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TMI Blog2016 (8) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... udit was reasonable cause for non- compliance with section 44AB and it was held that Tribunal was right in cancelling penalty levied under section 271B - CIT(A) was not right in upholding the levy of penalty under section 271B – Decided in favor of Assessee. - ITA No. 5949/Del/2014 - - - Dated:- 5-7-2016 - Sh. N. K. Saini, Accountant Member For The Assessee : Sh. Shailesh Gupta, Adv. For The Revenue : Sh. A. Sreenivasa Rao, Sr. DR ORDER This is an appeal by the assessee against the order dated 29.08.2014 of ld. CIT(A)-VI, New Delhi. 2. Following grounds have been raised in this appeal: 1. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in sustaining penalty und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO levied the penalty of ₹ 1,00,000/- u/s 271B of the Act. 4. Being aggrieved the assessee carried the matter to the ld. CIT(A) who sustained the penalty levied by the AO by observing in paras 5.1 to 5.5 of the impugned order as under: 5.1. I have carefully considered the submission of the appellant vis-a-vis the penalty order passed in this case, as under challenge. Section 271B provides for imposition of penalty for assessee If any person fails to get his accounts audited in respect of any previous year or years relevant to an assessment year [furnish a report of such audit as required under section 44AB], the [Assessing] Officer may direct that such person shall pay, by way of penalty, a sum equal to one-half percen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in coming week only therefore we request you to kindly be adjourned the case to some other date after 15th April, 2013. 5.4. In this regard, it is ample clear that appellant was given an opportunity to file its reply. It is the appellant who could not avail the opportunity as given by the AO before initiating the penalty proceedings u/s 271B of I.T. Act, 1961 and did not bother to file its reply by 20.06.2013. 5.5. The case laws cited by the appellant do not come to its rescue. In this context, reliance is placed on the judgement - ACIT Vs. Gayathri Traders (ITAT, SB-Hyd) 58 ITD 121 wherein it has been stipulated that accounts got audited belatedly after the specified date u/s 44AB - Penalty leviable since sufficient cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and tax consultant of the company expired on 27.4.2009, and as a consequence, the briefs of the appellant company could not be procured for a long time to hand over the same to another internal auditor and tax consultant to take up the job. (vii) That the statutory auditors started the audit process w.e.f. 22.7.2009 and during the course of audit, it was found that there were some technical snags in the new SAP system and also there were problems in understanding of SAP. Since the senior finance and accounts staff had already left the company, it took considerable time to reconcile closing balances with physical records with the result the financial accounts could not be finalized in time. (viii) That during the intervening pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s due to the delay in completing the statutory audit. A similar issue has been adjudicated by the Co-ordinate Bench i.e. ITAT Mumbai Bench A , Mumbai in the case of APL India Pvt. Ltd. Vs JCIT (supra) wherein by following the judgment of the Hon ble Punjab Haryana High Court in the case of CIT Vs Punjab State Leather Development Corporation Ltd. (2001) 119 Taxman 258. The penalty levied u/s 271B was deleted by holding as under: According to section 273B, no penalty shall be imposable on the person or the assessee, as the case may be for any failure which inter alia include the defaults mentioned in section 271B, if he proves that there was reasonable cause for the said failure. A plain reading of section 273B makes it clear that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given in the present case for non-compliance with the statutory provisions of section 44AB was late completion of statutory audit by the auditors which was completed on 21.04.2009. After completion of the said statutory audit, within a reasonable time i.e. within a period of little more than 2 months, the assessee obtained tax audit report on 25.06.2009 and return was e-filed on 03.09.2009. Without completing statutory audit, the assessee could not have obtained tax audit report, which constituted reasonable cause. This plea was raised by the assessee even before the Assessing Officer and Assessing Officer had not doubted such contention of the assessee. The Hon'ble Punjab Haryana High Court in the case of CIT v. Punjab State Leather ..... X X X X Extracts X X X X X X X X Extracts X X X X
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