Requirement of furnishing tax audit report under section 44AB was introduced only with effect from 1-7-1995 for purpose of section 271B

ORAL JUDGMENT (PER DR. D.Y. CHANDRACHUD, J.)

1) The petitioner seeks to challenge orders passed by the Commissioner of Income Tax, Kolhapur on 28 September 1995 and on 25 March 1996. By the first of those orders, the Commissioner rejected an application filed by the petitioner under Section 264 questioning the imposition of a penalty on him under Section 271B. By the second of those orders, an application for rectification that was filed by the petitioner was dismissed.

2) The facts in so far as they are relevant fall within a narrow compass. The petitioner filed his return of income for assessment years 1990-91 to 1993-94 together with audit reports under Section 44AB, on 19 November 1993, 23 July 1993 and 30 December 1993. The position as it emerges from the record of this proceeding is that the petitioner had obtained the tax audit reports under Section 44AB before the specified date. The specified dates for the aforesaid four assessment years, for obtaining tax audit reports were 31 October 1990, 31 October 1991, 31 October 1992 and 31 October 1993 respectively. There is no dispute about the  fact that the tax audit reports were obtained before these dates or about the fact that the tax audit reports were, as a matter of fact, filed with the return of income.

3) The petitioner was subjected to a penalty under Section 271B for the aforesaid four assessment years. The Commissioner while rejecting the representation filed by the petitioner has held that under Section 271B, it is obligatory to get the accounts audited, to obtain a report of audit as required under Section 44AB and to furnish the report.

4) The contention that was urged on behalf of the petitioner by learned Counsel is that the obligation to furnish the tax audit report under Section 44AB by the date specified was inserted by the Finance Act, 1995 with effect from 1 July 1995. It is urged that prior to the amendment the requirement was to obtain the tax audit report by the specified date under Section 44AB. This requirement, it was submitted, was complied with.

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