2004-VIL-254-ITAT-CHN

Equivalent Citation: [2006] 5 SOT 336 (COCH.)

Income Tax Appellate Tribunal COCHIN

IT APPEAL NO. 476 (COCH.) OF 2002

Date: 27.10.2004

STAR AGENCIES

Vs

INCOME-TAX OFFICER

BENCH

O.K. NARAYANAN AND N.R.S. GANESAN, JJ.

JUDGMENT

N.R.S. Ganesan, Judicial Member. - This appeal of the assessee is directed against the order of the Commissioner of Income-tax (Appeals) confirming the levy of penalty under section 271B of the Income-tax Act, 1961, for the assessment year 1994-95.

2. Shri Jose Kappan, the learned authorised representative of the assessee submitted that the assessee filed the return of income for the year under consideration on 20-6-1995 along with the audit report under section 44AB of the Act. According to the learned representative of the assessee, the assessee is a partnership firm doing business in provision. According to him this is the first year in which the assessee has to file the audit report under section 44AB. Due to the illness of one of the partners, who is looking after the business the assessee could not file the audit report in time. However, it was filed along with the return on 20-6-1995. The learned representative placed his reliance in the decision of the Bangalore Bench of this Tribunal in the case of G.S. Kasat v. ITO [1995] 53 TTJ (Bang.) 103. On the contrary, Shri K.K. John, learned departmental representative submitted that the assessee failed to get the accounts audited and to obtain the audit report within the specified time. Therefore, the Assessing Officer initiated penalty proceedings under section 271B of the Act. According to the departmental representative, since there was no reason- able cause on the part of the assessee in getting the audit report within the prescribed periods, the Assessing Officer has rightly levy the penalty.

3. We have considered the rival submissions and perused the entire materials on record. Admittedly, the assessee filed return of income along with the audit report on 20-6-1995. Even though the assessee has to obtain the audit report and filed the same along with the return of income, in our view filing of audit report along with the return is only discretionary. The very purpose of filing the audit report is to enable the Assessing Officer to complete the assessment. In this case, admittedly the assessee filed the audit report along with the return of income on 20-6-1995. Therefore, there is no impediment for the Assessing Officer for completing the assessment by taking note of the audit report which is admittedly available before him.

4. The fact that one of the partners who is looking after the business of the assessee was said to be ill is not disputed by the revenue. The first appellate authority appears to have disbelieved the claim of the assessee only on the ground that the profit of the assessee for the year under consideration is more than the earlier year. Merely because profit of the assessee increased during the year under consideration it does not mean that the assessee could have filed the audit report within the time-limit. The assessee might have carried out its business through employees. However, for the purpose of carrying out the audit, the assessee has to produce the necessary particulars before the auditors. Therefore, though the business of the assessee increased during the assessment year under consideration, that alone cannot be a ground to show that the assessee could have obtained the audit report within the specified time. In our opinion, in view of the illness of one of the partner, there was reasonable cause on the part of the assessee for not getting the audit report within the prescribed period. In view of the above discussion, we do not find any justification in levying the penalty under section 271B of the Act. In our opinion this is not a fit case of levying the penalty under section 271B of the Act. Accordingly, we set aside the orders of the authorities below and delete the penalty imposed by the Assessing Officer.

5. In the result, the appeal of the assessee stands allowed.

 

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