2017 (2) TMI 1227 - AT - Income Tax

Penalty u/s. 271B - non-uploading of audit report electronically - assessee s explanation for non uploading of audit report because of problem faced in the system and the contention that second circular issued by the CBDT extending the due date of filing of return of income from 30th Sep, 2013 to 14th Oct, 2013 implicit the difficulty in uploading the audit report - Held that - the online filing of audit report u/s. 44AB was newly introduced during the year under consideration because of which the assessee had faced difficulty in uploading the audit report electronically in the system. The issuing of the two circulars by the CBDT implicit constraint and elucidate the hiccup in uploading the prescribed reports of audit in the system electronically. We also noticed that the assessee had submitted the audit report on 30/09/2013 manually within the due date which could not be uploaded electronically because of the reasons stated supra in this order. The above stated facts and findings indeed indicate that there was a bonafide reasonable cause for not uploading the audit report electronically by the assessee, therefore, as per our considered opinion the ld. CIT(A) is not justified in sustaining the penalty levied by the assessing officer. - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271B of the Income Tax Act, 1961 for failure to upload audit report electronically for A.Y. 2013-14.

Analysis:
The case involved two appeals by different assessees challenging the penalty imposed under section 271B of the Income Tax Act, 1961 for not uploading audit reports electronically for A.Y. 2013-14. The appeals were based on similar facts, and one case was taken as the lead for decision-making.

The assessing officer received information that the assessees had not uploaded the audit reports electronically as required by the CBDT notification. The assessees contended that they faced difficulties due to the new e-filing system introduced for audit reports. They had submitted the reports manually within the due date but could not upload them electronically.

The CIT(A) confirmed the penalty stating that there was no reasonable cause for the failure to upload the reports electronically. However, the ITAT observed that the introduction of the new system and the CBDT circulars extending due dates implied constraints in uploading the reports electronically. The assessees' submission of the reports manually within the deadline was considered a valid reason for the failure to upload electronically.

The ITAT concluded that there was a bona fide reasonable cause for not uploading the reports electronically, overturning the CIT(A)'s decision and allowing the appeals filed by the assessees. The penalty under section 271B was set aside based on the assessees' genuine difficulties faced in complying with the new e-filing requirements.

In summary, the ITAT held that the assessees had a valid reason for not uploading the audit reports electronically due to initial system difficulties, and therefore, the penalty under section 271B was not justified.