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2022 (9) TMI 1432 - AT - Income TaxLevying penalty u/s.271B - belated filing of audit report in terms of Section 44 AB without assigning proper reasons and justifications - HELD THAT - It is an admitted fact that although the assessee has filed Tax Audit Report in Form 3CB as required u/s.44AB of the Act beyond due date specified u/s.139(1) but such Tax Audit Report was made available to the AO before completion of assessment proceedings u/s.143(3) on 22.11.2017. It is evident from the fact that the assessee has obtained Tax Audit Report from an Accountant on 28.03.2016 and furnished before the AO during the course of assessment proceedings. Therefore we are of the considered view that when the Tax Audit Report was made available to the AO before completion of assessment proceedings then for venial technical breach without any mala fide intention penalty cannot be levied u/s.271B of the Act. A similar issue has been considered in the case of M/s.T P D 101 Uthangarai Milk Producers Co-operative Society Ltd 2022 (6) TMI 1365 - ITAT CHENNAI where on identical set of facts penalty levied u/s.271B of the Act has been deleted - we direct the AO to delete penalty levied u/s.271B. Appeal filed by the assessee is allowed.
Issues involved:
1. Validity of penalty under section 27IB for belated filing of audit report. 2. Whether reasonable cause existed for the delay in filing the tax audit report. 3. Discretionary power under section 271B for penalty imposition. 4. Applicability of penalty under section 271B for failure to furnish tax audit report in time. 5. Consideration of technical or venial breach of law in penalty imposition. Issue 1: Validity of penalty under section 27IB for belated filing of audit report: The appeal challenged the order of the Commissioner of Income Tax (Appeals) regarding the imposition of penalty under section 27IB for the belated filing of the audit report. The appellant argued that the penalty was unjustified as the tax audit report had been submitted during the scrutiny assessment proceedings under section 143(3). Issue 2: Reasonable cause for the delay in filing the tax audit report: The appellant contended that the delay in filing the tax audit report was due to the health issues of a partner managing the firm's affairs. Medical evidence was presented to support this claim. It was argued that this constituted a reasonable cause for the delay and should exempt the appellant from penalty under section 273. Issue 3: Discretionary power under section 271B for penalty imposition: The appellant emphasized that the power to impose a penalty under section 271B is discretionary and should not be exercised for technical breaches without mala fide intentions. The argument was supported by citing a precedent where a similar penalty was deleted by a co-ordinate Bench of the Tribunal. Issue 4: Applicability of penalty under section 271B for failure to furnish tax audit report in time: The discussion revolved around whether the penalty under section 271B could be imposed for the failure to furnish the tax audit report within the specified time frame. The appellant argued that since the report was made available to the Assessing Officer before the completion of assessment proceedings, the penalty was not justified. Issue 5: Consideration of technical or venial breach of law in penalty imposition: The Tribunal considered the nature of the breach in filing the tax audit report and whether it was a technical or venial breach without mala fide intentions. Relying on precedents and legal principles, the Tribunal concluded that in cases of minor or unintentional breaches, the penalty should not be imposed, and justice should be favored over punishment. In a detailed analysis, the Tribunal found that the tax audit report was submitted to the Assessing Officer before the completion of assessment proceedings, indicating a technical breach without mala fide intentions. Citing a similar precedent, the Tribunal ruled in favor of the appellant, emphasizing that penalties should not be imposed for minor breaches without reasonable cause. Consequently, the penalty under section 271B was deemed unjustified, and the appeal was allowed, directing the Assessing Officer to delete the penalty.
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