MISC. APPEAL No. 506 OF 1999

(Against the Judgment dated 11/5/1999 passed by Sri

Jordan Kachchap,Judicial Member and Sri Sikandar

Khan, Accountant Member of Income-tax Appellate

Tribunal, Patna Bench, Patna in I.T.A. No. 94/PAT/96).

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M/S BIHAR STATE LEATHER INDUSTRIES

DEVELOPMENT CORPORATION ------------- Appellant

Versus

COMMISSIONER OF INCOME

TAX & ANR.- -----------------Respondents

For the petitioner Mr. Ajay Rastogi, Adv.

For the respondents : Mr. Harshwardhan Pd.,

Sr. Standing Counsel

Mrs. Archana Sinha,

Jr. Standing Counsel

P R E S E N T

THE HON’BLE MR. JUSTICE CHANDRAMAULI KR. PRASAD

THE HON’BLE DR. JUSTICE RAVI RANJAN.

Prasad &

Ranjan, JJ.

Bereft of unnecessary details, facts necessary for the decision

of the present appeal are that the appellant-assessee is a Government

Company and it filed return on 9^th of December 1992 for the

assessment year 1992-93. However, it did not file the audited account

as provided under Section 44AB of the Income-Tax Act. The Assessing

Officer by order dated 27/2/1995 determined the total income of the

assessee. Later on, a show cause notice dated 2^nd of June, 1995 was

issued asking the assessee to show cause as to why levy of penalty as

contemplated under Section 271B of the Income-tax Act be not levied.

The assessee filed photocopies of the internal auditor9s report on 19^th

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February and it was contended that the Comptroller and Auditor

General has not appointed the statutory auditors, hence audited

account as provided under Section 44AB of the Income-Tax Act

(hereinafter referred to as the 8Act9) was not filed. The plea put forth by

the assessee did not find favour with the Assessing Officer and it found

that there was delay on the part of the assessee to complete the books

of accounts. On these facts, the Assessing Officer came to the

conclusion that the delay in filing the statutory auditor9s report is not on

account of any delay by the Comptroller and Auditor General.

Accordingly, it levied penalty of Rs. 1,00,000/- on the Assessee. The

assessee carried the matter in appeal and the Commissioner of

Income Tax, dismissed the appeal and while doing so, it observed that

securing appointment of the Auditor through the Comptroller and

Auditor General, is the responsibility of the Assessee and there being

no reasonable cause for the failure to comply the provisions of Section

44AB of the Act, the imposition of penalty is legal and valid. The

assessee thereafter preferred appeal before the Patna Bench of the

Income-Tax Appellant Tribunal, which on its finding that there was no

reasonable cause for not completing the books of account and

obtaining the auditor9s report within the specified date as required

under Section 44AB of the Act, dismissed the appeal.

Aggrieved by the same, the assessee has preferred this

appeal under Section 260A of the Act. By order dated 21.11.2000, the

appeal has been admitted on the following substantial questions of law:

(a) Whether on the facts and in the

circumstances of the appellant9s case, the Income-Tax

Appellate Tribunal is justified in confirming penalty of

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Rs. 1,00,000/- imposed under Section 271B of the

Income Tax Act=?

(b). Whether on the facts and in the

circumstances of the appellant9s case, the finding of the

Income-Tax Appellate T