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Issues:
1. Confirmation of penalty under section 271B of the IT Act, 1961 for failure to get accounts audited within the specified date. 2. Whether there was a reasonable cause for the delay in getting the accounts audited and filing the audit report. 3. Whether the penalty under section 271B was justified in the given circumstances. Detailed Analysis: 1. The case involved an appeal against the confirmation of a penalty of Rs. 64,694 under section 271B of the IT Act, 1961 by the CIT(A). The penalty was imposed due to the assessee's failure to get the accounts audited within the specified date as required by section 44AB of the Act. The penalty was marginally reduced from the original amount levied by the Assessing Officer. 2. The assessee, a wholesale dealer, argued that the delay in getting the accounts audited was due to the negligence of the accountant, who left the service. The delay in filing the return for the previous year also contributed to the delay in finalizing the accounts for the relevant year. The counsel contended that there was no deliberate default on the part of the assessee and cited various cases to support the argument that the delay was due to reasonable causes. 3. The Departmental Representative argued that timely audit report submission was crucial and emphasized that time was the essence of the default under section 271B. It was pointed out that the auditor mentioned the assessee's attempt to get the report anti-dated, indicating misconduct. The Departmental Representative stressed that such conduct warranted the penalty. 4. The Tribunal analyzed section 271B, noting that it aims to ensure proper maintenance of accounts and reflect the true income of taxpayers. The Tribunal highlighted the distinction between absolute default in getting accounts audited and failure to file the audit report with the return. It emphasized that mere delay without mala fide intention should not lead to penalty imposition. The Tribunal concluded that the delay in this case was due to reasonable causes and technical in nature, not warranting a penalty. 5. The Tribunal found that the delay in getting the accounts audited was due to the accountant's negligence and the subsequent impact on finalizing the accounts. The Tribunal accepted the explanation provided by the assessee for the delay and noted that there was no deliberate attempt to default under section 271B. The Tribunal also considered the non-appearance of the assessee due to an accident as a valid reason and disregarded the evidence obtained without giving the assessee an opportunity to respond. 6. Ultimately, the Tribunal held that the penalty under section 271B was not justified in the given circumstances. It concluded that the assessee had reasonable causes for the delay, did not act in disregard of statutory obligations, and the conduct was neither fraudulent nor contumacious. Therefore, the Tribunal canceled the penalty and allowed the appeal in favor of the assessee.
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