2020 (4) TMI 719 - AT - Income Tax

Penalty u/s 271B - assessee has not filed the tax audit report u/s 44AB - reasonable cause for the late filing of the tax audit report or not? - HELD THAT - Once the assessee has paid all the taxes due on the returned income including the demand raised in the assessment order before 30.09.2010 the assessee is mandated to file the return of income within the prescribed time limit. Since the assessee failed files the return of income within the prescribed time limit we are of the considered opinion that the penalty levied under section 271F of the Act was rightly confirmed by the ld. CIT(A). We find no infirmity in the order passed by the ld. CIT(A) and thus the ground raised by the assessee stands dismissed.

Summary

Issues:
1. Penalty under section 271B of the Income Tax Act, 1961 for failure to get accounts audited and furnish tax audit report.
2. Penalty under section 271F of the Income Tax Act, 1961 for late filing of income tax return.

Analysis:

Issue 1: Penalty under section 271B
The appeal was against the penalty levied under section 271B of the Income Tax Act for not getting accounts audited and filing the tax audit report on time. The Assessing Officer imposed a penalty of ?1,00,000 as the turnover was ?260,70,26,450, and the tax audit report was not submitted by the specified date. The appellant argued that there was a reasonable cause for the delay, citing issues like office relocation, delayed AGM, and misplaced records. The Tribunal found merit in the appellant's argument, noting that the corporation had paid all taxes due before the deadline and that the delay was due to valid reasons. Referring to section 273B of the Act, which waives penalties for valid reasons, the Tribunal set aside the penalty, emphasizing that the term "reasonable cause" must be assessed based on individual case facts.

Issue 2: Penalty under section 271F
The appeal also challenged the penalty of ?5,000 under section 271F for late filing of the income tax return. The Assessing Officer imposed the penalty as the return was filed after the extended deadline. The appellant contended that all taxes were paid before the original deadline, reiterating reasons provided in the earlier penalty proceedings. The Tribunal upheld the penalty, stating that despite tax payments, the return should have been filed within the prescribed time limit. As the return was filed late, the Tribunal agreed with the CIT(A)'s decision to confirm the penalty under section 271F. Therefore, the appeal against this penalty was dismissed.

In conclusion, the Tribunal allowed the appeal against the penalty under section 271B while dismissing the appeal against the penalty under section 271F. The judgment highlighted the importance of valid reasons for delays in compliance with tax laws and the significance of timely filing of tax returns to avoid penalties.