INSPECTING ASSISTANT COMMISSIONER Vs. HINDUSTAN LEVER LTD

JUDGEMENT

(1.) This appeal by the department and the cross objection by the assessee relate to the assessment year 1985-86. Both these were heard together and are disposed of by this consolidated order.

(2.) The short ground in the departments appeal is that the CIT (A) erred in cancelling the penalty of Rs. 1,00,000 levied by the IAC under section 271B of the Income Tax Act, 1961 .

(3.) The relevant facts are that the assessee is a limited company. The IAC imposed a penalty of Rs. 1,00,000 because the company had not fulfilled the requirements of section 44AB. It would appear that the company by its application in Form No. 6 dated 30-9-1985 sought extension of time for filing the return up to 31-10-1985. In the application form 6, the reason given for seeking extension was as follows :