2017 (4) TMI 172 - AT - Income Tax

Levy of penalty u/s 271B read with section 274(1) - Held that - The audit report in Form 3CB/3CD has been uploaded on the same date ie, 18.9.2013 as date of filing of the return of income but due to some technical snag in the e-filing system of I.T system, the same could not be viewed later on by the AO, at the same time, the ld AR has not been able to furnish any confirmation that the audit report has been uploaded electronically on 18.09.2013. It is also a fact that the audit report has subsequently been uploaded afresh after the assessee become aware of the technical snag and also a hard copy has been furnished before the AO which is again not disputed by the Revenue. The intention behind carrying out the audit u/s 44AB and furnishing a copy of the audit report to the AO is to aid and assist the latter in completing the assessment proceedings. It is not the case of the Revenue that any prejudice or hindrance is caused to the Revenue or the audit report has been filed after the close of the assessment proceedings. Taking into the fact that the audit report has subsequently been uploaded electronically and also hard copy has been furnished before the AO before the completion of the assessment proceedings, non furnishing of the return electronically on 18.09.2013 is merely a technical breach of the provisions of the Act and respectfully following the decision of the Hon ble Supreme court in the case of Hindustan Steel Ltd. vs. State of Orissa (1969 (8) TMI 31 - SUPREME Court) penalty levied u/s 271B of the Act is hereby directed to be deleted. - Decided in favour of assessee.

Summary

Issues:
Levy of penalty under section 271B read with section 274(1) of the Act for non-filing of audit report in electronic form as per CBDT notification.

Analysis:
The case involved an appeal by the assessee against the penalty imposed for not submitting the audit report in electronic form as required by the CBDT notification. The AO held the assessee failed to furnish the report before the due date and imposed a penalty. The assessee argued that the audit report was obtained before the due date and was part of the electronically filed return. However, both the AO and the CIT(A) did not accept this explanation, leading to the confirmation of the penalty.

The assessee further appealed to the Bench, reiterating that the audit report was part of the e-filed return and pointing out technical issues in the tax department's system that prevented the report from being viewed. The Bench noted that the audit report details were disclosed in the electronically filed return, and the report was obtained before the due date. The assessee subsequently uploaded the report again and submitted a hard copy to the AO. Considering the legislative intention and the timely submission of the report, the Bench referred to the Hindustan Steel Ltd. case and decided to delete the penalty under section 271B.

Therefore, the appeal by the assessee was allowed, and the penalty under section 271B was directed to be deleted based on the timely submission of the audit report electronically and in hard copy before the completion of assessment proceedings, considering it as a technical breach without causing prejudice to the Revenue.