|CORAM:||A. T. Varkey (JM), Prashant Maharishi (AM)|
|CATCH WORDS:||penalty, tax audit|
|DATE:||October 21, 2015 (Date of pronouncement)|
|DATE:||November 20, 2015 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 271B: The requirement in s. 44AB that the the tax audit report has to be obtained "before" the specified date has to be interpreted to mean "on or before" the specified date. So, even if the audit report is obtained "on" the specified date, there is no default|
The assessee, a partnership firm filed its return of income on 30th March, 2009. The tax Audit report was signed on 30th September 2008. The AO held that tax audit report should have been obtained before the specified date i.e. 30th September 2008. As the assessee had obtained the tax audit report on 30th September 2008 and not before 30th September, 2008, the AO, levied penalty of Rs. 1,00,000/- u/s 271B of the IT Act. Against this, assessee-preferred appeal before the CIT (A) who confirmed penalty holding that assessee has committed a default by not getting its accounts audited before the due date. On further appeal by the assessee HELD allowing the appeal:
The term “before” specified date in section 44AB means “on or before” the specified date. Therefore, though audit report is signed on 30th September 2008 and the requirement of law is to be construed as tax audit report required to be obtained on or before 30th September 2008. Hence, the assessee has obtained tax audit report in time and there is no default u/s 271B. In Prem Chand Nathmal Kothari vs. Kishanlal Bachharaj Vyas & Ors dated 5th April 1975 reported in AIR 1976 Bombay 82 the Bombay High Court, relying on the Chambers Dictionary, held that word ‘before’ means ‘previous to the expiration of’. Therefore, before 30th September, 2008 means before the end of 30th September 2008. (Decision of Allahabad ITAT in Chandra Kumar Seth vs. ITO 62 ITD 106, CIT vs. Jai Durga construction Company 133 taxman 99 and CIT vs. V.P.Gupta and Sons 172 taxman 344 referred/ followed)
The inference drawn by the AO and confirmation by CIT (A) in this case is an example of the high handedness of the AO and CIT (A) to interpret law as per their will and pleasure. Does it strike to them if they apply the word “before 30th September” was the intention of legislature it would tantamount to curtailment of one day at the least.
The crisp decision should be taken to its logical end.The IT act says returns have to be filed on a specific date.31.7…..As per the decision of the CIT (A) the return needs to be filed on 30.7…..I think he has to be sent back to the NADT to get his bearings correct.It is surely a high handedness of the AO and the CIT (A).Will the CBDT take action on them in the light of the PMs promise????A Rs one crore question!!!
The CBDT does not wish even to take notice of it because the AO and CIT (A) appear to be from the lot of IRS (DR) community. It will initiate disciplinary actions against those who apply their mind and does not make high pitch assessments. It issued a charge sheet for not making high pitch assessment by wrongly applying the provisions of Sec. 69. The faulty reopened assessment was struck down by the Tribunal. Yet the CBDT wished to continue the disciplinary proceedings.
No promoter officer is to apply their mind.only the writ of the direct recruits should prevail.That appears to be what they I trained in the NADT*read is.That is the reason for the high handed behaviour of the blue eyed boys.