Penalty of Rs. 1L imposed under Income Tax Act for Non Completion of Audit on Time: Supreme Court sets aside Penalty [Read Judgement]
The Supreme court refused to interfere with the impugned judgment and order passed by the High Court.
Income Tax Act – Supreme Court – Penalty – Income Tax – taxscan
Income Tax Act – Supreme Court – Penalty – Income Tax – taxscan
The Supreme Court set aside the penalty of Rs. 100,000 imposed under the Income Tax Act for non-completion of the audit on the Stipulated time frame. The Special Leaving Petition ( SLP ) arose from the impugned final judgment and order passed by the Bombay High Court.
Laurel Wires Ltd, the appellant is engaged in the business of manufacture of wires and cables. The Directorate General of Central Excise Investigation (“DGCEI”) carried out search proceedings in the premises of the appellant and seized various documents as well the computer hard disks from the appellant’s premises under panchanama.
It was alleged that the appellant failed to file the audit report. A notice under Section 148 of the Income Tax Act, 1961 (“the Act”) was also issued to which Appellant did not reply. Section 148 proceedings were carried out and the Appellant was also levied with the penalty of Rs.1,00,000/- for AY 2004- 05 and AY 2005-06.
On appeal, the Commissioner of Income Tax (Appeal) (“CIT(A)”), dismissed the appeals. Appellant preferred appeals before the Income Tax
The ITAT dismissed the appeal and found that the Appellant was not able to file the audited returns. The total receipt of over Rs.26 Crores and still did not file an audited report as required under Section 44AB of the Act. In response to a penalty notice did not even file any reply. The Tribunal concluded that there is no reasonable cause has been shown for not getting the audit completed in the stipulated time and confirming the penalty. The High Court following the Tribunal's view, imposed a Cost of Rs.1,00,000/- on the Appellant to be paid within four weeks from today.
The two-judge bench of Justice Pamidighantam Sri Narasimha and Justice Prasanna Bhalachandra Varale refused to interfere with the impugned judgment and order passed by the High Court. However, in the facts and circumstances of the case, the court set aside the direction imposing Rs.1,00,000/- towards costs and disposed of the Special Leave Petition.
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