2023 (7) TMI 1273 - AT - Income Tax

Penalty u/s 271B - not only the return of income but also the tax audit report could not be filed on time - reasonable cause in terms of section 273B or not? - HELD THAT - We find that the learned AR is the other director of the assessee company, who has also signed Form no.36 of the present appeal and has claimed to be not well-versed with the daily affairs of the company and other accounting aspects. Therefore, when the loss return has been accepted by the Revenue and the audit report filed belatedly was available with the AO during the assessment proceedings, we are of the view that no adverse inference can be drawn against the assessee for not filing the audit report within the prescribed time. We are of the considered view that the assessee had reasonable cause in terms of section 273B for not furnishing the audited report under section 44AB of the Act in time. Appeal by the assessee is allowed.

Summary

Issues involved: Challenge to penalty order u/s 271B of the Income Tax Act, 1961.

Summary:

Issue 1: Treatment of case as non-filing of Tax Audit Report
- The Assessing Officer (AO) treated the case as non-filing of Tax Audit Report.
- Assessee's response regarding delay due to glitches in the Income Tax Portal was not considered.
- AO should have considered communication received in response to initial Show Cause Notice.
- Failure to consider relevant case law and observations.
- No adverse inference warranted as returned loss was accepted by the department.

Issue 2: Levy of penalty under section 271B
- Assessee filed return declaring total loss, which was accepted by the AO.
- Penalty initiated for failure to furnish audit report under section 44AB.
- Assessee cited delay due to director's death for late filing of audit report.
- CIT(A) dismissed appeal citing lack of sufficient basis for delay.
- AR argued that director's death caused delay in filing reports.
- Tribunal found reasonable cause for delay, directing deletion of penalty.

Conclusion:
The Tribunal allowed the appeal, finding reasonable cause for delay in filing the audit report under section 44AB of the Act, thus directing deletion of the penalty levied under section 271B. The grounds raised by the assessee were upheld, and the appeal was allowed.