2019 (11) TMI 352 - AT - Income Tax

Levy of penalty u/s 271B and 271F - Late filing of tax audit report and income tax return - assessee pointed out that defaults were inadvertent and beyond the control of the assessee since the taxation matters of the assessee were being looked after by tax consultants and tax auditors, who due to heavy rush of return had failed to file ITR by the due date alongwith tax audit report u/s 44AB - HELD THAT - Levy of penalty for delayed filing of tax audit report and income tax return. Undoubtedly the Revenue could not find any fault in the income returned by the assessee for the impugned year, despite subjecting it to scrutiny assessment. What emerges from the same is that the non filing of tax audit report and of the return of income by the specified due date was definitely not intentional with the purpose of not disclosing any income for taxation. The plea of the assessee therefore that it was an inadvertent default, on account of the tax consultant being busy with GST returns and the assessee not being able to adequately follow up with him since he was away in New Zealand, appears to be a reasonable cause. In view of the same we hold that no penalty u/s 271B and 271F was leviable in the present case and direct deletion of both. Appeals of the assessee are allowed.

Summary

Issues: Appeals against penalties under sections 271B and 271F of the Income Tax Act, 1961 for assessment year 2010-11.

Analysis:
1. Levy of Penalty under Section 271B:
The appeal challenged the penalty under section 271B for failure to audit accounts before the specified date. The counsel argued that the default was inadvertent and beyond the assessee's control due to reliance on tax consultants and auditors. The assessee's absence from the country during the relevant period was also highlighted. Despite the scrutiny assessment accepting the returned income without additions, the Revenue contended that the reasons provided did not constitute a reasonable cause for the delay. The tribunal observed that the non-filing was not intentional to evade tax and considered the reasons presented by the assessee as reasonable. Consequently, the penalty under section 271B was deemed not leviable, and the appeal was allowed.

2. Levy of Penalty under Section 271F:
The second appeal challenged the penalty under section 271F for delayed filing of the income tax return. The same arguments regarding inadvertent default and lack of intention to evade tax were presented. The Revenue, however, maintained that the reasons provided were insufficient to justify the delay. The tribunal, after considering the contentions of both parties, concluded that the assessee's explanations were valid, and the delay was not deliberate. Therefore, the penalty under section 271F was also held to be not leviable. Both appeals of the assessee were allowed, and the penalties were directed to be deleted.