AMIT BAJAJ ADVOCATE

I have had a discussion lately on the topic whether penalty u/s 271B is imposable in case the audit report u/s 44AB is obtained within the due date of filing the ITR u/s 139 but the ITR is filed after such due date? I have tried to examine such situation out of my Legal conscience as follows:


The due date for filing Income Tax Return for corporate and those assessees who are required to get their accounts audited is 30th september every year. But it has been extended to 15th October this year. The Due date for furnishing Audit report u/s 44AB to the Income Tax Department is also 30th september every year which also has been extended to 15th october this year.

Earlier before the introduction of annexure less forms the audit report was required to be submitted with the department before the due date of return of Income, otherwise it attracted penal provisions u/s 271B. Penalty under section 271 B is a sum equal to half per cent of the total sales, turnover or gross receipts from business or profession as the case may be , in such financial year or one lakh rupees, whichever is less.

But after the introduction of annexure less forms i.e ITR4, ITR5, ITR6 etc., the Tax Audit Report is not required to be submitted along with the Return of Income nor it is to be submitted separately any time before or after the due date. But one should get the Tax Audit Report from his CA before the due date of submitting the Return of Income and fill the relevant columns of the Return of Income on the basis of such report.

"7. Following clarifications are also issued in respect of certain issues arising from furnishing
the returns in the above mentioned forms:


(i) An assessee should obtain the report of audit from an accountant under
section 44AB of the Act on or before the due date of the furnishing of the return and
should fill out the relevant columns of the return forms on the basis of such report.
However, the report of audit should not be attached with the return or furnished
separately any time before or after the due date. The assessee should retain the report
with himself. If called for by any income-tax authority during any proceeding under the
Act, it shall be incumbent upon the assessee to furnish/produce the same in original. No
penalty under section 271B shall be initiated or levied for not furnishing the tax audit
report on or before the due date. However, if the audit report has not been obtained before
the due date, provisions of section 271B shall continue to be attracted."

The Kerala High Court in an important Judgement namely Vodafone Essar Cellular vs. ACIThas decided that the discount given on the SIM cards and recharge coupans to the dealers of the telecom company is commission u/s 194H and is liable to TDS. The court held that "The terminology used by the assessee for payment to the distributors is immaterial. In substance the discount given at the time of sale of Sim Cards or Recharge coupons by the assessee to the distributors is a payment for services rendered to the assessee and falls within s. 194H."

• The use of the expression “falsely represents” is indicative of the fact that the offence under Section 10(b) comes into existence only where a dealer acts deliberately in defiance of law or is guilty of contumacious or dishonest conduct; therefore, in proceedings for levy of penalty under Section 10A burden would be on the revenue to prove the existence of circumstances constituting the said offence

GUIDELINES FOR SELECTION OF CASES FOR SCRUTINY DURING 2010-11

1. Selection of cases for scrutiny during the financial year 2010-11 will be done primarily through CASS this year. Manual Selection for scrutiny this year will be limited only to a few categories of cases listed below.
2. List of cases selected during each month in accordance with the selection criteria mentioned below shall be submitted by the Assessing Officers to their respective Range heads by the 15^th of the following month and also displayed on the Notice Board of their office.

The Madras High court has held in Infotech software Dealers Association vs UOI that though software is a good but a supply of it may be a service and not a sales. When a person enters into an agreement with the developer of software like an end user licence agreement for marketing the software to end user, then such transaction between the end user and the person marketing such software is only a service and not a sale.