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2024 (8) TMI 422 - AT - Income TaxPenalty levied u/s. 271B - violation of the provisions of section 44AB of the Act for not filing the audit report - HELD THAT - First of all, the assessee has not furnished any evidence to show that the assessee was attending to litigations and he was long defaulter running after the funds to procure company inputs. Secondly, the assessee knows the legal provisions for filing of audit report which is evident from the fact that for all the years he has filed audit report from the assessment years from 2014-15 to 2022-23 except AY 2017-18. It means that he did not want to get his audit completed or he knowingly he has not filed audit report for the relevant assessment year. Since, there is no reasonable or sufficient cause shown by the assessee for not complying with the legal provisions of section 44AB of the Act, we confirm the penalty and dismiss the appeal of the assessee.
Issues Involved:
1. Confirmation of penalty levied under Section 271B of the Income Tax Act for violation of Section 44AB due to non-filing of the audit report. Detailed Analysis: Issue 1: Confirmation of Penalty under Section 271B for Violation of Section 44AB Background: The appeal stems from the order passed by the Commissioner of Income Tax (Appeals), NFAC, Delhi, confirming the penalty levied by the Assessing Officer (AO) under Section 271B of the Income Tax Act for the assessment year 2017-18. The penalty was imposed due to the assessee's failure to file the audit report as mandated by Section 44AB of the Act. Assessee's Arguments: The assessee argued that the delay in filing the audit report was due to significant time spent on litigations related to loan defaults and efforts to secure funds for business operations. The assessee highlighted that this was the only year (2017-18) out of several years (2014-15 to 2022-23) where the audit report was not filed on time. Additionally, the assessee contended that the AO did not specify the exact limb under Section 271B in the Show Cause Notice, which led to the penalty. Assessing Officer's Findings: The AO noted that the assessee's turnover exceeded Rs. 10 crore, necessitating compliance with Section 44AB. Despite this, the audit report was not filed within the due date. The AO rejected the assessee's justification, stating that the reasons provided did not constitute a reasonable cause under Section 273B. Consequently, a penalty of Rs. 1.5 lakhs was levied. CIT(A)'s Decision: The CIT(A) upheld the AO's decision, emphasizing that the appellant should have been aware of the legal requirement to file the audit report on time. The CIT(A) found the reasons for the delay unconvincing and not constituting a reasonable cause under Section 273B, thus confirming the penalty. Tribunal's Analysis: Upon hearing the rival contentions, the Tribunal noted that the assessee did not provide sufficient evidence to substantiate the claim of being preoccupied with litigations and financial issues. The Tribunal observed that the assessee was aware of the legal requirements, as evidenced by timely filings in other years. The Tribunal referred to previous decisions, including the case of Balaji Logistics v. ACIT, where penalties were deleted due to the timely submission of the audit report during assessment proceedings. However, in the present case, no such mitigating circumstances were evident. Conclusion: The Tribunal concluded that the assessee did not show reasonable or sufficient cause for non-compliance with Section 44AB. Consequently, the penalty under Section 271B was confirmed, and the appeal was dismissed. Order: The appeal filed by the assessee was dismissed, and the penalty levied under Section 271B was upheld. The order was pronounced in the open court on 11th July 2024 at Chennai.
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