2013 (12) TMI 1108 - AT - Income Tax

Penalty u/s.271B failure to get its accounts audited and furnished before prescribed date u/s 44AB - Waiver of penalty u/s 273B - Held that - The audit report signed by the auditors in the instant case is dated 01-08-2008 - The assessee is required to get its accounts audited before the specified date i.e. 31st of October 2006 - The assessee has not given any details regarding the name of the previous auditor, the date of resolution appointing the new auditor and copy of any correspondence between the assessee company and the old auditor or the assessee company with the new auditor or correspondence between the new auditor and the old auditor - Delay in obtaining the auditor report was due to change of the auditor and delay in getting NOC from the previous auditor remains unsubstantiated - The assessee was tied up in court litigation the order of which was announced on 14-12-2007 - The assessee failed to substantiate the reason for delay between December 2007 till 01-08-2008 - The assessee could not explain any reasonable cause for not getting the accounts audited before the specified date and furnish the same by that date Decided against assessee.

Summary

Issues:
Levy of penalty u/s.271B for delay in filing appeals against CIT(A) orders.

Analysis:
In the case of ITA No.1399/PN/2011, the appellant, a Pvt. Ltd. Company engaged in land dealing, faced penalty proceedings u/s.271B for delay in getting accounts audited for A.Y. 2006-07. The Assessing Officer noted a two-year delay in audit and imposed a penalty of Rs. 1 lakh. The appellant cited reasons like a change in auditors, director's involvement in a land dispute, and confusion over taxability. However, the AO rejected these explanations, leading to the penalty upheld by CIT(A). The appellant argued reasonable cause, but the Tribunal found the explanations unsubstantiated, upholding the penalty.

In ITA No.1400/PN/2011, the appellant challenged the penalty under similar circumstances as the previous case. The Tribunal upheld the penalty, citing identical facts and arguments as the earlier case, leading to the dismissal of the appeal.

In ITA No.1401/PN/2011, the appellant contested a penalty of Rs. 23,251 u/s.271B for A.Y. 2007-08, related to unaudited accounts for A.Y. 2006-07. The Tribunal acknowledged a reasonable cause due to the prior year's unaudited accounts, leading to the cancellation of the penalty for A.Y. 2007-08. This decision differed from the previous cases due to the specific circumstances, resulting in the allowance of the appeal.

Overall, while penalties were upheld in two cases due to unsubstantiated explanations for audit delays, the third case saw the penalty canceled based on a reasonable cause related to unaudited accounts from the previous year. The Tribunal's decisions were based on the specific facts and evidence presented in each case, emphasizing the importance of providing valid justifications for delays in compliance with statutory obligations.