2019 (5) TMI 186 - AT - Income Tax

Penalty proceedings u/s 271B - lapse of 23 months and 26 days in passing the assessment order u/s 143(3) r.w.s. 147 - delay of filing of return of income and audit report - assessment not initiated before the completion of the assessment and thus barred by limitation prescribed u/s 275? - HELD THAT - Due date of filing of the return and audit report u/s 44AB of the I.T.Act was 30.09.2008. Admittedly, in the instant case, the assessee had filed the return of income and the audit report u/s 44AB only on 10.12.2008. The assessment order was completed u/s 143(3) r.w.s. 147 of the I.T.Act vide order dated 21.12.2010. The penalty proceedings were initiated after 23 months and 26 days from the date of assessment order and order u/s 271B was passed on 28.06.2013. There is a delay of filing of return of income and audit report by two months and 11 days. The return of income and audit report u/s 44AB was filed much before the assessment order u/s 143(3) r.w.s. 147 was completed. According to us, the assessee had only committed a technical venial breach, which does not create any loss to the exchequer as the audit report was available to the Assessing Officer well before the completion of the assessment proceedings. On identical facts, the Cochin Bench of the Tribunal in the case of Johns Biwheelers v. ACIT 2019 (3) TMI 630 - ITAT COCHIN had deleted the penalty imposed u/s 271B We delete the penalty u/s 271B - Decided in favour of assessee.

Summary

Issues involved:
1. Validity of penalty imposed under section 271B of the Income Tax Act.
2. Additional ground raised regarding the limitation of penalty proceedings under section 271B.

Analysis:
1. The appeal was against the Commissioner of Income-tax (Appeals)'s order imposing a penalty under section 271B of the Income Tax Act for the assessment year 2008-2009. The appellant contended that the delay in submitting the audit report was due to genuine reasons, including medical treatment, and relied on legal precedents emphasizing a reasonable cause for delays. The Assessing Officer had imposed the penalty as the turnover exceeded the specified limit, and the audit report was not submitted on time. The CIT(A) upheld the penalty, stating there was no reasonable cause as required under the Act. The Tribunal considered the facts, including the delay in filing the audit report, and referred to a similar case where the penalty was deleted due to technical venial breach not causing any loss to the exchequer. Consequently, the Tribunal deleted the penalty imposed under section 271B of the Income Tax Act, citing the appellant's technical breach but no loss to the revenue.

2. An additional ground was raised challenging the validity of penalty proceedings under section 271B, contending that the delay in initiating the penalty after the assessment order rendered it barred by limitation as per section 275 of the Income Tax Act. The Tribunal, having already deleted the penalty under section 271B, did not adjudicate on this additional ground. As a result, the appeal filed by the assessee was allowed, and the penalty under section 271B was deleted. The Tribunal's decision was based on the principle that technical breaches without causing revenue loss should not result in penalties, aligning with previous judicial interpretations and ensuring fairness in applying penal provisions.

This detailed analysis of the legal judgment highlights the issues involved, the arguments presented, and the Tribunal's decision, providing a comprehensive understanding of the case and its implications under the Income Tax Act.