dealing in grams and cotton under the name and style of Dhanalakshmi Stores, had filed his returns of income for the asst. yrs. 1990-91 and 1991-92 on 29th Dec., 1992, along with the audit reports under s. 44AB of the IT Act in response to notice under s. 148 of the IT Act, dt. 20th Nov., 1992, and served on the assessee on 20th Nov., 1992. In compliance with the summons under s. 131 a statement of the assessee was recorded. The P.3 was of the opinion after going through the facts of the case that the books of accounts of the assessee were not audited till 25th Nov., 1992 and no tax audit report under s. 44AB of the Act was issued till that date. He, therefore initiated penalty proceedings under s. 271B by issuing notice on 20th Nov., 1992 and serving the same on the assessee on the same date. The AO after taking the explanation from the assessee levied penalties of Rs. 26,785 and Rs. 33,065 respectively for the asst. yr. 1990-91 and 1991-92. Being aggrieved the assessee went in appeal before the Dy. CIT(A), who confirmed the penalty levied by the AO. Thus the assessee has come up in appeal before us. The assessee's authorised representative relied on the answers to question Nos. 3,4,9,12,13 and 14 provided in the statement recorded by the AO on 19th Nov., 1992. According to the authorised representative it was the accountant who was fully authorised by the assessee and he has carried all the books of accounts. The assessee was not aware of as to who was his Chartered Accountant and to whom the books of accounts have been given for audit purposes. He further took us through p. 26 of the paper-book which consisted of the statement of the assessee recorded by the AO on 20th Nov., 1992. He stressed that this statement clearly indicates that the accounts were duly audited and the accountant who was in charge of the books of accounts was keeping all the books of accounts and the audited statement and the same were not available at the time of hearing. The AO without recording the statement of the accountant or the auditor who has audited the accounts was totally wrong in infering that the statement of the assessee and the reply filed by him in response to the penalty notice under s. 271B are contradictory. The AO was also wrong in suspecting the fact that the Form 3CI) in which the audit report under s. 44AB was issued by the Chartered Accountant was actually printed in 1992. According to him the AO should have called for the statement of the accountant of the assessee as well as the statement of the Chartered Accountant who has actually audited the books of accounts of the assessee under s. 44AB.

(3.) The learned Departmental Representative invited our attention to copy of Form 3CB, i.e., the audit report appearing at p. 4 and Form 3CD appearing at pages 5 to 9 of the paperbook and pointed out that from these audit reports it is not clear as to who has signed these audit reports and even each page of Form 3C1) has not been signed. Merely the name of the firm of Chartered Accountants and address appear by way of a rubber stamp. Neither the capacity under which the Chartered Accountant has signed the audit reports has been mentioned. He invited our attention to the reply relating to question Nos. 4, 9 and 10 given by the assessee in the statement recorded on 19th Nov., 1992, which is appearing at p. 24 of the paper-book. To a straight question by the AO being question No. 4 where the name of the auditor was asked he immediately replied: 'Auditor name is Thiru Pakkiriswarny'. In reply to question No. 5 as to for how many years the assessee has given his books of accounts to auditor Thiru Pakkiriswamy, he replied : 'I have given books of accounts for the year ended 1st April, 1990, to 31st March, 1991 and Ist April, 1991 to 31st March, 1992. Then again in reply to question No. 10 he replied: 'have given the books to my auditor during July, 1992. He has not so far prepared the auditors statement'. He further invited our attention to the reply to question No. 5 given by the assessee during the course of recording of the statement on 20th Nov., 1992, which states : 'I got the audited statement under s. 44AB every year. The same are with my accountant. Thiru V. Pakkiriswamy, C.A. gave the same. I have paid Rs. 500 for each year that is 1990-91, 1991-92 and 1992-93'. The learned Departmental Representative also invited our attention to p. 5 of the assessment order, according to which the form was printed in 1992 by M/s Seetharaman and Co., Madras, and which fact has not been denied by the assessee even before the first appellate authority and this appellate authority.