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Issues:
Sustainability of penalty under section 271B of the IT Act for the assessment years 1986-87, 1988-89, and 1989-90. Analysis: The appeals were filed by the assessee against the order of the CIT(A) Vijayawada regarding the penalty levied under section 271B of the IT Act for the mentioned assessment years. The penalty was initiated as the assessee failed to get its accounts audited within the specified date under section 44AB. The assessee explained that the delay in obtaining the tax audit report was due to non-finalization of accounts and the delay in obtaining the report for the preceding year. The AO did not accept this explanation and levied penalties. The CIT(A) upheld the penalties, stating that the assessee should have appointed another auditor to expedite the process and finalize the accounts. The assessee contended that the delay was justified due to circumstances beyond their control, such as the illness and subsequent death of their accountant. The assessee argued that the penalties were unjustified as the delay in obtaining the tax audit report was a result of delays in finalizing the accounts for the preceding year. The Tribunal considered the timeline of events and found that the delay in obtaining the tax audit report for the assessment years in question was directly linked to the delay in obtaining the report for the preceding year. The Tribunal referenced previous judgments to support the contention that penalty should not be levied unless the assessee acted in defiance of the law or conscious disregard of obligations. The Tribunal concluded that the delay in this case was technical and venial, justifying the cancellation of the penalties. Therefore, the Tribunal set aside the order of the CIT(A) and canceled the penalties levied for the assessment years in question, ruling in favor of the assessee. The appeals were allowed.
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