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2023 (2) TMI 765 - AT - Income TaxPenalty u/s 271B - non-furnishing of TAR within the prescribed time limit u/s 44AB r.w.s. 139(1) - Scope of reasonable cause - Whether reasons advanced by the appellant are good reasonable to take shelter u/s 273B of the Act? - HELD THAT - It is well settled law that, section 273B states notwithstanding anything contained in section 271B, no penalty shall be imposed on the assessee for failure to comply with the provisions of section 44AB if the assessee proves that there was a reasonable cause for the said failure. Therefore, the liability to levy penalty can be fastened only on only on the assessee who does not have a reasonable cause against the noncompliance of mandate. The burden, of course, is on the assessee to prove such reasonable cause with evidential documents so has to take shield against the levy of penalty. Delayed compliance with the mandates of section 44AB of the Act, we have noted all the reasons furthered by the appellant during assessment and appellate proceedings and find them reasonable and convincing for the purpose of section 273B so has to hold the imposition of penalty as unjustified in the light of Hindustan Steel Ltd. Vs State of Orissa 1969 (8) TMI 31 - SUPREME COURT - thus direct the Ld. AO to delete the penalty - Decided in favour of assessee.
Issues involved:
Assessment of penalty under section 271B for delayed furnishing of tax audit report u/s 44AB of the Income-tax Act, 1961 for AY 2017-18. Detailed Analysis: 1. Background and Assessment of Penalty: The appeal pertains to the assessment year 2017-18 where the assessee, a resident private limited company, failed to furnish the tax audit report (TAR) within the prescribed time limit under section 44AB of the Act. Consequently, penalty proceedings were initiated under section 271B by the Assessing Officer (AO) for non-furnishing of TAR within the stipulated timeframe. 2. Appeal and Adjudication Process: The assessee challenged the penalty imposed by the AO before the National Faceless Appeal Centre, Delhi. The assessee tried to justify the delayed compliance with letters from the tax auditor and newly appointed accountant. However, the arguments failed to establish a reasonable cause for the delay, leading to the confirmation of the penalty by the CIT(A) based on relevant case laws. 3. Contentions and Decision: During the appeal hearing, the assessee reiterated their arguments for the deletion of the penalty based on bonafide reasons. The departmental representative argued that the appellant failed to comply with the statutory provisions and did not provide sufficient evidence to prove a reasonable cause for the delay. The ITAT considered the arguments of both parties, reviewed the material on record, and analyzed the legal position before making a decision. 4. Legal Position and Justification for Penalty Deletion: The ITAT examined the provisions of section 273B, which state that no penalty shall be imposed if the assessee proves a reasonable cause for non-compliance with section 44AB. The burden of proving a reasonable cause lies with the assessee. In this case, the ITAT found the reasons advanced by the appellant to be reasonable and convincing, citing the "Hindustan Steel Ltd. Vs State of Orissa" case. The ITAT emphasized that penalties should not be imposed unless there is deliberate defiance of the law or contumacious conduct. 5. Decision and Outcome: Based on the settled legal position and the lack of a reasonable cause for penalty imposition, the ITAT set aside the order of the NFAC and directed the AO to delete the penalty. Consequently, the appeal of the appellant was successful, and the penalty was revoked. In conclusion, the ITAT's decision highlights the importance of establishing a reasonable cause for non-compliance with statutory obligations to avoid penalty imposition under the Income-tax Act, 1961.
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