2014 (7) TMI 594 - AT - Income Tax

Audit report obtained u/s 44AB of the Act Wrong information given to AO - Whether the statement of the assessee that it has obtained the tax audit report prior to filing of return is correct or not Held that - The corporate assessees have to furnish Tax audit report in Form 3CA and Form No.3CD - The non-corporate assessees have to furnish the tax audit report in Form 3CB and Form 3CD - it requires the tax auditor only to furnish the details of audit conducted under the Companies Act - the assessee has filed the return of income under E filing procedure - Part A-O1 of the return of income requires the assessees who are liable for audit under section 44AB of the Act to furnish certain information - The information to be given in Part A-O1 contains the details to be furnished in Form No.3CD - the assessee has duly furnished all the details under Part A-O1 of the return of income, there appears to be some truth in the submission of the assessee that it has obtained the tax audit report before the due date for filing return of income - the audit under the Companies Act and u/s 44AB of the Act was conducted by the very same auditor and he has confirmed the fact by filing an affidavit - the assessee could have obtained the audit report u/s 44AB of the Act before filing the return of income - the assessee could have obtained the tax audit report before the due date for filing return of income, there is no justification for levying penalty u/s 271B of the Act this, the order of the CIT(A) is set aside and the AO is directed to set aside the penalty levied in the hands of the assessee u/s 271B of the Act Decided in favour of Assessee.

Summary

Issues:
Penalty under section 271B for failure to get accounts audited under section 44AB of the Act before filing return of income.

Analysis:
The appeal was against the penalty of Rs. 1.00 lakh imposed under section 271B of the Act for not getting the accounts audited under section 44AB before filing the return of income for the assessment year 2009-10. The assessing officer initiated penalty proceedings as the assessee answered "NO" to the question of being liable for audit under section 44AB in the E-filing process and did not provide details of the auditor. The assessee claimed it was a typographical error and submitted the tax audit report along with its reply. The CIT(A) upheld the penalty, leading to the appeal.

The Chartered Accountant representing the assessee argued that the statutory and tax audit reports were both issued on the same date, 01-09-2009, and were conducted by the same auditor. The E-filing process did not require attaching documents, and all necessary details were provided in the E-return. The inadvertent mistake was attributed to a clerical staff. The Departmental Representative contended that the explanations were not convincing, emphasizing the failure to provide auditor details.

The Tribunal observed that the auditor had conducted both audits and confirmed issuing the tax audit report before the due date. The Form 3CA required for tax audit under section 44AB only necessitated certifying Form 3CD, which was completed. The E-return included all required details in "Part A-O1," supporting the claim of obtaining the tax audit report before filing the return. The Tribunal concluded that the penalty was unjustified due to the inadvertent error and directed the AO to delete it.

In conclusion, the appeal was allowed, setting aside the penalty under section 271B of the Act, emphasizing the timely audit completion and inadvertent error in the E-filing process.