2005 (7) TMI 320 - AT - Income Tax

Summary

Issues: Penalty under section 271B for failure to produce audit report under section 44AB within specified time

In this case, the appellate tribunal considered an appeal against the order of the CIT(A) regarding the levy of a penalty under section 271B of the IT Act, 1961 for the assessment year 1997-98. The sole issue raised was whether the failure to produce an audit report under section 44AB, obtained within the deadline but not submitted to the AO on time, would lead to a penalty. The tribunal examined the circumstances where the audit report was obtained before the due date but submitted late along with the return of income due to the assessee's belief that filing a declaration under VDIS exempted them from filing a return. The tribunal referred to Circular No. 755, which clarified that no penalty could be levied for the assessment year related to the disclosure of income. The tribunal emphasized that penalty provisions should not be imposed for pedantic reasons and should consider the intention and purpose of the law. It concluded that the reason provided by the assessee was reasonable and sufficient to justify the delay in filing the report, as it was obtained within the deadline. Therefore, the tribunal held that a mitigating circumstance existed, and the penalty was canceled, allowing the appeal in favor of the assessee.