2024 (3) TMI 427 - AT - Income Tax

Penalty u/s 271B - assessee had failed to get his account audited u/s 44AB - sufficient cause - The assessee explained that the delay in furnishing the Audit Report was due to the death of his elder brother, who managed the financial affairs, and his own critical medical condition during the relevant year. - HELD THAT - Section 44AB casts an obligation upon the assessee to get accounts audited before the specified date and furnish by that date the report of such audit. It is not the case of the Revenue that the original return e-filed on 04.10.2013 was not within time prescribed u/s 139(1) of the Act. Section 139(5) of the Act permits an assessee to file revised return before the completion of assessment. Assessee has filed revised return within the legally permissible time along with Audit Report. During the course of assessment proceedings itself it was explained by the assessee that delay was caused due to the death of his elder brother who was looking after the financial affairs of the assessee s business. Before the Ld. CIT(A) in reply uploaded on the ITBA Portal on 06.10.2021, it was submitted that the assessee himself was going through a critical medical condition in the year under consideration. It was also submitted that the delay in furnishing Audit Report in time was caused due to inadvertent mistake committed by his Chartered Accountant. The assessee s explanation has merely been disbelieved. In our opinion, there was reasonable cause for failure in furnishing the Tax Audit Report in time. As stated earlier, it is not a case of not getting the accounts audited in time. We, therefore, hold that the impugned penalty u/s 271B is not exigible which we hereby vacate. Assessee appeal allowed.

Summary

Issues:
The judgment involves a penalty imposed under section 271B of the Income Tax Act, 1961 for Assessment Year 2013-14 due to the failure of the assessee to get the accounts audited under section 44AB of the Act within the stipulated time.

Summary:

1. The appeal was filed against the penalty of Rs. 1,50,000 imposed by the Assessing Officer under section 271B of the Income Tax Act, 1961 for Assessment Year 2013-14, which was confirmed by the Commissioner of Income Tax (Appeals).

2. The assessee, engaged in the business of trading and manufacturing of timber products and firewoods, e-filed the return declaring income, later revised, but failed to get the accounts audited under section 44AB of the Act, leading to penalty proceedings initiated by the Assessing Officer.

3. During the penalty proceedings, the assessee requested to keep the proceedings in abeyance till the disposal of the quantum first appeal pending before the CIT(A). The penalty was imposed by the Assessing Officer for non-compliance after the disposal of the quantum first appeal.

4. The appeal filed by the assessee was dismissed by the CIT(A), prompting the appeal before the Tribunal.

5. Despite being called for a physical hearing, no one attended for the assessee, and the appeal was decided after hearing the Senior DR.

6. The Tribunal considered the arguments and records, noting that the Tax Audit Report was filed with the revised return within the legally permissible time. The delay in furnishing the Audit Report was explained by the assessee due to personal reasons, which the Revenue disbelieved. The Tribunal found a reasonable cause for the delay and held that the penalty under section 271B was not justified, thus vacating the penalty.

Result:
The appeal of the assessee is allowed, and the penalty under section 271B is not exigible.