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2023 (6) TMI 386 - AT - Income TaxPenalty u/s 271B - delay filing of tax audit report contravening section 44AB - HELD THAT - The assessee completed the tax audit within the due date. But the assessee filed the tax audit report before the authority with a delay which is contravening of section 44AB - assessee filed a proper reason for delay in filing tax audit report. In factual matrix the assessee was suffering a financial exigency with legal battel. This is a sufficient reason for delay in filing the tax audit report before the authority which follow the Section 273B of the Act. Accordingly, the penalty u/s 271B is quashed. Decided in favour of assessee.
Issues involved:
The appeal against penalty u/s 271B for delay in filing tax audit report for A.Y. 2016-17. Summary: The Appellate Tribunal ITAT Amritsar heard an appeal against the penalty imposed u/s 271B for the delayed filing of a tax audit report for the assessment year 2016-17. The penalty of Rs. 81,843 was levied on the assessee, who then appealed to the CIT (A) and subsequently to the Tribunal. The assessee company had completed the tax audit within the due date but filed the report late due to a legal dispute with a major client. The revenue authorities upheld the penalty, citing non-compliance with section 44AB of the Income Tax Act, which requires timely submission of the audit report. However, the Tribunal considered the financial hardship and legal battle faced by the assessee as a valid reason for the delay, in line with Section 273B of the Act. Consequently, the penalty of Rs. 81,843 was revoked, and the appeal was allowed in favor of the assessee. The Tribunal found that while the tax audit was completed on time, the filing of the report was delayed, breaching section 44AB of the Act. The assessee provided a legitimate explanation for the delay, attributing it to financial difficulties and ongoing litigation. Acknowledging the exceptional circumstances faced by the assessee, the Tribunal invoked Section 273B of the Act, which allows for a waiver of penalty in cases of reasonable cause for delay. As a result, the penalty of Rs. 81,843 imposed u/s 271B was set aside. Therefore, the Tribunal allowed the appeal of the assessee, quashing the penalty imposed u/s 271B for the delayed filing of the tax audit report for A.Y. 2016-17.
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