2018 (4) TMI 1275 - AT - Income Tax

Levy of penalty u/s 271BA - failure to comply with the provisions of section 92E - not filing the audit report electronically - scope of amendment - reasonable cause for non compliance - Held that - For the year under consideration i.e, AY 2012-13, pursuant to the amendment in the Rules, being the procedural law, the assessee was required to file the audit report electronically. There was apparently no such requirement to file the audit report electronically all these years where the electronic filing of returns has been specified. Given the said consistent position in law and the fact that the amendments have been brought in for the first time starting the year under consideration, the bonafide of the assessee cannot be doubted and we agree with the assessee that the said amendment in the procedural law has missed the attention of the assessee and there was a reasonable cause for such non-compliance by way of non-filing of audit report electronically. There was a reasonable cause on part of the assessee for not filing the audit report electronically and the penalty levied under section 271BA is hereby directed to be deleted. within the stipulated time - Decided in favour of assessee.

Summary

Issues:
Levy of penalty u/s 271BA of the IT Act, 1961 for non-compliance with section 92E requirements.

Analysis:
The appeal was filed against the order confirming the penalty of ?1 lac u/s 271BA for not furnishing Form No. 3CEB detailing international transactions. The assessee argued that the audit report was filed with the Assessing Officer during assessment proceedings, complying with CBDT Circular No. 06/2018. The contention was rejected, leading to the penalty imposition.

The assessee's submission highlighted the inadvertent non-electronic filing of the audit report u/s 92E due to a missed amendment. The contention was that obtaining the report is mandatory, but filing is procedural. The CIT(A) upheld the penalty, stating no reasonable cause for non-compliance.

During the hearing, reference was made to relevant CBDT Circulars and amendments mandating electronic filing of audit reports. The contention was that the amendment was overlooked due to the first-time requirement. The Revenue argued non-filing of the report, while the assessee emphasized the manual filing during assessment.

The Tribunal analyzed the legal provisions and amendments, concluding that the assessee was required to file the audit report electronically for AY 2012-13. However, considering the consistent practice and first-time amendment, the Tribunal found a reasonable cause for non-compliance. Citing precedent, the penalty was deleted based on the bonafide belief of the assessee.

In summary, the Tribunal allowed the appeal, deleting the penalty under section 271BA due to a reasonable cause for non-electronic filing of the audit report. The judgment emphasized the importance of bonafide belief and discretion in penalty imposition for statutory obligations.