2017 (6) TMI 433 - AT - Income Tax

Penalty u/s 271B r.w.s. 274 - delay in filing the audit report obtained u/s 44AB - default - Held that - As decided in case of Smt. Raj Kumar Bafna vs. ITO 2016 (12) TMI 952 - ITAT JAIPUR Penalty imposed by the lower authorities u/s 271B of the Act on the assessee is not justifiable as the audit report was to be uploaded by the Chartered Accountants who audited her books of account and the assessee was low educated and she had under bona fide belief that the same had been uploaded in the system developed by the Department. In such a situation, penalty need to be deleted - Decided in favour of assessee.

Summary

Issues:
Confirmation of penalty u/s 271B r.w.s. 274 for non-filing of audit report u/s 44AB.

Analysis:
The appeal was filed against the order confirming the penalty of ?83,574/- u/s 271B r.w.s. 274 for the assessment year 2013-14. The ld. CIT(A) upheld the penalty stating that the appellant failed to show that the audit report was filed as required u/s 44AB and no reasonable cause for non-submission was provided. The appellant's contention of technical issues for non-filing was not supported by evidence. The appeal proceeded ex parte as the assessee did not appear despite notice. The assessee argued that the audit report was obtained before the due date and submitted online with the ITR, but the auditor failed to file it online due to technical issues. The assessee cited Hindustan Steel Ltd. vs. State of Orissa case to argue against conscious breach of law and highlighted that the ITR was accepted without security concerns. The audit report was later filed online by the auditor. The authorities upheld the penalty citing lack of evidence for technical issues, disregarding the bona fide efforts of the assessee.

In a similar case, the Tribunal allowed an appeal where the penalty u/s 271B was imposed for failure to upload the audit report electronically due to technical issues. The Tribunal noted the assessee's lack of familiarity with e-filing systems and the technical breach caused by server problems. The Tribunal considered the assessee's bona fide belief that the report was uploaded and referred to case laws supporting leniency in such cases. The penalty was deemed unjustifiable due to the technical nature of the breach and the assessee's genuine efforts. Following this precedent, the Tribunal allowed the present appeal, emphasizing the similarity in circumstances and the unjust nature of the penalty imposed.

In conclusion, the Tribunal allowed the appeal, overturning the penalty imposed under section 271B for non-filing of the audit report u/s 44AB. The decision was based on the precedent set in a similar case where technical issues and the assessee's lack of familiarity with e-filing systems were considered valid reasons for not imposing the penalty.