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INCOME TAX REVIEW

Writ Petition

  1. General Principles

    1. Article 226 of the Constitution of India empowers the High Courts and Article 32 empowers the Supreme Court to issue directions, orders or writs including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari. The power of Supreme Court under Article 32 is restricted to enforcement of fundamental rights guaranteed in Part III of the Constitution, whereas the High Court can exercise its power for the purpose of enforcement of both fundamental rights and also other legal rights. Thus the jurisdiction of the High Courts under Article 226 is wider than that of the Supreme Court under Article 32 of the Constitution. Article 227 gives to the High Courts the power of superintendence over all courts and Tribunals through the territories in relation to which it exercises jurisdiction. Exercising its power of superintendence under Article 227, the High Court can interfere, in order to keep the tax authorities created under the statutes, to perform quasi-judicial function within the bounds of their authority and to see that they do their duty in a legal manner. The power of superintendence under Article 227 is broader in one respect than the power to issue writs under Article 226. Under Article 226, the High Court merely quashes the decision of a Tribunal, whereas under Article 227 it can issue directions to the Tribunal regarding the disposal of the matter. The jurisdiction under Article 227 can be exercised only upon courts and Tribunals and not upon administrative authorities.
       

    2. The High Court can issue a writ of 'certiorari' to quash quasi-judicial proceedings taken by the Income-tax Authorities without jurisdiction or in excess of jurisdiction, and orders vitiated by an error apparent on the face of the record or which is passed without application of mind or which is passed in violation of principles of natural justice. The High Court can pass a writ of mandamus to compel the Income-tax authorities to perform their statutory duties or to refund money wrongfully recovered from the petitioner. The High Court can pass a writ of prohibition to prohibit the Income-tax authorities from acting in excess of their jurisdiction. The High Court can also pass a writ of habeas corpus to release an assessee from illegal detention by the Tax Recovery Officer.
       

    3. The writ jurisdiction of the High Court is not meant to short circuit or circumvent statutory procedures. The power under Article 226 is a discretionary power. It is a cardinal principle of writ jurisdiction that the petitioner must approach the Court with clean hands. If false statements are made in the writ petition or misleading or incomplete facts are stated then the court is fully justified in dismissing that writ petition on that ground alone [Sohan Singh Basi vs. I.A.C. 194 TTR 339, 342 (Del)]. Improper conduct of the person invoking writ jurisdiction can be a valid ground for dismissal of the petition. In T. N. Rugmani vs. C. Achutha Menon (1991) Supp (1) SCC 520, 523-24 the Hon'ble Supreme Court has held that even an unassailable cause or illegal or arbitrary order may fail to move the conscience of the Court due to inequitable or unjustifiable behaviour or conduct in equitable jurisdiction.
       

    4. Under Article 226, the High Court has certain self imposed limitations such as :-

      1. the court will not act as a court of appeal or revision to correct mere errors of law or facts;

      2. writ jurisdiction is not intended as an alternative remedy for relief which can be obtained by suit or other mode prescribed by the statutes; and

      3. the court will not generally entertain determination of questions which demands elaborate examination of evidence and will not decide abstract or academic or hypothetical questions.

      High Courts have exercised writ jurisdiction on the following grounds.

      1. that the provisions of law under which the order was passed is itself unconstitutional.

      2. that the impugned order infringes the fundamental right of the party.

      3. that the impugned order was passed without jurisdiction.

      4. that the order disclosed an error of law apparent on the face of the record.

      5. that the order was based on extraneous or mala fide considerations.

      6. that the order violates the rules of natural justice.

      7. that there is no alternative remedy provided by the statute.

      8. that the statutory remedy was not adequate or was onerous.

      9. that resort to the statutory remedy would cause irreparable injury to the petitioner.
         

  2. Proper High Court

    1. A writ can be issued by a High Court against a person, Government or authority residing within the jurisdiction of that High Court, or within whose jurisdiction the cause of action in whole or in part arises.

    2. The Bombay High Court has Benches at Mumbai, Nagpur, Aurangabad and Goa at Panaji. The jurisdiction of the Bombay High Court extends to the State of Maharashtra, the State of Goa, the Union territories of Daman and Diu and the Union Territories of Dadra & Nagar Haveli. This territorial jurisdiction has been divided into four parts for the four Benches. A writ petition should accordingly be filed before the respective Bench. As such, if the cause of action arises in the state of Goa then the petition should be presented before the Goa Bench. If the cause of action arises in the judicial districts of Akola, Amravati, Bhandara, Buldhana, Chandrapur, Nagpur, Wardha, Yavatmal and Gadchiroli then the petition should be filed at the Nagpur Bench. If the cause of action arises in the judicial districts of Ahmednagar, Aurangabad, Beed, Jalgaon, Jalna, Nanded, Osmanabad, Parbhani and Latur then the petition should be filed at Aurangabad Bench. In respect of the remaining territory the petition will lie at the Bombay Bench. Thus if the cause of action arises in Mumbai, Thane, Pune, Nasik etc. writ petition has to be filed at Mumbai Bench. Further, in the case of Mumbai Bench in respect of cause of action arising in Greater Mumbai, the writ petition will lie at the Original Side of the Mumbai Bench and in other cases the writ petition should be filed at the Appellate Side of the Mumbai Bench.
       

  3. Limitation & Delay
    No period of limitation has been prescribed by any statute for filing a writ petition. The only known principle is that the court may not examine stale causes as the court helps the vigilant and not the indolent. In every case it would have to be decided on the facts and circumstances whether the petitioner is guilty of laches and that would have to be done without taking into account any specific period of limitation. There may be cases where even a short delay may be fatal while there may be cases where even a long delay may not be evidence of laches on the part of the petitioner. Where the explanation for delay is convincing and reasonable a writ petition cannot be dismissed merely on the ground that the same was filed after a long delay.     State of Uttar Pradesh vs. Bahadur Singh 142 ITR 745 (S.C.)
     

  4. Court Fees
    In case of a writ petition under Article 226 for enforcement of any of the fundamental rights conferred by part III of the Constitution or for the exercise of its jurisdiction under
    Article 227 thereof the court fees payable is Rs. 250/-. For any other writ under Article 226 the court fees payable is Rs. 125/-.
     

  5. Draft Petition

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. ----- OF 2005.

In the matter of Article 226 of the Constitution of India,
AND
In the matter of Articles 14 and 19 of the Constitution of India.
AND
In the matter of Section 44AB and Section 271B of the
Income-tax Act, 1961
AND
In the matter of notice dated 13-9-2004 issued by the Assessing Officer Mumbai for levying
penalty u/s. 271B of the Income-tax Act, 1961.
AND
In the matter of the order of the Assessing Officer Mumbai dated 18-3-2005 passed u/s 271B
of the Income-tax Act, 1961.

M/s. X Y Z
a partnership firm having office                                                                                        ... Petitioner

VERSUS

  1. Assessing Officer having office at Aayakar Bhavan, M. K. Marg, Mumbai 400 020
  2. Commissioner of Income-tax, Bombay City ---- Mumbai having office at Aayakar Bhavan, M. K. Marg, Mumbai - 400 020
  3. Union of India ... Respondents

To

The Hon'ble Chief Justice and the Other Puisne Judges of this Hon'ble Court.

THE HUMBLE PETITION OF THE PETITIONER FIRM ABOVENAMED MOST RESPECTFULLY SHEWETH:

  1. The petitioner is a partnership firm having office at --------. The First Respondent is the Assessing Officer having jurisdiction to assess the petitioner firm under the provisions of the Income-tax Act, 1961 (hereinafter referred to as the Act). The second Respondent is the Commissioner of Income-tax having jurisdiction over the proceedings in the case of the petitioner firm under the provisions of the Act. The Third Respondent is the Union of India. The relevant period is the assessment year 1991-92.
     

  2. The petitioner by this petition has challenged the validity including the constitutional validity of the provisions of section 271B of the Act, the said notice dated 13-9-2004 issued by the First Respondent for imposing penalty u/s. 271B of the Act and the said order dated 18-3-2005 passed by the First Respondent u/s. 271B of the Act.
     

  3. The relevant facts leading to the petition are as under :

    1. The petitioner is a partnership firm carrying on business as a trader and regularly assessed under the provisions of the Act in the status of a registered firm. The Finance Act, 1984 has inserted a new section 44AB which came into effect from 1st April, 1985. This section makes it obligatory for persons carrying on business or profession to get their accounts audited by a Chartered Accountant before the specified date, if the total sales or turnover or gross receipts exceed Rs. 40 lakhs in business and Rs. 10 lakhs in profession. Explanation (ii) to this section explains the meaning of specified date as 31st December of the assessment year in the case of a company and 31st October in any other case. The audit report should also be obtained before the specified date. For the relevant year, the provisions of section 44AB were attracted in the case of the petitioner firm. As required by the provisions of section 44AB, the petitioner firm got the accounts audited by a Chartered Accountant and also obtained the Audit Report on 12-10-1991. As such the petitioner firm has complied with the provisions of section 44AB of the Act and there is no default in that respect. The petitioner firm states and submits that section 44AB only requires that the accounts must be audited and audit report must be obtained before 31st October, of assessment year and it does not provide for the filing of the same in the office of the Respondent before 31st October of the assessment year.
       

    2. The petitioner firm states that section 139 of the Act, deals with the provisions for filing return of income. Sub-section (1) of section 139 provides for the filing of the return on or before the due date. The due date in the case of the petitioner firm is 31st October of the assessment year and for the relevant year, the due date was 31st October, 1991. Where a person has not filed the return of income within the time allowed u/s. 139 (1), section 142 (1)(i) empowers the Assessing Officer, to issue after the expiry of the time allowed u/s 139 (1) a notice requiring the assessee to furnish a return of his income. The relevant portion of section 142(1) reads as under:
      Sec. 142 (1)
       For the purpose of making an assessment under this Act, the Assessing Officer may serve on any person who has made a return under section 139 or in whose case the time allowed under sub-section (1) of that section or furnishing the return has expired, a notice requiring him on a date to be therein specified.

      1. where such person has not made a return within the time allowed under sub-section (1) of section 139 to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed....

      2. .........."
        Where the return of income is not filed within the time allowed under section 139(1) or within the time allowed under notice issued u/s. 142(1); section 139(4) provides that a return may be furnished any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. Relevant portion of sub-section (4) of section 139 reads as under :
        "Any person who has not furnished a return within the time allowed to him under sub-section (1) or within the time allowed under a notice issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier".
         

    3. The petitioner firm states that the main partner of the petitioner firm who was also looking after the income-tax affairs was out of Mumbai for a long time attending to his ailing wife and as a result, there was an inadvertent delay in filing the return of income, and the return could not be filed within the time prescribed u/s 139(1). There was no notice issued u/s 142(1) for filing of the return. The petitioner firm filed the return of income on
      3-7-1992, within the time prescribed u/s 139 (4). Along with the return, the petitioner firm has also filed the said audit report obtained u/s 44AB.
       

    4. The petitioner firm states that the requirement of filing the audit report obtained u/s 44AB along with the return is to be found under sub-section (6A) of section 139 which reads as under :
      "Without prejudice to the provisions of sub-section (6), the prescribed form of the returns referred to in sub-sections (1) and (3) of 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 require him to furnish the report of any audit obtained under section 44AB, the particulars of the location and style of the principal place where he carries on the business or profession and all the branches thereof, the names and addresses of his partners, if any, in such business or profession and, if he is a member of an association or body of individuals, the names of the other members of the association or the body of individuals and the extent of the share of the assessee and the shares of all such partners or the members, as the case may be, in the profits of the business or profession and any branches thereof".
      Sub-section (9) of section 139 provides that where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period. As per the Explanation to that sub-section, if the return of income is not accompanied by a report of the audit obtained u/s 44AB, then the return will be considered as defective and the assessee will have to be given an opportunity to rectify the defect by filing the report of audit obtained u/s. 44AB. The relevant portion of sub-section (9) of section 139 reads as under.
      "Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the Assessing Officer may, in his discretion allow, and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act shall apply as if the assessee had failed to furnish the return.
      Provided that where the assessee rectifies the defect after the expiry of the said period of fifteen days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return.
      Explanation: For the purposes of this sub-section a return of income shall be regarded as defective unless all the following conditions are fulfilled namely:-

      1. ---------------------

      2. ---------------------
        the return is accompanied by the report of the audit obtained under section 44AB.

      3. ---------------------"
        The relevant portion of Explanatory note on Finance Act, 1984 in Circular No. 387 dated
        6-7-1984, issued by the CBDT reads as under:

      "A proper audit for tax purposes would ensure that the books of account and other records are properly maintained, that they faithfully reflect the income of the tax-payer and claims for deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of the accounts before the tax authorities and considerably saving the time of assessing officers in carrying out routine verifications, like checking correctness of totals and verifying whether purchases and sales are properly vouched or not. The time of the Assessing Officer thus saved could be utilised for attending to more important investigational aspects of the case."

      As such, the object of obtaining audit report is for assistance in the course of assessment proceedings. As per section 139 (6A) where a return of income is filed u/s 139 (1) or (3) or pursuant to a notice u/s 142 (1)(i) such return must be accompanied by a report of audit u/s 44AB. As regards return filed u/s 139(4) nothing is provided u/s 139(6A). As such, no default shall be deemed to have been committed if the audit report obtained u/s 44AB is not filed with return filed u/s 139(4). In such an event, the return will not become invalid but will be deemed to be defective and in view of sub-section (9) of section 139, the assessing officer is bound to give an opportunity to the assessee to rectify the defect by filing the report of audit u/s 44AB and the objective of section 44AB would be achieved. There is no provision under the Act, for filing of the audit report before the filing of the return, nor there is any provision u/s 44AB or otherwise, that the audit report should be filed before the specified date. The only requirement u/s 139(6A) is that where a return is filed u/s 139(1) or pursuant to a notice u/s 142 (1)(i), the audit report has to be filed along with such return. Moreover this requirement is directory in nature and not mandatory.
       

    5. Section 271B which provides for penalty for failure to get accounts audited reads as under:-
      "S. 271B – Failure to get accounts audited –
      If any person fails to get his accounts audited in respect of any previous year or years relevant to an assessment year or obtain a report of such audit as required under section 44AB, or furnish the said report along with the return of his income filed under sub-section (1) of section 139, or along with the return of income furnished in response to a notice under clause (i) of sub-section (1) of section 142, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum equal to one half per cent of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession in such previous year or years or a sum of one hundred thousand rupees, whichever is less".
      As such u/s. 271B penalty can be imposed :

      1. if the accounts are not audited before 31st October of the assessment year, or

      2. if the audit report is not obtained before 31st October of the assessment year, or

      3. if the audit report is not filed along with the return of income filed u/s 139 (1); or

      4. if the audit report is not filed along with the return of income filed pursuant to notice u/s 142(1)(i).

      Up to A. Y. 1988-89, only first two defaults were covered by section 271B and from A. Y. 1989-90, the last two additional defaults have also been covered. The penalty provided is a fixed penalty of an amount equal to one half per cent of the total sales turnover or gross receipts, in the year or Rs. 1 lakh, whichever is less. As such, the quantum of penalty is linked with the sales, turnover, or gross receipts as the case may be and not with the default of delay. The penalty is imposable only if one of the four types of defaults referred to above are committed and not otherwise. Section 271B does not provide for imposition of penalty for delay in filing the return. Irrespective of delay in filing return penalty would be leviable if the audit report is not filed with the return where the return is filed either under section 139(1) or in response to a notice u/s. 142(1)(i). Where the return is filed otherwise than u/s. 139(1) or in response to notice u/s. 142(1)(i), the penalty u/s. 271B would not be attracted even if the audit report is not filed along with the return if the accounts are audited and audit report u/s 44AB is obtained before 31st October of the assessment year.
       

    6. The petitioner firm states that it has not committed any of the four defaults referred to above and is therefore, not liable to be penalised u/s 271B of the Act. However, the first Respondent issued a notice dated 13-9-2004 for showing cause as to why penalty u/s. 271B of the Act should not be levied. The notice has been issued without application of mind, without considering the facts on record and without specifying the default in respect of which he proposes to impose penalty u/s 271B. The notice is vague, and the first paragraph of the Notice reads as under:
      "Whereas in the course of proceedings before me for the A. Y. 1991-92 it appears to me that you have without reasonable cause failed to get your accounts audited in respect of previous year relevant to A.Y. 1991-92 or obtain a report of such audit as required u/s 44AB or furnish the said report along with the return of 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".
      Hereto annexed and marked Exhibit 'A' is a copy of the said notice dated 13-9-2004 issued by the first Respondent.
       

    7. The petitioner states that there is no dispute that:

      1. the petitioner firm has got the accounts audited as required and within the time prescribed u/s 44AB;

      2. the petitioner firm has obtained the audit report as required and within the time prescribed u/s. 44AB;

      3. the petitioner firm has filed the return of income within the time allowed u/s 139(4) and along with the return, the audit report obtained u/s 44AB has been filed;

      4. no notice u/s 142(1)(i) of the Act was issued.

      The first Respondent has not given any specific reason for imposition of penalty. The petitioner has submitted that no default has been committed as contemplated u/s 271B and therefore, no penalty could be imposed. The first Respondent only orally indicated that he proposes to impose penalty u/s 271B on account of delay in filing the return, but however, nothing was given in writing. The petitioner firm therefore, without prejudice, submitted that no penalty on that count also can be imposed as the delay in filing the return was on account of the reasonable cause, the delay being attributable to the personal problems of the main partner who was looking after the taxation matters of the firm. The petitioner firm, therefore, submitted to the first Respondent that the said notice dated 13-9-2004 has been issued without jurisdiction, without application of mind and hence illegal and invalid. The first Respondent was, therefore, requested to withdraw the said notice and to drop the proceedings. The first Respondent was also requested to give an opportunity of being heard in case an adverse view was required to be taken by him. Hereto annexed and marked Exhibits 'B-1', 'B-2' and 'B-3' are copies of the letters dated 17-10-2004, 27-2-2005 and 8-3-2005 respectively filed by the petitioner firm in response to the said notice dated 13-9-2004 and in furtherance thereto.
       

    8. However, the first Respondent by his order dated 18-3-2005 imposed a penalty of Rs. 1,00,000/- purporting to be penalty u/s. 271B of the Act. The reason given for imposing penalty is not delay in filing the return but for not filing the audit report within the time provided u/s 44AB. It may be noted that section 44AB does not provide for filing of the audit report but it only provides for auditing the accounts and obtaining the audit report within the specified time. Hereto annexed and marked Exhibits 'C-1 and 'C-2' are respectively copies of the said order of the first Respondent dated 18-3-2005 and the demand notice dated 18-3-2005.
       

  4. The petitioner firm states and submits that the said provisions of section 271B are arbitrary, illegal, unconstitutional and contrary to the principles of criminal jurisprudence and the said order of the first Respondent dated 18-3-2005 being Exhibit 'C-1' is without or in excess of jurisdiction and/or suffers from mistakes apparent on the record, for the following amongst other grounds which are without prejudice to one another.

    1. The said order of the first Respondent dated 18-3-2005 being Exhibit 'C-1' is without jurisdiction, there being no default committed by the petitioner firm as contemplated u/s 271B of the Act. The penalty has been imposed on the ground that the petitioner firm has not filed the audit report as required u/s. 44AB of the Act. Section 44AB reads as under:

      "Section 44AB : Audit of accounts of certain persons carrying on business or profession. Every person,

      1. carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds forty lakh rupees in any previous year, or

      2. carrying on profession shall, if his gross receipts in profession exceed ten lakh rupees in any previous year, get his account of such previous year audited by an accountant before the specified date and obtain before that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.
        Provided, that in a case where such person is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date and obtains before that date the report of the audit as required under such other laws and a further report in the form prescribed under this section.
        Explanation: For the purpose of this section :-

        1. "accountant" shall have the same meaning as in the Explanation below sub-section (2) of section 288;

        2. "specified date" in relation to the accounts of the previous year relevant to an assessment year means –

          1. where the assessee is a company, the 31st day of December of the assessment year;

          2. in any other cases, the 31st day of October of the assessment year".

        Thus section 44AB requires following two things to be done before the specified date:

        1. to audit the accounts and

        2. to obtain the report of such audit."

        3. The petitioner firm has complied with both these requirements. There is no requirement in section 44AB for filing of the audit report so obtained. As such there is no default under section 44AB. Therefore, the levy of penalty on the ground that the petitioner firm has not filed audit report as required u/s 44AB is unjust and invalid and hence the said order dated 18-3-2005 being Exhibit 'C-1' deserves to be quashed.
           

    2. The petitioner firm has not committed any default as contemplated u/s 271B of the Act. Penalty can be imposed u/s 271B only if any one of the following defaults are committed.

      1. if the accounts are not audited before 31st October of the assessment year; or

      2. if the audit report is not obtained before 31st October of the assessment year; or

      3. if the audit report is not filed along with the return of income filed u/s 139(1); or

      4. if the audit report is not filed along with return filed pursuant to notice u/s. 142 (1) (i).

      The petitioner firm has not committed any of these defaults. The petitioner firm has got the accounts audited and has obtained the audit report before 31st October, 1991. Also there was no notice issued u/s 142 (1)(i). As such, there is no default of the type (a), (b) and (d) referred to above. Also there is no dispute as regards this. The return along with the audit report has been filed within the time prescribed u/s 139(4) and beyond the time prescribed u/s 139(1). If the return is deemed to be filed u/s. 139(1) then obviously there is no default, If the return so filed is not deemed to be a return filed u/s 139(1) then also there is no default. What is required u/s 271B is that if the return is filed u/s 139(1) then such a return should be accompanied by the audit report. Nowhere under the Act, including u/s 271B there is a provision or requirement for filing of the audit report before filing of the return. Both u/s. 139(6A) and u/s. 271B the audit report has to be filed along with the return where the return is filed u/s. 139(1) or pursuant to notice u/s. 142(1)(i). It is also not correct to say that section 271B provides for penalty for delay in filing the return or for filing the return beyond the time prescribed u/s. 139(1). In no case this could be the interpretation, since where the audit report is filed along with the return filed pursuant to a notice u/s. 142(1)(i) there would be no penalty u/s. 271B. This is more so because notice u/s. 142(1)(i) can be issued only after the time prescribed for filing of the return u/s. 139(1) is over. It is, therefore, submitted that the petitioner firm has not committed any default as contemplated u/s. 271B and hence the said order dated 18-3-2005 being Exhibit 'C-1' passed by the first Respondent is without jurisdiction, unjust, illegal and bad in law.
       

    3. The petitioner firm has not committed any default as contemplated u/s. 271B of the Act. The first Respondent has issued the said notice dated 13-9-2004 without application of mind. The notice is vague and reproduces section 271B, as it is, without giving the proper reason for issuing the said notice. The notice does not specify the default committed by the petitioner firm. In the course of the proceedings the petitioner firm had explained as to how no default has been committed by the petitioner firm as contemplated u/s. 271B. The petitioner firm had also requested the first Respondent to give an opportunity if he intends to impose penalty on any other count. The first Respondent has now imposed penalty on the ground that the audit report has not been filed within the time prescribed u/s. 44AB. Firstly, the first Respondent has not given any proper opportunity to the petitioner firm, and secondly the order passed by the first Respondent is the result of pure misconception of the law. The petitioner firm therefore submits that the said notice issued by the first Respondent, and the said order dated 18-3-2005 are patently illegal, without jurisdiction and hence bad in law.
       

    4. The requirement of filing the audit report along with the return as provided u/s. 139(6A) read with section 139(1) is directory and not mandatory. The audit report could be filed even during the course of assessment and the object of section 44AB would be achieved. In the circumstances it is submitted that levy of penalty u/s. 271B on account of delay in filing the audit report is unreasonable and unlawful, and hence the said provisions of section 271B are invalid to that extent.
       

    5. The provisions of section 271B are equally unlawful and invalid being unconstitutional, since they violate the principles laid down under Articles 14 & 19(1)(g) of the Constitution of India. The penalty provided is unreasonably high and violates the right to carry on business as provided under Article 19(1)(g) of the Constitution of India. The provisions of section 271B are also unconstitutional and invalid, since the penalty is related to the turnover, and not to the default of delay. Penalty imposable is the same irrespective of whether there is a delay of one day or one year resulting in equal treatment of unequals and accordingly violating the provisions of Article 14 of the Constitution of India. The provision for penalty is also contrary to the principles of criminal jurisprudence, the quantum of penalty being not commensurate to the extent of default. It is therefore, submitted that the provisions of section 271B are unconstitutional and hence invalid.
      The petitioner firm craves leave to add, amend, alter and/or delete any of the grounds or submissions.

  5. The petitioner firm has demanded justice, but the same has been denied to it. The petitioner firm has challenged the validity including the constitutional validity of section 271B of the Act. The impugned order is patently erroneous and without jurisdiction. The petitioner firm therefore states that there is no other alternative remedy which is efficacious and effective. The first Respondent while passing the said order was acting in his quasi-judicial capacity. The petitioner firm states that the relief, if any granted in this petition will be complete.
     

  6. The petitioner firm therefore, states and submits that this Hon'ble Court may be pleased to declare that the said provisions of section 271B are unconstitutional, invalid and inoperative.
     

  7. The petitioner firm also sates and submits that this Hon'ble Court may be pleased to issue under Article 226 of the Constitution of India on appropriate direction, order or a writ, including a writ in the nature of 'Certiorari' calling for the records of the case and after satisfying itself as to the legality thereof quash and set aside the said order and the demand notice being Exhibits 'C-1' and 'C-2' both dated 18-3-2005 passed/issued by the first Respondent.
     

  8. The petitioner firm, further states and submits that this Hon'ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate direction, order or a writ, including a writ in the nature of 'Mandamus' and/or Prohibition, permanently prohibiting and restraining the Respondents, their officers and agents, from proceeding further by way of recovery or otherwise in pursuance of the said order and the demand notice being 'Exhibits 'C-1' and 'C-2' both dated 18-3-2005.
     

  9. The petitioner firm, further submits that it would be just and fair that during the pendency of these proceedings, this Hon'ble Court may be pleased to restrain, by an order or injunction, the Respondents, their officers and agents, from proceeding further by way of recovery or otherwise in pursuance of the said order and the demand notice being Exhibits 'C-1' and 'C-2' both dated 18-3-2005. The petitioner firm states that if the Respondents are not so restrained, then they would proceed to recover the illegal demand and cause irreparable damage and harm to the petitioner firm.
     

  10. The petitioner firm has its office in Mumbai. The Respondents have their offices in Mumbai. The impugned order was passed in Mumbai. The petitioner firm therefore submits that this Hon'ble Court has jurisdiction to entertain and dispose of this petition.
     

  11. The said order of the first Respondent dated 18-3-2005 was received by the petitioner firm in the last week of March, 2005. The petitioner firm therefore submits that there is no undue delay in filing this writ petition. However, if this Hon'ble Court is of the view that there is any such delay, then the Hon'ble Court may be pleased to condone the same.
     

  12. Shri. ……….. partner of the petitioner firm above named has signed and declared the petition. He is conversant with the facts of the case and is able to depose the same.
     

  13. The petitioner firm has paid the Court fees of Rs. 250/- towards this petition.
     

  14. The petitioner firm would rely on documents a list of which is annexed.
     

  15.  The petitioner firm has not filed any other petition before this Hon'ble Court or the Hon'ble Supreme Court of India, in respect of the subject matter of this petition.

The Petitioner firm therefore prays

  1. that this Hon'ble Court may be pleased to declare that the provisions of section 271B are unconstitutional, invalid and inoperative.

  2. that this Hon'ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate direction, order or a writ, including a writ in the nature of 'Certiorari' calling for the records of the case and after satisfying itself as to the legality thereof, quash and set aside the said order and the demand notice being Exhibits 'C-1' and 'C-2' both dated 18-3-2005 passed/issued by the first Respondent.

  3. that this Hon'ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate direction, order or a writ, including a writ in the nature of 'Mandamus' and/or 'Prohibition' permanently prohibiting and restraining the Respondents their officers and agents, from proceeding further by way of recovery or otherwise in pursuance of the said order and the demand notice being Exhibits 'C-1' and 'C-2' both dated 18-3-2005.

  4. that pending the hearing and final disposal of these proceedings this Hon'ble Court may be pleased to restrain, by an order or injunction, the Respondents, their officers and agents, from proceeding further by way of recovery or otherwise in pursuance of the said order and demand notice being Exhibits 'C-1' and 'C-2' both dated 18-3-2005.

  5. for ad interim relief in terms of prayer (d).

  6. for the costs of these proceedings.

  7. for such further and other relief, as the nature and circumstances of the case may demand.

Petition drawn by :

PETITIONER.
 

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