2018 (6) TMI 599 - AT - Income Tax

Penalty u/s 271B on failure to get accounts audited - Held that - Assessee under consideration gets the accounts audited on 25.09.2013, that is, before the due date of filing audit report, which is 30.09.2013 - CBDT has extended time of uploading of audit report to 31.10.2013 - taking note of the extended period of one month, the Chartered Accountant, though accounts were audited on 25.09.2013, filed it manually on 08.10.2013 - Since the assessee got the audited accounts before 30.09.2013 and the income tax return has been filed in time and, therefore, there is no prejudice caused to the Revenue - thus for technical and venial breach on the part of Chartered Accountant of the assessee, the assessee cannot be penalized - hence penalty imposed by the AO and confirmed by the CIT(A) needs to be deleted - Decided in favor of assessee.

Summary

Issues:
Appeal against penalty order u/s 271B of the Income Tax Act, 1961 for Assessment Year 2013-14.

Analysis:
The appeal was filed against a penalty order passed by the Assessing Officer u/s 271B of the Income Tax Act, 1961. The appellant contended that the penalty was unjust and should be quashed. The appellant argued that substantial compliance of the law was made and there was a reasonable cause for the delay in filing the audit report electronically. The appellant's accounts were audited on time, but due to technical issues and the Chartered Accountant's misunderstanding, the audit report was manually filed after the extended due date. The Assessing Officer imposed a penalty of ?1,50,000 for the delay in filing the audit report electronically.

The Tribunal analyzed the provisions of section 271B of the Act, which state that a penalty may be imposed if accounts are not audited or if the audit report is not furnished as required under section 44AB. The Tribunal noted that the appellant had the accounts audited before the due date and furnished the audit report manually within the extended period, although not electronically as required. The Tribunal considered the circumstances, including the CBDT's circular extending the deadline for electronic filing, technical issues faced by taxpayers, and the Chartered Accountant's genuine belief in filing the report manually within the extended period.

The Tribunal emphasized that the word "may" in section 271B indicates that the penalty is not mandatory and can be waived if there is a reasonable cause for the delay. Referring to the CBDT circular relaxing the electronic filing requirement, the Tribunal found that the penalty was not justified in this case. Citing the Supreme Court's judgment in Hindustan Steel Ltd. Vs. State of Orissa and a Coordinate Bench's decision in a similar case, the Tribunal concluded that the penalty imposed by the Assessing Officer should be deleted. Therefore, the Tribunal allowed the appeal and quashed the penalty.

In conclusion, the Tribunal found in favor of the appellant, ruling that the penalty imposed under section 271B was unwarranted due to the circumstances and the reasonable cause for the delay in filing the audit report electronically. The Tribunal highlighted the importance of considering all relevant circumstances and exercising discretion while imposing penalties for statutory obligations, ultimately leading to the deletion of the penalty in this case.