1. This appeal by revenue for A.Y. 1993-94 is directed against the order of CIT(A), Jodhpur, dated 19-9-1994 whereby he cancelled the penalty levied by Assessing Officer under section 271B. The Assessing Officer had levied the penalty holding that the assessee had not obtained audit report within specified time. The Ld. CIT(A) cancelled the penalty holding that I.T. Return was filed late along with audit report and so the audit report was delayed as it could not be separated from the return and be filed without submission of return. He also observed that the Chartered Accountant had also confirmed in his statement/examination that he had prepared the audit report in time.
2. We have heard the arguments of both sides and also perused the record.
3. The Ld. Sr. D.R. of revenue has also furnished written submission and we have gone through the same. We have also gone through the cited decisions, copies of which have been furnished before us.
4. The only issue raised by the revenue before us disputes the cancellation of penalty imposed by Assessing Officer under section 271B. The Ld. Sr. D.R. has contended that the assessee's turnover being more than Rs. 40 lacs it was necessary for the assessee to have its accounts audited under section 44AB before the specified date which, in this case, is 31-10-1993. He has contended that it was also necessary for the assessee to obtain audit report under section 44AB on or before the specified date, i.e. 31-10-1993; and equally it was also necessary for the assessee to furnish report of audit under section 44AB on or before 31-10-1993. He has contended that such a requirement already existed under section 44AB read with section271Band section 139(6A), as they stood at the relevant time. Hehas also referred to the decision of Hon'ble Rajasthan High Court in the case of Abhay Kumar v. Union of India [1987] 164 ITR 148. As against this, the Ld. A.R. of assessee has contended that the issue is covered by a decision of this Bench in the case of Asstt. CIT v. Shanker Lal Agarwal [IT Appeal No. 247 (Jp.) of 1994, dated 4-5-2000] a copy of which has been placed on record.
However, as the Ld. Sr. D.R. contended that the decision of Hon'ble jurisdictional High Court in the case of Abhay Kumar (supra) was not considered by the Bench in its earlier decision, so the arguments of both sides were heard in detail. The Ld. A.R. of assessee has contended that various Benches of ITAT have been consistently holding that for the assessment years prior to 1-7-1995 the furnishing of audit report under section 44AB was not necessary nor, in turn, the penalty under section 271B was leviable for default of non-furnishing of the same. He has contended that the requirement of furnishing of audit report under section 44AB has come in the statute in section 44AB w.e.f. 1-7-1995 and prior thereto the only requirement under section 44AB was regarding getting the accounts audited and obtaining the report of the said audit. He has contended that for assessment years prior to the amendment in section 44AB which has come into operation w.e.f. 1-7-1995 no penalty under section 271B can be levied for any failure to furnish the report of audit under section 44AB or for any delayed furnishing of the audit report - V. Kathirvelv. ITO [1999] 63 TTJ (Mad.) 500. He has contended that while interpreting taxing statutes the Court cannot make good the deficiencies in the statute and that Court must interpret the statute as it stands and in case of doubt in a manner favourable to the tax payers. He has - CIT v. Shaan Finance (P.) Ltd [1998] 231 ITR 308' (SC).
5. We have considered the rival contentions as also the materials placed on record together with the cited decisions. We may note that in section 44AB the word "furnish" regarding audit report under section 44AB has been inserted w.e.f. 1-7-1995, and that earlier thereto the words in section 44AB were "to obtain". As such so far as the provision of section 44AB is concerned, it did not provide for furnishing of audit report under section 44AB at any time prior to 1-7-1995. The assessment year under appeal being 1993-94 that is prior to amendment of section 44AB vide the Finance Act, 1995 which became operative with effect from 1-7-1995, the position of law under section 44AB remains that as mentioned above as being prior to 1-7-1995. Accordingly, evident as it is, the provision of section 44AB, as it stood prior to 1-7-1995, required only the getting of accounts audited within specified date and also the obtaining of audit report under section 44AB within the specified date. Furnishing of audit report under section 44AB was not a requirement under section 44AB prior to 1 -7-1995, and the said requirement has come under section 44AB only w.e.f. 1-7-1995 which did not exist prior thereto, nor, in turn, in A.Y. 1993-94, the one under appeal. As such during A.Y. 1993-94 the provision of section 44AB, as it stood at the relevant time, did not require the assessee to furnish the audit report under section 44AB.6. Now coming to the provision of section 139(6A) the same may, for advantage, be quoted here as under :-- 139(6A).--Without prejudice to the provision of sub-section (6), the prescribed form of the returns referred to in this section and in clause (i) of sub-section (1) of section 142 shall in the case of an assessee engaged in any business or profession also, requires him to furnish the report of any audit referred to in section 44AB....." In the above provision the words "the report of any audit" were inserted in this provision by amendment vide Finance Act, 1988 w.e.f.
1-4-1989, and the words "referred to in section 44AB" were inserted by amendment vide Finance Act, 1995 w.e.f. 1-7-1995. It may be re-called that the audit reports may be under various provisions of Income-tax Act, 1961, as for example 12A(b), 32AB(5), 80HH, 80HHC, 80HHE, etc.
etc. So the provision of section 139(6A) as amended by the Finance Act, 1988 w.e.f. 1-4-1989, as it existed prior to 1-7-1995 required only the furnishing of audit report along with return and the said audit report was not the only one under section 44AB but there were so many other audit reports also under various sections, a few of which have just been mentioned above, As such the said provision (as it stood prior to 1 -7-1995 required the various audit reports to be furnished to the Assessing Officer along with the return of income and the provision did not prescribe any earlier specific date for furnishing the audit report. We may also note that in case the audit report was not furnished along with the return of income as required under section 139(6A) the return was tobe treated as defective and the Assessing Officer was under an obligation under section 139(9) to require the assessee to rectify the defect and thus provide the assessee an opportunity for removing the defect. However, if the assessee did not rectify the defect even after affording the assessee an opportunity, the result would have been that the return would be treated as an invalid return. In the instant case however there is no material on record to show that the Assessing Officer had given any notice of defect in the return to the assessee requiring the assessee to remove the defect of non-furnishing of the audit report with the return. As such even if there were non-compfiance of section 139(6A) due to non-furnishing of audit report under section 44AB along with the return, the penalty under section 271B cannot justifiably be levied for the said default/defect or else the same would violate the principle of natural justice, inasmuch as no notice under section 139(9) for rectifying the defeat in return seems to have been given.
7. Besides, the issue is worth considering from another aspect as well.
Assuming that even if the defect notice under section 139(9) for rectifying the defect in the return in respect of non-filing of the audit report along with the return of income as required under section 139(6A) were issued and still there were non-compliance on the part of the assessee inasmuch as the assessee did not rectify the defect nor did the assessee file the audit report, the leviability of penalty under section 271B for the aforesaid default of section 139(6A) still remains question marked for the reason that the penalty under section 271B is leviable in some specific situations.
In order to appreciate the same we may quote the relevant portion of section 271B, as applicable prior to 1-7-1995, as under :-- "obtain a report of such audit as required under section 44AB or furnish the said report along with return of his income filed under sub-section (1) of section 139 or along with the return of income furnished in response to notice under clause (i) of sub-section (1) of section 142." A perusal of the above provision makes it clear that the penalty thereunder is leviable for the following defaults :-- (II) failure to file report of audit under section 44AB along with return of income which is filed under section 139(1) ; and (iii) failure to file report of audit under section 44AB with the return of income which is filed in response to notice under section 142(1)(i).
As such it is clear from the above analysis that under section 271B as it stood prior to 1-7-1995 the penalty leviable was for default of obtaining audit report under section 44AB or for filing of audit report along with return of income when return was furnished either under section 139(1) or in compliance of notice under section 142(1)(i). No penalty under the above provision was however leviable when the return of income was filed under section 139(4). This view is also supported by - V. Kathirvel, cited by the Ld. A.R. of assessee.
8. We may also note that the penalty provided under section 271B does not embrace, within its fold, the default of any requirement regarding furnishing of audit report under some other provisions of the Act. For drawing this conclusion we may lay emphasis on the words of section 271B as used in the portion thereof quoted hereunder - The resultant position, that emerges logically, is that the default of requirement under section 139(6A) does not seem to attract the mischief of section 271B when the return was filed under section 139(4). The non-compliance of section 139(6A) may however attract the penalty under section 271B, for non-furnishing of the audit report under section 44AB only in situation, specified in section 271B as mentioned at items (ii) and (iii) above, and in no other situation. In this context we may also note that in section 139(6A) the words "referred to in section 44AB" qualifying the audit report have been inserted by amendment vide Finance Act, 1995, w.e.f. 1-7-1995. The reference of section 44AB in respect of audit report did not exist in section 139(6A) of the Act prior to 1-7-1995.
9. In the instant case there is no default regarding the situation mentioned at item no. (iii) above as is evident from the written submission of the assessee (page 4 of the assessee's P.B.) wherein it is mentioned that the Assessing Officer had issued notice under section 142(1) dated 7-12-1993 requiring to file return of income on or before 31-12-1993 and the assessce filed the return along with audit report under section 44AB on 14-12-1993, that is prior to the date given by Assessing Officer. As regards the situation mentioned at item no. (ii) above the return filed by the assessee is a belated one inasmuch as the due date was 31-10-1993 whereas the assessee filed on 14-12-1993. As such it was not a return filed under section 139(4) but one filed under section 139(1). Therefore, the requirement ordained in section 271B vide situation mentioned at item no. (ii) above is not applicable to the matter in hand.
10. As regards the situation mentioned at item (i) above we will discuss the same ahead separately as the same involves some other disputes also requiring factual analysis.
11. It is clear from the above discussion that section 271B, as it stood at the relevant time, did not require the assessee to furnish the report of audit under section 44AB along with return of income inasmuch as the assessee's return of income was not filed under section 139(1) but was filed under section 139(4). At this juncture it may also be observed that the words "referred to in section 44AB" qualifying the audit report have been inserted in section 139(6A) by Finance Act, 1995 w.e.f. 1-7-1995 only and the assessment year under appeal being 1993-94, the penalty under section 271B is not leviable for non-compliance of section 139(6A).
12. Now corning to the provision of section 27IB, the position of the said provision as it stood prior to 1-7-1995 alone is relevant in this case and the same has already been discussed above. It is worthwhile to note here that requirement of "furnishing" the audit report under section 44AB was incorporated in section 271B by amendment vide Finance Act, 1995 w.e.f. 1-7-1995 and prior thereto such a general requirement of furnishing the report of audit under section 44AB was no more there under section 271B.13. The Ld. Sr. D.R. has referred to the decision of Hon'ble jurisdictional High Court in Abhay Kumar's case (supra). He has drawn our attention to the observation of the Hon'ble Court as made on page 165 of the Report which is as under:-- "The conspectus of the whole situation is that both the provisions, i.e., section 44AB along with section 271B and section 139(9) can be read together and a harmonious construction is that the assessee has to file an audit report within the specified date, failing which he will have to pay the penalty if he fails to show reasonable cause for not doing so." From the perusal of the cited judgment we find that the issue of penalty was not there before the Hon'ble High Court and it was the constitutional validity of section 44AB which was in issue before the Hon'ble Court. It was with a view to judge the constitutional validity of section 44AB that the workability of section 44AB together with section 139(9)(e) and section 271B together was considered and the observation on harmonious construction were made as quoted above. In this context we may also refer the observation made in the second para on page 164 of the Report to the effect that- "The next limb of the argument of learned counsel for the petitioner is that the present section is unworkable because it is inconsistent with the various other provisions of the Act," In this regard the contention raised was that there was no discretion with the Assessing Officer under section 271B for levy of penalty for violation of section 44AB, whereas under section 139(2) there was discretion with the ITO. From the perusal of the cited judgment it clearly appeals that the observations made by the Hon'ble High Court regarding the levy of penalty on page 165 of the Report were in the contest of judging the workability of section 44AB together with section 271B so as to adjudicate upon the issue of constitutional validity of section 44AB. Obvious as it is the question as to whether the penalty under section 271B was or was not leviable for default of furnishing of audit report required under section 44AB within specified date was not in issue before the Hon'ble High Court. In the circumstances the above referred observations of the Hon'ble High Court as made on page 165 of the reported judgment may not be the ratio decidendi of the case but only obiter dicta, as has been argued by the Ld. A.R. of the assessee. The contention of the Ld. A.R. of the assessce has further been that the Obiter dicta of the Hon'ble Apex Court of the land may have the binding nature and be operative as precedent but not the Obiter dicta of an Hon'ble High Court and this contention cannot be said to be without force. It has been held by the Hon'ble Calcutta High Court in the case of Mahaliram Ramjeedas. In re, [1938] 6 ITR 265 that the Obiter dicta of High Court did not operate as res-judicata nor was it binding on I.T. authorities. In Goodyear India Ltd. v. State of Haryana [ 1991] 188 ITR 402 (SC), the Hon'ble Supreme Court has held that a judgment is an authority only for what it decides and not for what may remotely or even logically follow. It has also been held therein that a decision even on question not argued cannot be treated as president. In CITv. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297 (SC) the Hon'ble Supreme Court has held that the judgment must be read as a whole. The observations from the judgment are to be considered in the light of question before the Court and not to be divorced from the context of the question under consideration. It has also been held that a decision of the Hon'ble Supreme Court takes its colour from the question involved in the case in which it is rendered, in CIT v. K. Ramakrishnan [1993] 202 ITR 997, the Hon'ble Kerala High Court has held that a case is a precedent for what it explicitly decides and nothing more. The words used by the judges are not to be read as it they are words used in an Act of Parliament, These words arc not used after weighing the pros and cons of all conceivable situations that may arise. They constitute just the reasoning of the judges in the particular case, tailored to a given set of facts and circumstances.
What is made relevant and binding is only the ratio decidendi and no more. In Abhay Kumar's case the specific issue as to whether the penalty under section 271B be levied or not for not furnishing of the audit report under section 44AB within the specified date, as provided in Explanation (ii) of section 44AB was not therefor adjudication before the Hon'ble Rajasthan High Court and the specific issue before the Hon'ble Court was regarding the constitutional validity of section 44AB. There is no gain saying the fact that the considerations for judging the constitutional validity of a statutory provision are different from those for judging the leviability of penalty under a particular statutory provision. The settled legal position is that while the Courts are slow in declaring a provision constitutionally invalid that is they need preferably be liberal in upholding the validity of provision whereas they need preferably construe the penalty provision strictly. At the same time it is also settled position of law that in interpreting a fiscal statute the Court cannot make good the deficiencies if there be any. The Court must interpret the statute as it stands and in case of doubt in a manner favourable to the tax payers. This position has been laid down by the Hon'ble Supreme Court in Shaan Finance (P.) Ltd (supra), cited by the Ld. A.R. of the assessee. In that view of the matter we are of the considered opinion that in the circumstances the revenue does not get any benefit from the decision of Hon'ble jurisdictional High Court in the case of Abhey Kumar.
14. In view of the discussions made above, we are of the view that prior to amendment of sections 271B & 44AB vide Finance Act, 1995 w.e.f. 1-7-1995, penalty for non-furnishing of audit report required under section 44AB within specified date was not leviable. As such the assessment year under appeal being 1993-94 the penalty under section 271B for non-furnishing of audit report under section 44AB on or before 31-10-1993, the specified date, was not leviable on assessee.
15. However, the Assessing Officer has in his order, largely discussed the non-getting of the accounts audited within the specified date 31-10-1993 as also non-obtaining of the report of such audit under section 44AB within 31-10-1993, though the Ld. CIT(A), in his order, discussed only the non-furnishing of the audit report under section 44AB. From the perusal of the record we find that the Assessing Officer has drawn his conclusion regarding the assessee having not got its accounts audited under section 44AB by 31-10-1993, nor having the audit report under section 44AB obtained by 31-10-1993 on the basis of the fact that the audit report was furnished along with return as late as 14-12-1993 despite the fact that the assessee had been penalised for the similar default in the preceding year vide order of penalty under section 271B dated 3-3-1993. In our view there can be a number of reasons for not furnishing of the audit report prior to 14-12-1993 after having obtained the same on 28-10-1993. The preparing of the audit report by 28-10-1993 is supported by the statement of Chartered Accountant also as mentioned in the impugned order of the Ld. CIT(A).
Mere delay that has occurred in this case, in furnishing the audit report to Assessing Officer or for that matter, mere suspicion cannot constitute a basis for concluding that the accounts were not got audited by 31-10-1993 or the report of the said audit was not obtained by 31-10-1993, the specified date under section 44AB. As such there being no cogent and clear evidence to shatter the apparent fact-situation the same well deserves to be treated as real.
Considering the facts and circumstances of the case, we do not find it established that the audit report dated 28-10-1993 was not prepared or not obtained by 28-10-1993. In the circumstances the assessee having got its accounts audited by 28-10-1993 and having obtained a reportof the said audit by 28-10-1993 the penalty for default of getting the accounts audited within specified date under section 44AB and of obtaining the audit report within the said specified date is not found to be leviable under section 271B. In that view of the matter considering all the facts and circumstances of the case as also the legal position we find the conclusion of the Ld. CIT(A) drawn in his impugned order to be quite justified and warranting no interference.
We, therefore, decline to interfere with the same.