2022 (6) TMI 1365 - AT - Income Tax

Penalty proceedings u/s.271B - belated filing of tax audit report as prescribed u/s.44AB - reasonable cause within the meaning of Sec.273B - HELD THAT - Although the assessee has filed tax audit report beyond the stipulated period, but such tax audit report was made available to the AO before he completes assessment proceedings. The assessee has given reasons for delay in filing tax audit report. As per which, the audit of accounts of society done by the Dept. of Cooperative Audit, could not be completed on or before 31.10.2015 and said delay was not in the hands of the assessee. Therefore, there is a reasonable cause for not filing the tax audit report within prescribed time limit ad thus, penalty cannot be levied. We find merits in the submission of the assessee for the simple reason that non-filing of audit report within the due date is a venial technical breach without any mala fide intention on the part of the assessee. Because, completion of audit of books of accounts of the society is under the control of Dept. of Cooperative Audit and thus, unless the Dept. of Cooperative Audit completes audit, the assessee cannot file return of income along with tax audit report. Therefore, reasons given by the assessee for not filing tax audit report prescribed u/s.44AB of the Act, is neither intention nor any mala fide intention, but it is venial technical breach and for this reason, penalty u/s.271B of the Act, cannot be levied. Decided in favour of assessee.

Summary

Issues involved:
- Condonation of delay in filing appeal
- Levy of penalty under section 271B of the Income Tax Act

Condonation of delay in filing appeal:
The appeal filed by the assessee was initially considered barred by limitation, but a petition for condonation of delay was submitted explaining the reasons for the delay. The tribunal found the reasons provided by the assessee to be reasonable and in accordance with the Act for condonation of delay. Therefore, the delay in filing the appeal was condoned, and the appeal was admitted for adjudication.

Levy of penalty under section 271B of the Income Tax Act:
The case involved the levy of a penalty under section 271B for the belated filing of a tax audit report as required under section 44AB of the Income Tax Act. The assessee, a cooperative society, had filed the tax audit report after the due date, but before the completion of assessment proceedings. The delay in obtaining the audit report was attributed to the Department of Cooperative Audit, which was not in the hands of the assessee. The tribunal found that there was a reasonable cause for the delay in filing the tax audit report, as it was a technical breach without any malicious intent on the part of the assessee. Relying on previous decisions and the jurisdictional High Court's ruling, the tribunal concluded that the penalty under section 271B could not be levied in such circumstances. Therefore, the tribunal directed the assessing officer to delete the penalty levied under section 271B of the Act.

In conclusion, the tribunal allowed the appeal filed by the assessee, emphasizing that the reasons provided for the delay in filing the tax audit report were reasonable and did not warrant the imposition of a penalty.