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2016 (12) TMI 952 - AT - Income TaxPenalty u/s 271B - failure on part of the auditor in uploading the audit report as introduced and required first time - Held that - As noticed from the records that the assessee had filed the return of income for the assessment year 2013-14 on 21-06-2013 electronically and the assessee got her accounts audited on 12-06-2013. It is also noticed from the records that copy of ITR Forms, acknowledgement and tax audit report dated 12-06-2013 were furnished to the AO. The CA of the assessee could not upload the audit report because of technical problem in the server/ site of the Department. The assessee was under bona fide belief that the report is already uploaded. However, the assessee had filed the tax audit report dated 12-06-2013 before the AO. It is also noticed that the assessee being low educated and she was not aware of the e-filing system particularly uploading of audit report on internet as it was first time introduced by the Department to upload the same. It appears that it is a technical breach on the part of the assessee as the audit report could not upload on account of site/ server problem of the system As decided in the case of ACIT & Anr vs. Dr. K. Satish Shetty (2009 (2) TMI 207 - KARNATAKA HIGH COURT ) this is first time when assessee was required to e-file the audit report and prior to that no such reports were being furnished. Hence, the penalty should not be levied. - Decided in favour of assessee
Issues Involved:
1. Imposition of penalty under Section 271B of the Income Tax Act, 1961 for failure to upload the audit report electronically. Detailed Analysis: Issue 1: Imposition of Penalty under Section 271B of the Income Tax Act, 1961 Facts of the Case: The assessee filed an appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], Ajmer, which confirmed the imposition of a penalty of ?1,50,000 under Section 271B of the Income Tax Act, 1961, for the assessment year 2013-14. The assessee, who is low educated, failed to upload the audit report electronically as required by the Central Board of Direct Taxes (CBDT) Notification No. 34 dated 01-05-2013. Arguments by the Assessee: 1. The assessee argued that the failure to upload the audit report was due to the auditor's mistake and the introduction of the e-filing system for the first time. 2. The audit report was obtained on 12-06-2013, and the return of income was e-filed on 21-06-2013. 3. The assessee, being low educated (IXth standard), was unaware of the requirement to upload the audit report electronically. 4. The audit report was attempted to be uploaded but failed due to technical issues with the Income Tax Department's server. 5. The assessee provided hard copies of the audit report to the Assessing Officer (AO) and believed the report was uploaded. 6. The assessee cited various case laws and CBDT circulars to argue that the penalty should not be imposed for a technical and inadvertent mistake, especially when it was the first time the e-filing requirement was introduced. Arguments by the Revenue: The Revenue argued that the assessee was liable to upload the audit report electronically and failed to do so, justifying the imposition of the penalty under Section 271B. Tribunal's Findings: 1. The Tribunal noted that the assessee had not uploaded the audit report on the e-filing portal, leading to the penalty imposed by the AO and confirmed by the CIT(A). 2. The Tribunal observed that the assessee had filed the return of income electronically and had her accounts audited before the due date. 3. The Tribunal acknowledged that the assessee faced technical issues with the Income Tax Department's server, which prevented the uploading of the audit report. 4. The Tribunal considered the assessee's low education level and lack of awareness of the e-filing system, introduced for the first time, as a valid reason for the failure. 5. The Tribunal referred to various case laws, including the Kerala High Court's decision in ACIT & Anr vs. Dr. K. Satish Shetty (2009) 310 ITR 366, which supported the view that penalties should not be imposed for first-time technical breaches. Conclusion: The Tribunal concluded that the penalty imposed under Section 271B was not justified. It directed the deletion of the penalty of ?1,50,000, considering the assessee's bona fide belief, technical issues with the server, and the first-time introduction of the e-filing requirement. Thus, the appeal of the assessee was allowed. Order: The appeal of the assessee was allowed, and the penalty of ?1,50,000 levied under Section 271B was deleted. The order was pronounced in the open court on 14/12/2016.
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