November 2008
Penalty : Failure to get accounts audited in time : S. 44AB and S. 271B : Condition precedent : Tribunal to record a finding whether assessee deliberately failed to submit audit report in time : Matter remanded
By K. B. Bhujle, Advocate
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19 Penalty : Failure to get accounts audited
in time : S. 44AB and S. 271B of Income-tax Act, 1961 : A.Y. 2001-02 : Condition
precedent : Tribunal to record a finding whether assessee deliberately failed to
submit audit report in time : Matter remanded.
[Gramin Vidyut Sahkari Samity Maryadit. v. ACIT, 305
ITR 89 (MP)]
For the A.Y. 2001-02, the assessee, a co-operative society
did not get its accounts audited as required u/s.44AB of the Act. The Assessing
Officer therefore, imposed a penalty of Rs.1,00,000. The CIT(A) deleted the
penalty. The Tribunal upheld the penalty order and held that there was no
illegality or infirmity in the order of the Assessing Officer.
On appeal, the Madhya Pradesh High Court remanded the matter
back to the Tribunal for fresh decision according to law, and held as under :
“(i) An order imposing penalty for failure to carry out a
statutory obligation is the result of a quasi-criminal proceeding and penalty
will not ordinarily be imposed unless the party obliged either acted
deliberately in defiance of law or was guilty of conduct contumacious or
dishonest or acted in conscious disregard of its obligation. The penalty will
not be imposed merely because it is lawful to do so. Whether the penalty
should be imposed for failure to perform a statutory obligation is a matter of
discretion of the authority to be exercised judicially and on consideration of
all the relevant circumstances. Even if minimum penalty is prescribed, the
authority competent to impose the penalty will be justified in refusing to
impose penalty, when there is a technical or venial breach of the Income-tax
Act, 1961, or where the breach flows from a bona fide belief that the
offender is not liable to act in the manner prescribed by the statute.
(ii) It is obligatory on the part of the Tribunal to record
a finding whether the assessee had acted deliberately in defiance of the
provisions of S. 44AB of the Act and is guilty of conduct contumacious or
dishonest, warranting imposition of penalty by the AO u/s.271B of the Act.
(iii) The Tribunal, apart from stating that there was no
denial by the assessee that the provisions of S. 44AB were not applicable to
it and there was delay in getting the accounts audited, had not applied its
mind and recorded any cogent or germane reasons as is imperative in law.
Therefore, the order of the Tribunal is liable to be set aside and the matter
remitted to it for reconsideration.”
