No penalty u/s 271B, If the audit report is obtained within the due date, but return is filed after the due date.

0 comments Tuesday, September 28, 2010
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.

The Tax Audit Report is required to be submitted if it is called for by the Income Tax Officer during the Assessment proceedings. This has also been explained in CBDT's circular No 3 of 2009. The relevant portion of the said circular is reprduced herebelow:
"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."

As per the above circular You are not in contravention of any provisions if tax audit report is obtained before due date.
There is no Penalty attracted if the Tax Audit Report is not submitted along with the Income Tax Return on or before the due date. However , if the Tax Audit report has not been obtained from the CA on or before the due date of filing return of Income, Penalty under section 271 B shall be attracted.
Although section 234A is attracted for late filing of return .There was one view expressed by someone to me that filing up the ITR ( particularly tax audit columns) is furnishing of the tax audit report and if that is not done before due date , penalty can be levied .  
 In my view  circular asks the assessee to fill up the relevant tax audit columns in the return of Income and file the return . It no where mentions that fill up the columns and file the ITR before due date. Moreover section 271B should be read with section 44AB and not with section 139.
Penalty u/s 271B is imposed on two grounds i.e for not getting the books of accounts audited within due date and for not furnishing the audit report within due date of filling of return of income. Now as per above circular furnishing of audit report has been done away with after the introduction of annexureless forms. The only thing that is required is to obtain the audit report within due date and fill the relavant audit columns of the ITR,  if it is done no penalty can be initiated u/s 271B.
Therefore in my view if you have got the audit report from your C.A. on or before the due date of furnishing the Return of Income, there is no penalty u/s 271B attracted even if you file return after the due date. 
Please Note: The views expressed are my Personal Views only.
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Due date of auditable Income Tax Returns extended from 30th september to 15th october

0 comments Monday, September 27, 2010
F.No. 225/72/2010-ITA.II
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Dated : September 27, 2010
Order under Section 119 of the Income Tax Act, 1961
On consideration of the reports of disturbance of general life caused due to floods and heavy rains, the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income Tax Act, 1961, hereby extends the due date of filing of returns of income for the Assessment Year 2010-11 from 30.09.2010 to 15th October 2010. Accordingly the due date for Tax Audit report u/s. 44AB of the Income Tax Act is also extended to 15th October, 2010.
(Ajay Goyal)
Director (ITA. II)
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Supply of SIM card is not sale, discount on sale of SIM cards and recharge coupans liable to TDS u/s 194H - Kerala High Court

0 comments Wednesday, September 22, 2010
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."
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A finding of mens rea is a condition precedent for levying penalty under section 10(b) read with section 10A of Central Sales Tax Act

0 comments Friday, September 17, 2010


  • 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

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SOME ISSUES PERTAINING TO C FORMS UNDER CST ACT 1956

11 comments Sunday, September 12, 2010
Under CST Act 1956 there are lot of Forms and declarations which help in saving CST on the interstate transactions. C form is an important and foremost common among dealers registered under CST Act 1956 engaged in interstate sales or purchases.

Although the CST Act 1956 is on the verge of its end with the advent of GST knocking at the doors waiting to change the whole picture of Indirect taxation in India. But still I feel inclined to discuss some issues relating to C forms under CST Act since due to the pendency of assessments under VAT and CST Acts many dealers have been facing problems in getting and producing the C forms for finalization of their assessments. Some important issues relating to the C forms are discussed as below for the benefit of dealers all around India:

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GUIDELINES FOR SELECTION OF CASES FOR SCRUTINY DURING 2010-11

4 comments Monday, September 6, 2010
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 15th of the following month and also displayed on the Notice Board of their office.
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Software Supply Is Not "Sale"- Madras High Court

1 comments Friday, September 3, 2010
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.

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