2019 (4) TMI 678 - AT - Income Tax

Penalty u/s. 271B - Non furnishing of Tax Audit Report within the prescribed period u/s 44AB - Limitation to impose penalty u/s 275 - HELD THAT - Issue of finality of the turnover of the business of the assessee was disposed off vide order u/s 250 dated 18-05-2017 in the appeal filed against the assessment order. Find that it is provided u/s 275 that where the relevant assessment order or the other order is subject matter of appeal before the Commissioner of Appeals u/s 246A penalty order has to be passed before the expiry of financial year in the course of which such proceedings have been initiated or within one year from the end of financial year in which order of the Commissioner (Appeals) is received by the Principal CIT - whichever is later. In this case the quantum of penalty to be imposed u/s 271-B was dependent on the outcome of appellate order u/s 250 of the Act in the appeal filed against the assessment order passed by the AO. AO has validly kept the penalty proceedings u/s 27IB of the Act in abeyance and has disposed off the same by 30-10-2017 within the prescribed period after the disposal of appellate order u/s 250 of the Act. The assessee has not furnished any reasonable cause for not getting the accounts audited as required u/s 44AB. It is also noted that the AO has already established for failure of the assessee to get its accounts audited or to furnish a report of such audit as required u/s 44AB vide his assessment order dated 17.3.2016 and the CIT(A) has also confirmed the major part of the addition made by the AO. AO has rightly imposed penalty u/s 271B with the provisions of the Act and therefore, the same was rightly confirmed by the CIT(A), which does not need any interference on my part, hence, uphold the action of the CIT(A) on the issue of dispute and reject the ground raised by the assessee.

Summary

Issues:
1. Appeal against the Order dated 27.6.2018 of the Ld. CIT(A), Muzaffarnagar pertaining to assessment year 2010-11.
2. Confirmation of penalty u/s. 271B of the I.T. Act, 1961 by Ld. CIT(A) despite being time-barred.

Analysis:
1. The assessee firm derived income from civil contracting but failed to file the ITR within the prescribed time under section 139 of the Income Tax Act, 1961. The assessment was completed at an income of &8377; 4,40,600/- under sections 147/143(3) of the Act. The AO issued a show cause notice u/s. 271B for failure to get accounts audited under section 44AB. The Ld. CIT(A) partly allowed the appeal, adjusting the gross receipts and net profit. Subsequently, another show cause notice u/s. 271B was issued, leading to a penalty of &8377; 67,950/-. The assessee appealed against this penalty, which was dismissed by the Ld. CIT(A), prompting the appeal before the Tribunal.

2. During the hearing, the assessee contended that the penalty was time-barred as the audit was completed after the due date. The AO had kept the penalty proceedings in abeyance until the disposal of the appeal. The Tribunal noted that penalty under section 271B had to be imposed before the expiry of the financial year following the appellate order. As the penalty was imposed within the prescribed period, the AO's action was deemed valid. The assessee failed to provide a reasonable cause for the delayed audit. The Tribunal upheld the penalty, distinguishing the case law cited by the assessee.

3. The Tribunal found that the AO was justified in imposing the penalty under section 271B, as the assessee had failed to comply with the audit requirements of section 44AB. The Tribunal upheld the decision of the Ld. CIT(A) to confirm the penalty, stating that it was in accordance with the provisions of the Act and did not warrant interference. Consequently, the appeal of the assessee was dismissed.

In conclusion, the Tribunal upheld the penalty imposed under section 271B by the AO, as confirmed by the Ld. CIT(A), due to the assessee's failure to comply with audit requirements, leading to the dismissal of the appeal.