2015 (12) TMI 1820 - AT - Income Tax

Penalty u/s 271B - violation of section 44AB - HELD THAT - We find that the findings recorded by the learned CIT(A) are not correct as assessee has been demanding the release of documents from 12.08.2009 onwards, which were provided to the assessee only on 14.07.2010, therefore, the delay in getting accounts audited was beyond the control of assessee. We further find that the penalty for violation of section 44AB is not mandatory. See SS BANGA. 2005 (1) TMI 82 - PUNJAB AND HARYANA HIGH COURT In the present case, we find that the reason for late filing of audit report was beyond the control of assessee, and therefore, there is a reasonable cause and therefore, penalty was not imposable. - Decided in favour of assessee.

Summary

Issues:
Appeal against penalty imposed under section 271B of the Income Tax Act for failure to get accounts audited within prescribed time.

Analysis:
1. The appellant contested the penalty imposed by the Assessing Officer under section 271B of the Income Tax Act, citing reasons beyond their control for not getting the accounts audited within the stipulated timeframe. The appellant highlighted that a survey conducted on their premises led to the seizure of documents, preventing timely audit. The appellant submitted letters requesting document release, emphasizing efforts made to comply. The appellant argued that the delay was justified due to circumstances outlined. The appellant relied on relevant case laws to support their position.

2. The Departmental Representative (DR) supported the lower authorities' decision.

3. Upon review, the Appellate Tribunal found discrepancies in the lower authority's findings. The Tribunal noted the appellant's consistent requests for document release since August 2009, with the documents only provided in July 2010. The Tribunal emphasized that the delay in audit was beyond the appellant's control. Additionally, the Tribunal highlighted that penalty under section 44AB is not obligatory, citing a High Court case where discretion is given to the Assessing Officer regarding penalty imposition based on reasonable cause shown by the assessee. In this case, the Tribunal concluded that the reason for the delayed audit report was justified, indicating a reasonable cause, thus rendering the penalty inapplicable.

4. Consequently, the Tribunal allowed the appeal filed by the assessee, overturning the penalty imposed under section 271B of the Income Tax Act. The order was pronounced in open court on 3rd December 2015.