COMMISSIONER OF INCOME-TAX Vs. ARUN KUMAR AGRAWAL

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Allahabad has referred the following question of law under Section 256(1) of the Income -tax Act, 1961, hereinafter referred to as 'the Act' for opinion to this court: Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was legally correct in cancelling the penalty of Rs. 42,242 imposed under Section 271B of the Act on the ground that no penalty under the said Section is exigible if the audit report is obtained within the specified time, though not furnished within time allowed for filing of the return under Section 139(1) of the Income -tax Act, 1961?

(2.) THE present reference relates to the assessment year 1990 -91.

(3.) THE assessee was required to get his accounts audited and obtain the audit report under Section 44AB of the Act before October 31, 1990. The assessee got his accounts audited and obtained the report before this date. However, the Assessing Officer was of the view that the assessee was also required to file his audited accounts within the specified time under Section 139(1) of the Act upon which he issued a show -cause notice to the assessee. In reply to the said notice the assessee submitted that his accounts were audited on October 25, 1990, i.e., within the specified time and the audit report was filed with the return, which was filed under Section 139(4) of the Act and not under Section 139(1) of the Act. However, the Assessing Officer not having been satisfied with the plea taken by the assessee vide order dated October 14, 1992, imposed a penalty of Rs. 42,242. Against the said order the assessee preferred an appeal before the Commissioner of Income -tax (Appeals), who upheld the order of the Assessing Officer. However, in appeal before the Tribunal, the Tribunal relying on its earlier decisions, has held that the penalty under Section 271B of the Act could not be legally imposed in this case and, therefore, cancelled the same.