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2023 (6) TMI 483 - AT - Income TaxPenalty u/s 271B - Delay in filing the tax audit report - delay occurred due to the Accountant leaving the job abruptly and it took time for the new Accountant to finalize the accounts - As per assessee he is regular in filing its tax audit report meeting the due dates this year i.e. AY 2017-18 is the exceptional year where tax audit report could not be furnished on/before due date due to uncontrollable circumstances - HELD THAT - The assessee submitted that the delay occurred due to the Accountant leaving the job abruptly in the month of February, 2017 and the assessee could appoint new Accountant after a gap of three months and, therefore, the delay occurred due to the Accountant leaving the job abruptly and it took time for the new Accountant to finalize the accounts. We observe that there is no dispute on this fact - delay is not willful and it was occurred only due to the Accountant leaving the job. We also further observed that this is the only year where there is a delay in getting the books of accounts audited u/s 44AB of the Act. On perusal of the acknowledgements and tax audit reports for preceding previous year and also for subsequent years i.e. AY 2015-16 and 2016-17, AY 2018-19 and 2019-20, we find that the assessee has been filing the tax audit report in time. Therefore, we hold that there is a reasonable cause in not getting the books of accounts audited u/s 44AB within the due date specified for the assessment year under consideration. In the case on hand the tax audit report was filed on 08.03.2018, the return was field on 09.03.2018 and the assessment was completed on 30.12.2019 on which date the tax audit report was very much before the Assessing Officer. Further the assessment was completed accepting the loss returned by the assessee. Thus, as relying on P. SENTHIL KUMAR 2019 (1) TMI 222 - MADRAS HIGH COURT we hold that the assessee is prevented with reasonable cause in getting the books of accounts audited u/s 44AB of the Act within the due date specified - Decided in favour of assesee.
Issues involved:
The appeal against sustaining a penalty under section 271B of the Act for delay in getting books of accounts audited and furnishing them beyond the due date for filing the return of income. Details of the Judgment: 1. The assessee, engaged in the business of manufacturing and selling bakery products, had total business receipts exceeding Rs. 1 crore, necessitating the audit of books of accounts under section 44AB of the Act. Due to the sudden departure of the accountant responsible for accounts, the tax audit report was filed after the extended due date. The assessment order accepted the returned loss without any adverse inference against the assessee. 2. The penalty proceedings under section 271B were initiated, with the assessee explaining the delay was due to the accountant leaving abruptly, beyond their control. The assessee had a history of timely filing tax audit reports, except for the exceptional year in question. 3. Despite the reasonable cause for the delay, the Assessing Officer imposed a penalty equivalent to 0.5% of the total turnover. The CIT(A) upheld this penalty, disregarding the assessee's submissions and explanations. 4. The counsel argued against the penalty, citing decisions from different Tribunal benches and legal precedents emphasizing that penalties should not be imposed for technical breaches or where there is a reasonable cause for the delay in compliance with statutory obligations. 5. After considering the submissions and evidence, the Tribunal observed that the delay was not willful but a result of the accountant's sudden departure. The assessee had a consistent record of timely compliance with tax audit requirements in previous and subsequent years, indicating a reasonable cause for the delay in the year under consideration. 6. Referring to legal precedents, the Tribunal concluded that the delay in filing the tax audit report was a technical breach and that the assessee had provided a reasonable cause for the delay. Therefore, the penalty under section 271B was deemed unwarranted, and the Assessing Officer was directed to delete the penalty levied. The appeal of the assessee was allowed. 7. The judgment was pronounced in open court on 09.06.2023.
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