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The judgment deals with the issue of penalty under section 271B of the Income-tax Act, 1961 for late filing of returns along with audit reports under section 44AB. Summary: The Appellate Tribunal ITAT Bangalore heard two appeals by the assessee together and disposed of them by a common order. The controversy revolved around the late filing of returns along with audit reports under section 44AB of the Act. The Assessing Officer contended that the audit reports were not filed along with the returns within the specified time under section 139(1), leading to the intention to levy a penalty under section 271B. The Commissioner of Income-tax (Appeals) upheld the penalty, citing clear provisions of section 271B and relevant case laws. The assessee argued that despite the delayed filing of returns, the audit reports were obtained and filed along with the returns, thus not warranting a penalty under section 271B. The counsel referred to a decision by ITAT, Delhi Bench, supporting this argument. The departmental representative supported the penalty, emphasizing the consequences of late filing under section 139(1) and the requirement to file audit reports along with the returns. The Tribunal considered the purpose of sections 44AB and 271B, emphasizing the importance of proper audit for tax purposes to ensure accurate income reflection and prevent fraudulent practices. Despite the delayed filing of returns, the Tribunal found that the purpose of section 44AB was achieved as the audit reports were obtained and filed. Citing a Supreme Court case, the Tribunal concluded that the penalty under section 271B was not justified in this case due to a minor breach and canceled the penalties. In conclusion, the Tribunal allowed both appeals, canceling the penalties imposed under section 271B of the Act.
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