2013 (11) TMI 1668 - AT - Income Tax

Penalty u/s 271B - not getting the accounts audited before the statutory due date - Held that - There is no absolute default and the assessee has filed Audit report although belatedly, we are of the considered opinion that there was bonafide reasons for not getting the accounts audited before the statutory due date and therefore this is not a fit case for levy of penalty u/s.271B of the I.T. Act. In this view of the matter, we set-aside the order of the CIT(A) and direct the Assessing Officer to cancel the penalty levied u/s.271B of the I.T. Act.

Summary

Issues: Penalty under section 271B for failure to get accounts audited within specified time.

Analysis:
1. The appeal was filed against the order of the CIT(A)-I, Thane for Assessment Year 2007-08. Despite notice, no one appeared on behalf of the assessee, and an adjournment request was rejected.

2. The Assessing Officer noted that the assessee, a land acquisitions and developers company, did not get its accounts audited within the specified time. A survey revealed incomplete books of account, leading to a penalty under section 271B consideration.

3. The assessee explained that due to uncertainties in land transactions, no income could be recognized, resulting in incomplete accounts. The audit was delayed as negotiations with another party were ongoing, affecting the pricing and contract finalization.

4. The Assessing Officer imposed a penalty of Rs. 36,249 for violating section 44AB. The CIT(A) upheld the penalty, rejecting the assessee's explanations.

5. The ITAT Pune found that the penalty was levied for obtaining the audit report after the due date. The assessee's income was assessed with certain additions, which were not challenged separately.

6. ITAT Pune considered the assessee's reasons for the delay in audit, citing precedents that mere delay in filing the audit report does not automatically warrant a penalty. They noted the bonafide reasons presented by the assessee and overturned the penalty, directing the Assessing Officer to cancel it.

7. The appeal was allowed, and the penalty under section 271B was set aside. The judgment was pronounced on 26th November 2013 during the hearing.