No Penalty on Tax Audit Report Obtained on last day of due date

CA Sandeep Kanoi

Brief facts of the case are that the assessee is a partnership firm filed its return of income on 30th March, 2009 showing total income of Rs. 58,57,760/- and assessment was completed u/s 143(3) on 24th November, 2010 at total income of Rs. 1,95,51,565/-. During the assessment proceedings while perusing the tax Audit report AO observed that the tax audit report is signed on 30th September 2008. Therefore, according to the AO tax audit report should have been obtained before the specified date i.e. 30th September 2008. Therefore, AO issued a show cause notice, which remained unresponded. On further opportunity, the assessee submitted that the audit report was obtained on 30th September 2008, which was within the time prescribed for obtaining tax audit report. However, AO was of the view that according to provisions of Section 44AB assessee is required to get his accounts audited before specified date and not on the specified date. Therefore, as assessee has obtained this tax audit report on 30th September 2008 and not before 30th September, 2008, therefore, 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. Against this assessee is in appeal before us.

Held– The meaning of the word ‘before’ in section 44AB of the Act is cloudy and uncertain. The word is possible of two meanings, one being the common meaning and the other as given in Chamber’s Twentieth Century Dictionary as ‘previous to the expiration of’. Looking to the other sections of the Act as above and giving harmonious construction and applying respectfully the ratio of the above decision of the Bombay High Court, we hold that the expression ‘before the specified date’ in section 44AB of the Act means ‘on or before the specified date’.

Full text of the Judgment is as follows –

INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH ‘B’, NEW DELHI

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