2019 (12) TMI 617 - AT - Income Tax

Penalty levied u/s 271B - delay in furnishing audit report - HELD THAT - The audit report was obtained within the due date prescribed u/s 44AB of the Act. The delay has occurred due to delay in filing return of income. The assessee has stated that it was under bonafide belief that the audit report could also be filed before 31.3.2015. There is also no dispute with regard to the fact that the audit report was available with the assessing officer before he completed the assessment. Delay in furnishing audit report has resulted only in technical venial breach which does not cause any loss to exchequer could be applied here also. Accordingly, following the above said decision of Cochin bench of Tribunal, we set aside the order passed by Ld CIT(A) and direct the AO to delete the penalty levied u/s 271B of the Act for the year under consideration. - Decided in favour of assessee.

Summary

Issues:
Challenging penalty under section 271B for not furnishing tax audit report on time.

Analysis:
The appellant challenged the penalty levied by the AO under section 271B for not furnishing the tax audit report as required under section 44AB of the Act within the due date prescribed under section 139(1) for filing the return of income for the assessment year 2014-15. The appellant filed the return of income on 30-03-2015, along with the tax audit report obtained on 02-09-2014. The AO initiated penalty proceedings due to the failure to furnish the tax audit report before the due date of 30-11-2014.

The appellant contended that they believed the tax audit report could be filed before 31-03-2015 and hence submitted it along with the return of income. However, the AO was not satisfied with this explanation and levied a penalty of ?1.50 lakhs under section 271B. Before the Ld CIT(A), the appellant further explained that the delay was due to discrepancies in reflecting TDS deducted by tenants in Form No.26AS, affecting the filing of the return and tax audit report.

The Ld CIT(A) upheld the penalty, noting that the appellant had filed tax audit reports within due dates in earlier years and that the explanations provided did not constitute a reasonable cause. The ITAT Bangalore observed that the tax audit report was available with the assessing officer before the completion of assessment and that the delay was due to the belief that the report could be filed before 31-03-2015. Referring to a similar case decided by the Cochin bench of Tribunal, the ITAT set aside the Ld CIT(A)'s order and directed the AO to delete the penalty under section 271B for the year in question.

In conclusion, the ITAT allowed the appeal, emphasizing that the delay in furnishing the audit report resulted in a technical venial breach that did not cause any loss to the exchequer. The ITAT accepted the appellant's bonafide belief and the availability of the audit report with the assessing officer before completing the assessment as valid reasons to delete the penalty under section 271B.