M/S Bajrang Oil Mills v. The Income Tax Officer, Balotra

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR JUDGMENT M/s Bajrang Oil Mills VS.The Income TaxOfficer, Balotra. D.B. INCOME TAX APPEAL NO.89/2001 against the order of the Income TaxAppellate Tribunal dt.27.4.95 passedin ITA No.2343/JP/96 for theAssessment Year 1994-95. HON'BLE MR. JUSTICE RAJESH BALIAHON'BLE MR. JUSTICE MANAK MOHTA Mr. Anjay Kothari for the appellant.Mr. Sangeet Lodha for the respondent. ------- Reportable By the Court: (PER HON'BLE RAJESH BALIA, J.) This appeal is arising out of the orderof the Tribunal dated 27[th] April, 2001 sustainingthe penalty levied against the assessee-appellantunder Section 271B for failure on the part of theassessee to get its accounts audited and obtainthe report of such audit before the dateprescribed under Section 44AB. assessee has filed his return on 28[th] Sept., 1994declaring the total receipts from sales atRs.35,38,266.58 declaring total sales amountingto Rs.35,38,266.58 and receipts for job work doneby him at Rs.5,57,879.40. Since the gross receiptof the assessee from the sales and the job workdone by him exceeded Rs.40 lacs, the AssessingOfficer opined that the assessee was under anobligation to get the accounts audited. The assessee's contention was that sinceunder Section 44AB, three expressions (i) 'totalsales', (ii) 'turn over' and (iii) 'grossreceipts' are used by legislature each of themare independent criteria and one does not overlapthe other. According to the assessee, since thethree expressions are related to three types ofbusiness activities, it be considered that undereach independent criterion unless the “totalsale” or “turnover” or “gross receipts other thanthe sale or turn over” independently haveexceeded 40 lacs, he was not liable statutorilyto have his accounts audited. Since in the caseof assessee neither “turnover” nor “total sales”nor “gross receipts” excluding “turnover” or “sales” to be considered independently did notexceed Rs.40 lacs, he was not liable to have hisaccounts audited for Assessment Year 1994-95.Since for subsequent year he fell into criterionhe has got his accounts duly audited and sincethen he has getting his accounts duly auditedevery year. However, the Assessing Officer opinedotherwise by finding that the gross receiptsinclude the receipts from all sources. Since theaggregate of the sales and the gross receiptsfrom the job work taken together exceeded Rs.40lacs he was liable to compulsory audit. The consequence of not gettingcompulsory audit as required under Section 44ABhas been provided under Section 271B by way oflevy of penalty. In response to notice to show causeagainst levy of penalty under Section 273B, theassessee pleaded that even if it be assumed thatinterpretation put by the Assessing Officer iscorrect, since the Assessee was under thebonafide belief, in view of the language that wasdeployed by the legislation, that he was not liable to subject himself to compulsory audit,the penalty ought not to be levied on him for thebreach of technical provision since there is nofailure on his part to make complete and correctdisclosure. He contended that merely because itis lawful to do so it was not necessary in eachcase that penalty ought necessarily be leviedeven on every venial or technical breach of lawwhen assessee's conduct cannot be said to becontumacious or willful. However, these contentions did notprevail with the Assessing Officer. Whileholding that the assessee was liable tocompulsory audit in terms of Section 44AB becauseaggregate of sales and other receipts from thejob work exceeded Rs.40 lacs he had committedbreach of the statutory obligation. Consequently,a penalty of Rs.20,530/- under Section 271B wasimposed by the Assessing Officer. However, these contentions did notprevail with the Assessing Officer. Whileholding that the assessee was liable tocompulsory audit in terms of Section 44AB becauseaggregate of sales and other receipts from thejob work exceeded Rs.40 lacs he had committedbreach of the statutory obligation. Consequently,a penalty of Rs.20,530/- under Section 271B wasimposed by the Assessing Officer. The order of the Assessing Officer hasbeen successively affirmed by the CIT (Appeals)vide his order dated 30th Oct., 1996, and theorder of the Tribunal under appeal. At the time of admission of the appeal, the following substantial questions of law wereframed which in the opinion of the Court arosefor consideration in this appeal:- Coming to the first question, it wouldbe apposite to refer to the provision of Section44AB itself which was inserted vide Finance Act, 1994 w.e.f. 1.4.1985. This provision wasprimarily intended to ensure the credibility ofaccounts maintained by any assessee other than acompany, which is otherwise required to get itsaccounts audited, and the cooperative societieswhich were also required to be audited by theCooperative Societies Act. Object for which thisclause was sought to be inserted was that aproper audit for the tax purposes would ensurethat the books of account and other records areproperly maintained and that they faithfullyreflect the income of the tax payer and claimsfor deductions are correctly made by him. Suchaudit would also help in checking fraudulentpractices. It can also facilitate theadministration of tax laws by a properpresentation of the accounts before the taxauthorities and considerations, like checkingcorrectness of totals and verifying whetherpurchases and sales are properly vouched or notcan be avoided. The time of the assessingofficers thus can be saved and can be utilizedfor attaining to more important investigationalaspects of the case. The aforesaid object was stated inmemorandum of notice explaining the provisions in the Finance Bill 1994 when it was proposed to beinserted in the Income Tax Act, 1961 during thecourse the Bill was placed before the Parliament. Coupled with this obligation cast on theassessees, the failure to get accounts auditedwhere it was so required without reasonable causewas also subjected to the provisions of penaltyunder Section 271B read with Sec.273B as we havenoticed above. The provisions read in the aforesaidcontext does reflect that the provision was madefor compulsory audit both in the case of tradingcommunity who derive their income from profitsand gains from the business as well asprofessionals who derive their income by way ofprofessional receipts though they do not deal incommodities or the persons engaged in supply ofservices though the service is essential part ofthe profession rendered by them to theirconstituents. For this reason, the differentterminology and the limit was fixed forclassifying the persons who would fall within thescope of compulsory audit. Since the income frombusiness of particular nature refers to threedifferent aspects of the receipts by the businessman namely; receipt from the sales,aggregate of turnover or the gross receipts fromwhatever sources where the assessee is notinvolved in the trading commodities. For thelast category of persons, criteria laid was ofthe gross receipts. The assessee has claimed that in view ofthree expressions used in clause (a) of Section44AB; the total sales or turn over or grossreceipt are to be viewed in relation to thebusiness to which such sales, turn over or grossreceipt are attributable independently. In caseswhere the assessee is involved in the business ofsales of any commodity, its aggregate sales haveto be above Rs.40 lacs, if he is to be subjectedto compulsory audit. businessman namely; receipt from the sales,aggregate of turnover or the gross receipts fromwhatever sources where the assessee is notinvolved in the trading commodities. For thelast category of persons, criteria laid was ofthe gross receipts. The assessee has claimed that in view ofthree expressions used in clause (a) of Section44AB; the total sales or turn over or grossreceipt are to be viewed in relation to thebusiness to which such sales, turn over or grossreceipt are attributable independently. In caseswhere the assessee is involved in the business ofsales of any commodity, its aggregate sales haveto be above Rs.40 lacs, if he is to be subjectedto compulsory audit. In case his business is other than thatof trading in commodity, his total turnover ofthe business as a whole must be above Rs.40 lacsor above. Where the assessee is not carrying onbusiness in sale of commodity, if gross receiptsof his business exceeds Rs.40 lacs, he is liableto compulsory audit, otherwise he is not liableto compulsory audit, if he is having in 3different business not falling in same genere and in each business his aggregate turn over, or saleproceeds or gross receipts separately less thanRs.40 lacs. Since the assessee carried on businessof sales of the commodity manufactured by him, aswell as doing the job work which did not relateto sale of commodity, the sale proceeds from saleof goods, and remuneration from job work, couldnot have been clubbed together for the purpose ofSection 44AB. The receipts from job work beingnot a part of his “total sales” amount receivedfrom job work could not have been considered as“sales proceeds”. Therefore, it is contended atthe first instance that the view taken by theRevenue authorities that sale proceeds from salesand receipts from job work are to be clubbed foroperating Sec.44AB, which obligates the assesseeto compulsory audit is erroneous. He further argued that all receipts ofwhatever nature are not to be included incomputing the limit, crossing of which subjectedany assessee to compulsory audit of his accounts.If the assessee has large number of investmentsother than his business, then the returnsreceived on his investment are not to be included in his gross receipts whether as a businessman ora professional, but it has to be kept asidenotwithstanding his returns from investment maybe more than Rs.40 lacs. In this connection, theattention was also invited towards clause (b) ofSection 44AB which lays down the limit where theprofessional is required to have his variousaccounts audited. It is pointed out that where aperson is carrying on profession, he is subjectedto compulsory audit, if his gross receiptsexceeds Rs.10 lacs only. The expressions “turnover” or “sales” have not been used in the caseof the applicability of Section 44AB toprofessionals pointing out that three terms arenot used in conjunction but in isolation. In the alternative, it was alsocontended that if it be taken that the “sales”and “turnover” and “gross receipts” are interchangeable, vis-a-vis the business carried on bythe assessee, if any, in that event, theprinciple of ejusdem genes is aught to be invokedaccording to which wherever general words at theend of a group of words is used by thelegislative it is to be understood that they takeit colour from each other. In the alternative, it was alsocontended that if it be taken that the “sales”and “turnover” and “gross receipts” are interchangeable, vis-a-vis the business carried on bythe assessee, if any, in that event, theprinciple of ejusdem genes is aught to be invokedaccording to which wherever general words at theend of a group of words is used by thelegislative it is to be understood that they takeit colour from each other. It was pointed out by the learnedcounsel that the word “gross receipts” in itswider sense means aggregate of all receipts ofwhatever nature from whatever sources. If theexpression “gross receipt” in Sec.44AB isunderstood in this wider sense then the use ofexpression “total sales” or “turnover” by thelegislature becomes redundant and otiose. Thegross receipts in case of a person carrying onbusiness and the gross receipts in case ofprofessional would have served the purpose.Legislation cannot be imputed with using anyexpression which does not convey any definitemeaning nor it is understood to have usedsurplus-sage. The learned counsel for the revenueurged that looking to the contents of statutoryprovision and its object, the expression “totalsales”, “turnover” or “receipts” are primarilyrelated to the “person” who is subjected tostatutory obligation and such person must be onewho is carrying on business. It is not thetotality of volume of receipts of sales fromindividual business, where such person iscarrying on number of businesses but aggregate ofall business carried on by such persons which make him subject to obligation of getting hisaccounts audited, else the very purpose ofproviding these provisions would be redundant.Since a professional is not supposed to indulgein trading or business activity other than theprofessional activity, he cannot have any volumeof sales or turnover from the professionalservice rendered by him which explains exclusionof expression “sales” and “turnover” from sub-clause (b) of Sec.44AB. He further pointed outthat since the aggregate of money received orpayable to the assessee without claim to anydeduction and his obligation under the headProfit and Gains from the business or professionbut there is definite distinction betweencarrying on a business and carrying on aprofession. Keeping this distinction in mindlesser limit of gross receipts in the case of aprofessional has been provided, crossing of whichentails his accounts to be subjected tocompulsory audit, since no capital investmentfactor is involved in carrying on profession.Where the assessee is a professional carrying onbusiness in contradiction to profession, itinvolves investment in capital structure ofbusiness. The higher limit of volume of businessof the assessee is envisaged for the purpose of subjecting him to compulsory audit. But ineither case it is the total volume of revenuereceipts from businesses or professions carriedon by the assessee that becomes the touchstonefor the purpose of subjecting him to thecompulsory audit of his account. The learnedcounsel pointed out as noticed by us above thatobject of the provision is to ensure the purityof accounts on the basis of which one mayultimately be assessed by the Assessing Officerwhich too serves in saving his time in verifyingthe facts which have been certified by theauditors and he can devote more time to deal withother complexities. subjecting him to compulsory audit. But ineither case it is the total volume of revenuereceipts from businesses or professions carriedon by the assessee that becomes the touchstonefor the purpose of subjecting him to thecompulsory audit of his account. The learnedcounsel pointed out as noticed by us above thatobject of the provision is to ensure the purityof accounts on the basis of which one mayultimately be assessed by the Assessing Officerwhich too serves in saving his time in verifyingthe facts which have been certified by theauditors and he can devote more time to deal withother complexities. Apart from the purity of accounts andsaves delay in procuring information relating tothe unaudited accounts by Assessing Officer, itis major device to check the possibility of taxevasion through manipulation of accounts eitherprepared at a later stage in order to suit theassessee's declaration or by smuggling somethingotherwise which may not be possible of theaccounts is subjected to auditors vigilance byprescribed time. Having given our careful consideration to the rival submissions and looking to theobject with which the provisions have beenenacted, it appears that the maximum limit ofRs.40 lacs has been fixed in the case of everyperson who is carrying on business and whosetotal receipts exceeds from his business activitywhich came under the head income from the profitand gains from the business has to be viewed asone integrated whole and not independently. Theassessment of a person is on the total income andnot on the income derived from the differentsources separately. The three expressions usedby the legislation, the total “sales”, “turnover” or “gross receipts” though not definedunder the Act, in the ordinary sense refers tothe volume of the business to which it relatesand which is/are carried on by the assessee andin making assessment of profits and gains fromthe business whether such volume is a part of thebusiness concerns the trading in commodities orotherwise the business activities where theassessee has to indulge in incurring cost beforereceiving the amount in relation to that businessor he is carrying on other business activities inwhich the cost factor is excluded by the assesseeand what he is receiving as charges for the workdone by him, like job work, where the raw material is provided by the other manufacturer,the assessee is merely to relate his receipts tolabour charges or procuring cost incurred by himalong with part of his profit. It is in thatsense that business which is carried on by theassessee has to be taken into totality. It maybe noticed that the “sales”, “turnover” or “grossreceipts” are not words of art used in relationto any individual transaction independently buthas been used as “sales”, “turnover” or “grossreceipts”. The expression 'total' qualify allthe other three expressions viz. 'sales','turnover' and 'gross receipts'. Total salesindicate the aggregate price of the sales ofcommodities carried out by the assessee as atrading business. Obviously, it would notinclude such transfer of immovable or movableproperty by way of investment. Similarly, wherethe assessee is not merely selling the movablecommodities, but relating to other trading activities e.g. where assessee is a landdeveloper and he is engaged in business ofacquiring land developing it and selling housesor purchasing or is indulged in leasing businessor is indulged in stock market so on and soforth, the expression “turnover” is made out todenote receipts from such activities. There may activities e.g. where assessee is a landdeveloper and he is engaged in business ofacquiring land developing it and selling housesor purchasing or is indulged in leasing businessor is indulged in stock market so on and soforth, the expression “turnover” is made out todenote receipts from such activities. There may be third or residuary category which may not betermed properly a trading activity yet it iscarrying on as or business activity like jobworks for others, without himself being themanufacturing and selling such manufacturedgoods, or running a motor service garage, for thereceipts of such business can aptly termed asreceipts of firm. However, integral relation ofreceipts by a person from business, does indicatethat it refers to revenue receipts only and donot include capital receipts and certainly notthe receipts which are not relatable to businessand may fall under the expression income to besubjected to tax as income from sources otherthan 'profits or gains from business, professionor vocation. Having come to the conclusion that ontrue interpretations of Section 44 AB clause (a)of the Income Tax Act, 1961, the assessee in thepresent case was required to get his accountsaudited as his gross receipts had exceeded Rs.40lacs during the previous year relevant toassessment year 1994-95, we may next consider thequestion No.(iii) that has been framed assubstantial question of law before considering The question No.(iii) as framed relatesto inter-play between the obligation of theassessee to get his accounts audited before thedate specified under Explanation (ii) attachedwith Section 44 AB and the provisions of Section139(9) in the light of the penalty provisionsunder Section 271 B read with Sec.273 B. Section 44 AB requires every person falling in any of the categories (a), (b) & (c)to get his accounts of previous year audited byaccountant before the specified date and furnishthe report of such audit in the prescribed formduly signed and verified by said accountant asmay be prescribed along with return. Thespecific date has been stated to be 31[st] day ofOctober of the assessment year. Sub-section (9) of Section 139 operateswhere a return has been submitted by the assesseeand the Assessing Officer considers whether thereturn of income furnished by the assessee isdefective. It requires the Assessing Officerwhere he finds that the return submitted by theassessee is defective, he must give him an opportunity to rectify the defect within a periodof fifteen days from the date of such intimationor within such further period which, on anapplication made in this behalf, the Assessingofficer may, in his discretion, allow; and if thedefect is not removed within the said period offifteen days or within the extended period as maybe allowed by the Assessing Officer, the returnhas to be treated invalid and the assessee isconsidered to have failed to furnish the return. The provisions of Section 139(9) is ofsingular importance from the point of view toallow a chance to assessee to make his returncomplete and specify the defects which arecurable and for the purpose of curing that defectan opportunity has to be offered to the assesseebefore the consequences of such defects follow.In other words, the consequence of non-complianceof requirement of furnishing of valid returntakes effect only after the assessee fails toremove the defects within time allowed until theassessee has opportunity to remove such defects,the consequence of such failure to comply withsuch defects cannot follow. Clause (bb) of the Explanation attached “Explanation.- For the purposes of thissub-section, a return of income shall beregarded as defective unless all thefollowing conditions are fulfillednamely :- (a) .... (b) .... Clause (bb) of the Explanation attached “Explanation.- For the purposes of thissub-section, a return of income shall beregarded as defective unless all thefollowing conditions are fulfillednamely :- (a) .... (b) .... (bb) the return is accompanied bythe report of the audit referred toin section 44AB, or, where thereport has been furnished prior tothe furnishing of the return, by acopy of such report together withproof of furnishing the report.” Clause (d) of Explanation 2 is relevantwhich also refers to a return being defective, ifit is not accompanied with the copies of auditedProfit and Loss Account and Balance Sheet andauditor's report where the assessee maintainsregular books of account and the account ofassessee has been audited. In both the provisions requirement ofvalid return is that it should be accompaniedwith auditor's report. Where the accounts required to be audited under Section 44 AB interms of clause (bb) of the Explanation or wherethe account books of the assessee are regularlymaintained and have been audited then too for avalid return the copy of audit report is requiredto be annexed to the return. Not annexing therequired audit report with the return makes thereturn defective. In such events, it becomes theduty of the Assessing Officer to notify theassessee about the defect in the return submittedby him and requiring to remove those defects.The defects in respect of requirement ofsubmitting audit report concerning the defect ofprocedural nature in submitting the return alongwith the audit report but this defect does notconcern literally speaking where the accountshave not been audited as required by law.However, that fact can come to notice only later.At the time when the return shows that assessee'sreturn discloses his turn over or gross receiptsto be in excess of rupees forty lakhs, and it isnot accompanied with an auditor's report, theAssessing Officer is under an obligation to issuenotice calling upon the assessee to furnish thereport within 15 days. The next step come wheneither the assessee does not submit such reportwithin the time allowed by A.O., or finally extended or he submits such report or he maysubmit an explanation for not submitting suchreport. If no such report is submitted thequestion may not carry further as in that eventthe return itself become invalid and it becomes acase where it is to be deemed that the assesseehas failed to submit any return which may lead toconsequence of default in filing return. contingency be set further question to be probed.If the accounts have duly been audited before 31[st]October of the Assessment Year, and such reportis submitted after receipt of notice u/s 139(9)the return in all literal sense and substantialsense has to be considered as a valid return tobe dealt with in accordance with provision of law. However, in response to notice u/s 139 (9) the assessee submits a auditor's report interms of Sec.44 AB and also the audited accountsand balance sheet, but such audit has taken placeafter 31[st] October of the Assessment year, thequestion arises whether furnishing of suchauditor's report and audited accounts, results in filing of valid return or the return remains aninvalid as if such belated audit is of noconsequence? Similarly if the assessee, instead ofsubmitting such auditor's report as notifiedjoins an issue about requirement of getting hisaccounts compulsorily audited at all, whether insuch case, the return has to be ignored oropportunity to remove defects of such defectivereturn is to be afforded after such objection isdecided, his objection is overruled the AssessingOfficer is required to give an opportunity tocomply with the provisions in terms of hisdecision and remove the defect in the returnsubmitted by the assessee, before proceedingfurther in the matter? filing of valid return or the return remains aninvalid as if such belated audit is of noconsequence? Similarly if the assessee, instead ofsubmitting such auditor's report as notifiedjoins an issue about requirement of getting hisaccounts compulsorily audited at all, whether insuch case, the return has to be ignored oropportunity to remove defects of such defectivereturn is to be afforded after such objection isdecided, his objection is overruled the AssessingOfficer is required to give an opportunity tocomply with the provisions in terms of hisdecision and remove the defect in the returnsubmitted by the assessee, before proceedingfurther in the matter? Apparently no such consequences havebeen provided in the Act for failure to getaccounts audited by 31[st] October. In that casethe further contingency comes to fore whereassessee submits his return along with auditor'sreport as required under Sec.44 AB but audit hasbeen conducted after 31[st]October of theAssessment year. Whether in such case return isto be treated invalid. All in all the bulls eye is whetherspecified date fixed for getting accounts auditedas per Sec.44 AB is absolute in terms, so thatfailure to comply makes it incurable default andrenders it impossible for the assessee to file avalid return at any time, even if default is heldto attributed to reasonable cause with theassessee or leaves a leeway for making compliancewith the provision before regular assessment inpursuance of valid return could take place? In case sec.44 AB applies and it isconsidered that conduct of audit by 31[st] Octoberis absolute in terms and cannot be cured by lateraudit, in no case such assessee can file a validreturn and he will always be deemed an assessee,who has failed to file a return required of himand suffer consequence of such default in filingreturn also and also suffer the indiction of hisincome escaping assessment due to non-filing ofreturn. There does not appear any moral to accept such express proposition. What is the effect of getting accounts audited in terms of Section 44 AB belatedly doesnot come within the province of Section 139(9).If there is delay in getting the accounts auditedin time but the accounts have been audited infact after the due date, it may in the givencircumstances, which may depend on facts andcircumstances of each case constitute areasonable cause for failure of the assessee tocomply with the provisions of Section 44 AB so asto avoid levy of penalty by invoking Section 273B which in terms provide that failure to complywith Section 44 A for a reasonable cause, thepenalty leviable for such under Section 271 B maynot be levied. However, in the present case sub-section (9) of Section 139 cannot be invoked.This takes us to consider the last questionwhether non-compliance with the provisions ofSection 44 AB in the present circumstances can beattributed to a bonafide belief held by theassessee about the true interpretation of clauseA of 44 AB which was ultimately found to beerroneous can be considered as a reasonable causefor the assessee's failure to get his accountsaudited for the assessment year 1994-95 so as toattract the provisions of Section 271 B forabsolving himself to levy of penalty. Apparently when a return is filedunaccompanied with auditor's report as requiredunder Section 44 AB it by itself does not makethe person liable for any consequence in thefirst instance. But he is required to be calledupon by the Assessing Officer, if he thinks thatit is a case to which Sec.44 AB is attracted toremove the defect for which a minimum 15 daystime is given to the assessee. The period mayfurther be extended on an application being madeby the assessee in that regard. In provisionlike the one with which we are concerned, it isprimarily of the procedural nature for smoothdischarge of functions of the Assessing Officersand is not meant for conferring any benefit onthe assessee in respect of liability arisingunder the taxing statute unlike the benefitsconferred under Section 32AB or section 80 HSCand HSD. Neither it creates additional liabilityin the case of a company with an object to fixminimum tax liability as in the case of anassessee which is a company and is governed bySection 115 J of the Act. Such provision cannotbe interpreted in a manner that a person shouldbe held to be in perpetual default which hecannot rectify and result in defeating the basicpurpose of the statute and to avoid or minimise the effect of such procedural non-compliance.Moreover it has also to be seen that whileconsequence of non-compliance with Section 44 ABinvites penalty to be levied on the assesseeafter affording an opportunity to show causeagainst levy of such penalty and failure tocomply with the requirement of Section 44 AB, ifattributable to reasonable cause which may haveresulted in default by the assessee then thepenalty is also not imposable in terms of Section273 B. In light of these provisions, if therequirement of removing the defect in returnitself has the meaningful purpose to bring homethe due levy of tax by securing a complete andvalid return from the assessee by giving him anopportunity to remove the defects, which areprimarily of the procedural nature, then ifduring the time afforded to the assessee, heproduces the auditor's report or gets hisaccounts audited on receipt of notice afterspecified date under Section 44AB which aresubject of return and produces the certificate ofauditor about the audited account, in ouropinion, validates a return and that return isrequired to be processed by the AssessingOfficer. Taking any other view would mean thatwhere audit of account under Section 44 AB is attracted but such audit has not been completedprior to 31[st] October of the relevant assessmentyears, for any reason, would become an incurabledefault. Consequence will be that becauserequirement of law is that every return must beaccompanied with the auditor's report whereSection 44 AB is applicable, and unless suchreport is produced there cannot be any validreturn, such an assessee cannot be in a positionto submit a valid return at all which could betaken into consideration by the Assessing officerfor the purpose of effecting charge of tax, assuch defect cannot be cured. A construction leads to such a resultwill lead to absurd end. We are, therefore, of the opinion thatclear purpose of Sec.139(9) in the contract isthat whenever from the return submitted by theassessee it appears to the Income Tax Officer orAssessing Officer that accounts of the assesseeare required to be audited under Section 44 ABand, therefore, the return ought to have beenaccompanied with the auditor's report, beforerejecting the return as invalid return, he isrequired to afford an opportunity as a matter of A construction leads to such a resultwill lead to absurd end. We are, therefore, of the opinion thatclear purpose of Sec.139(9) in the contract isthat whenever from the return submitted by theassessee it appears to the Income Tax Officer orAssessing Officer that accounts of the assesseeare required to be audited under Section 44 ABand, therefore, the return ought to have beenaccompanied with the auditor's report, beforerejecting the return as invalid return, he isrequired to afford an opportunity as a matter of statutory obligation u/s 139(9) of the Act to theassessee to submit the auditor's report. Onreceiving such notice, an assessee can avail suchopportunity either by submitting the auditor'sreport if the accounts have already been auditedand if the accounts have not been audited by thenand he realises that the accounts are required tobe audited then he can in the given time get hisaccounts audited and submit the accounts alongwith the report of the auditor in terms of clause(bb) and (d) of Section 139(9) of the Act of 1961and on furnishing of such report with or withoutaudited account as the case may be the returnbecome valid will be required to be processed assuch. There may be yet another contingencywhere the assessee considers that he is not underan obligation to get his accounts audited u/s44AB. In such event, he may raise this objectionbefore the Assessing Officer in response tonotice U/s 139(a). Where such objection israised it will be for the Assessing Officer todecide such objection before taking any decisionabout validity of return. In case the AccessingOfficer accepts the objection, that will be endof matter. The Assessing Officer in that case will proceed with assessment on the basis ofreturn already submitted before him. However, incase the objection raised by assessee isoverruled, the Assessing Officer will be requiredto then call upon the assessee to comply with theprovisions of Sec.44 AB within reasonable timeto enable a valid return to come before him whichcould be processed for regular assessment. The question of considering the issue ofpenalty cannot arise until that stage has arisen. The question of penalty for non- compliance cannot be inquired into withoutreading the provisions of Section 271-B and 273-Bas both are integrally enacted. While Section271 B provides for consequence of non-complianceof Section 44AB. Section 273 B provides defenceor way by which the assessee can seek absolutionfrom liability to penalty that arises underSection 271 B. This brings us to second question whichwe have noticed to above, assuming it for thesake of arguments that sub-section (9) of Section139 is not attracted when any accounts have notbeen audited by 31[st] of October of the relevant assessment year as required under Section 44 ABand the accounts are audited thereafter or notaudited by the assessee on its own evaluation.It becomes relevant to consider what is theeffect of getting accounts audited in terms ofSection 44AB belatedly or of raising an issue bythe assessee, when he is called upon to removethe defects in return under Section 139(9) fornot filing the auditor's report under Section 44AB along with the return, or inconsequences ofproceedings under Section 271 B, that under thelaw he was not required to get his accountsaudited. assessment year as required under Section 44 ABand the accounts are audited thereafter or notaudited by the assessee on its own evaluation.It becomes relevant to consider what is theeffect of getting accounts audited in terms ofSection 44AB belatedly or of raising an issue bythe assessee, when he is called upon to removethe defects in return under Section 139(9) fornot filing the auditor's report under Section 44AB along with the return, or inconsequences ofproceedings under Section 271 B, that under thelaw he was not required to get his accountsaudited. Apparently, in terms of Section 273B,the Assessing Officer will be required toconsider whether not getting the accounts auditedby 31[st] October of the relevant assessment yearwas due to any reasonable cause which theassessee may put forward as defence for thefailure to comply with the aforesaid provisions.In either case where the assessee raises an issuethat his case does not fall within the purview ofSection 44 AB before penalty could be levied, theAssessing Officer would be under an obligation todecide such objection raised by the assessee. Ifthe objection is sustained obviously, no occasion would arise either of filing of auditor's reportalong with the return so as to complete thedefective return on such receipt of the noticeunder Section 139(9) or to suffer penalty underSection 271B. In case where the AssessingOfficer over rules the assessee's objection andholds that the assessee is/was liable to get hisaccounts audited in terms of Section 44 AB thequestion is always be germane to consider whethersuch objection raised by assessee as to hisobligation u/s 44AB was frivolous or a plausiblestand, before arriving at conclusion whether insuch case penalty could be levied. Section 273 B clearly postulates wherethe assessee furnishes a reasonable cause for hisfailure to comply with the provisions whichinvite penalty under Section 271 B along withcertain other provisions, with which we are notpresently concerned, no penalty is leviable. As a matter of law, it cannot be saidthat in all cases where ultimately the assessee'sobjection as to his liability to get his accountsaudited under Section 44 AB or for any matternon-compliance of any provision, his objectionsare over ruled, his defects or reason for non- compliance cannot be considered to be notbonafide. The fact that ultimately on theanalysis of the provisions the successiveauthorities or the Court may come to theconclusion that the objections raised by theassessee about the requirement to comply with theprovisions of the Act are not sustainable, doesnot make objection raised by the assessee to benot bonafide or groundless. The fact that theassesseeraisescertainquestionsaboutinterpretation of the statute which needsinterpretarial exercise, prima facie supports theassessee in that the objection raised by him isbonafide and he seeks the decision on its merit.The fact that ultimately the court comes to theconclusion against the assessee is no reflectionin all cases that objection raised by him werefrivolous that answer to objection raised byassessee was self evident, as appears to havebeen assumed by the Tribunal. We are, therefore, of the opinion thatthe Tribunal was not justified in rejecting theassessee's contention that, even if it isultimately held that the assessee was under anobligation to get his accounts audited underSection 44 AB, he was under bonafide belief about We are, therefore, of the opinion thatthe Tribunal was not justified in rejecting theassessee's contention that, even if it isultimately held that the assessee was under anobligation to get his accounts audited underSection 44 AB, he was under bonafide belief about the true interpretation of the provisionsconstitutes reasonable cause for not complyingwith the provisions of Section 44 AB withoutconsidering the matter in its totality. In themanner in which the defence of the assessee hasbeen rejected summarily by holding that since theTribunal found on merit against the assessee, theanswer is self evident about the interpretationof Section 44AB and the default cannot be said tobe bonafide. It needs to be reminded that when amatter is brought in appeal before the Court,such appeal lies only in respect of substantialquestion of law to be framed at thetime of admission, when no substantial questionof law arises for considering the appeal, cannotbe entertained. For that matter under theearlier provisions also the questions of law onlycould be referred to this Court for its opinionby way of reference. In this connection, theposition is also clear from the decisions of theSupreme Court that any question answer to whichis self-evident is not a question of law which isrequired to be referred to this Court or thequestion which is self-evident or governed cannotbe said to be a substantial question of law which need consideration in an appeal under Section260A. The fact that the Tribunal has to takeup the interpretorial exercise by referring tothe provisions and analyzing the differentphraseology used in Section 44 AB(a) beforereaching its conclusion at least gives a cluethat the interpretorial exercise in respect ofobjection raised by the assessee was not a self-evident exercise but needed a rational andreasoned approach keeping in view the content,context and object of provisions itself, inconjunction with other provisions of the Acthaving a relevant bearing of concerned provision. The fact that this Court whileconsidering the admission of the appeal has foundthat interpretation of Section 44AB is asubstantialquestionoflawrequiringconsideration by this Court prima facie suggeststhat the interpretation of Section 44 AB was notself-evident and needed an examination ofprovisions of Section 44AB and differentphraseology used with the aid of interpretorialtools in true scope of the provision. If that to be so, in our opinion, itcannot be said that the assessee was not bonafidein not getting his accounts audited for theassessment year 1994-95 because he has genuinedoubt about his liability to do so which heraised when he was called upon to answer the non-compliance.Thequestionabouttheinterpretation of Section 44 AB was required tobe considered by the Revenue Authorities beforefinding the assessee to be in breach of suchprovision and which has in fact been consideredby the Revenue Authorities albiet ultimate answeris found against the assessee. Moreover, we findfrom the facts, and about which there is nodispute that for the subsequent years andthereafter when the assessee had his totalturnover from its business of manufacture wasmore than the prescribed limit he had beensubject his accounts to audit and is complyingwith the provisions of Section 44AB regularly. We are further of the opinion thatfailure to comply with such procedural provisionswith which we are concerned, under a bonafidebelief that the assessee is not required to actin a particular manner under the statute andwhich does not effect its rights and obligation We are further of the opinion thatfailure to comply with such procedural provisionswith which we are concerned, under a bonafidebelief that the assessee is not required to actin a particular manner under the statute andwhich does not effect its rights and obligation otherwise arising under the statute; nor byraising of objection, he obtains any advantage towhich he is not otherwise entitled to; or wherefulfillment of such requirement, the assesseebecomes entitled to certain benefits of statutewhich requires strict compliance with requirementof law in the manner prescribed breach remains avenial and technical breach for which the penaltyis not leviable merely because if it is lawful todo so. In terms of law laid down by the SupremeCourt, the penalty could not be levied for everyvenial and technical breach of procedural la