2023 (2) TMI 157 - AT - Income Tax

Penalty levied u/s 271B - assessee has filed the tax audit report belatedly - HELD THAT - By filing detailed year-wise sales turnover of assessee s jewellery business and heavy loss incurred in the fish net business, the assessee has submitted before the ld. CIT(A) that her business was totally came to a standstill and matters went to a very critical level that her properties were put for auction by the bankers (M/s. Karur Vysya Bank), due to her inability to repay the loan or the mounting interest liability and also filed notice for sale of immovable properties published by the bankers in the leading news papers for recovery of ₹.29.60 crores as on 31.01.2022 plus interest till the date of settlement. Considering the pathetic condition of the assessee as well as by following various case law, the ld. CIT(A) has observed that the books of accounts audited, though belatedly, but the audit report was produced before the Assessing Officer before completion of the assessment. Since the assessee was prevented by reasonable cause for not getting her books of accounts audited in time as required under the provisions of section 44AB of the Act, but filed the tax audit report before completion of the assessment, the ld. CIT(A) has held that it is not a fit case for the levy of penalty under section 271B of the Act and accordingly, the penalty levied was deleted - Decided against revenue.

Summary

Issues:
- Penalty under section 271B of the Income Tax Act for late filing of tax audit report.

Analysis:
The appeal was filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, regarding the penalty levied under section 271B of the Income Tax Act for late filing of the tax audit report. The case involved the assessment year 2017-18. The Assessing Officer initiated penalty proceedings as the audit report was filed beyond the due date. The total gross receipts of the assessee were above the threshold requiring a tax audit report under section 44AB of the Act. The penalty of Rs. 1,50,000 was levied under section 271B. The ld. CIT(A) (NFAC) deleted the penalty, citing reasons similar to a precedent case and considering the financial difficulties faced by the assessee. The Revenue appealed to the Tribunal, but the Department failed to comply with the defect notice for filing grounds of appeal. The Tribunal proceeded to hear the appeal on merits, where the ld. DR supported the penalty. However, as the assessee did not appear, the Tribunal upheld the decision of the ld. CIT(A) and dismissed the Revenue's appeal, affirming that it was not a fit case for the penalty under section 271B. The order was pronounced on January 24, 2023, at Chennai.