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2013 (11) TMI 1669 - AT - Income TaxLevy of penalty u/s.271B - Held that - As due to the leaving of service by the Accountant the accounts of the assessee could not be finalised in time for which there was delay in getting the audit report and finally the assessee has obtained the audit report on 16-01-2009. Further, the returned income at ₹ 8,51,340/- has been accepted by the Assessing Officer in the assessment. Considering the totality of the facts of the case, we are of the opinion that this is not a fit case for levy of penalty u/s.271B of the I.T. Act, 1961. We, therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to cancel the penalty.
Issues:
Levy of penalty under section 271B for failure to get accounts audited before the statutory due date. Detailed Analysis: Issue 1: Levy of penalty under section 271B The appellant, engaged in civil construction business, filed the return of income for A.Y. 2007-08 after the statutory due date, declaring income of &8377; 8,51,340. The Assessing Officer noted incomplete books of account during a survey and imposed a penalty of &8377; 38,489 under section 271B, which was upheld by the CIT(A). The appellant explained that due to the Accountant leaving the job during the previous year, there was a delay in finalizing accounts, resulting in the audit report being obtained after the due date. The Tribunal found merit in the appellant's explanation, noting that there was a reasonable cause for the delay in obtaining the audit report. Citing judicial decisions, the Tribunal emphasized that mere failure to file the audit report in time does not automatically warrant a penalty under section 271B, as the provision is discretionary. Considering the circumstances, including the acceptance of the returned income by the Assessing Officer, the Tribunal held that this case was not suitable for the imposition of a penalty under section 271B. Consequently, the Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to cancel the penalty. This judgment highlights the importance of considering reasonable causes for delays in compliance with statutory requirements and the discretionary nature of penalty provisions under the Income Tax Act, 1961. The Tribunal's decision underscores the need for a thorough examination of facts and circumstances before imposing penalties, ensuring fairness and justice in tax assessments.
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