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TMI Blog2024 (12) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... he illness of the partner in charge and the departure of the accountant, which were beyond the control of the appellant. 4. The CIT(A) has not considered the fact that the appellant had duly filed the hard copy of the return along with the audited financial statements on 3.10.2018, which should be considered as compliance with the provisions of section 44AB. 5. The CIT(A) erred in not considering the judicial pronouncements, including the case of SLV Housing Development Corporation Vs. ACIT where it was held that the levy of penalty u/ 271B is discretionary and not mandatory. 6. The CIT(A) failed to consider that the appellant has been regularly complying with the audit requirements in subsequent years and the delay in the assessment year 2017-18 was due to genuine and unavoidable circumstances. 7. The CIT(A) has not provided adequate justification and reasoning for uploading the penalty, thus violating the principles of natural justice. 3. The brief facts of the case are that assessee is a partnership firm carrying on business of Petroleum Products like Petrol, Diesel, Lubricants, Tyres and Tubes. The assessee is also a dealer of Indian Oil Corporation Ltd. As per the inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment tax during April, 2018 and September, 2018. The return of income and also the audit report in hard copy were filed before the income tax officer ward-1, Gadag well before the department could issue noticed u/s 148 of the Act. Therefore, the assessee submitted that this is a case where audit was not done in time due to the genuine & bonafide reasons and there is no loss of revenue for the Government as the due taxes have been paid in April, 2018 only and accordingly prayed to drop the penalty proceedings u/s 271B of the Act. But after examining the above submissions, the AO held that it is a fit case for levy of penalty u/s 271B of the Act and accordingly levied the penalty of Rs. 1,50,000/- under the provisions of section 271B of the Act. 3.2 Aggrieved by the order of penalty passed u/s 271B of the Act, by the ITO, Ward-1, Gadag, the assessee preferred an appeal before the ld. CIT(A)/NFAC. The Ld. CIT(A)/NFAC dismissed the appeal of the assessee in the absence of any substantiation or any documentary evidence filed in support of grounds of appeal. Further, the ld. CIT(A) concluded that the assessee has no evidence or explanation to offer in respect of late filing of audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of considered opinion that the action of the assessee is bonafide as the assessee could not produce these evidences by way of an affidavit before the authorities below and the ld. CIT(A) has dismissed the appeal on the sole ground of non-submission of any evidence in support of the grounds of appeal. We find that these are not the new facts submitted by the assessee by way of an affidavit in the guise of additional evidences. What is narrated in the affidavits are the submissions already made before the lower authorities with regard to the reasonable cause for failure in submitting the audit report on or before the extended due date. Being so, in our considered view in the given facts and circumstances of the case, it is appropriate to admit these additional evidences for adjudication in the interest of justice. Accordingly, these additional evidences are admitted for the purpose of adjudication. 4.2 Before us, ld. A.R. of the assessee vehemently submitted that there is a reasonable cause in not filing the audit report for AY 2017-18 as the accountant had left the job in September,2017 and the Managing partner was also sick after his marriage. The accountant rejoined in September, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 44ADA and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; or (e)carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year, ] get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed: Provided that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year: Provided [further] that this section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BBA, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 271 B, ] [Inserted by Act 46 of 1986, Section 26 (w.e.f. 10.9.1986).][section 271- BA] [Inserted by Act 14 of 2001, Section 94 (w.e.f. 1.4.2002).][, section 271-BB,] [ Inserted by Act 12 of 1990, Section 50 (w.r.e.f. 1.4.1990).] [section 271-C, section 271-CA] [ Substituted by Act 21 of 2006, Section 55, for " section 271-C" (w.e.f. 1.4.2007).][, section 271-D, section 271-E, ] [Inserted by Act 46 of 1986, Section 26 (w.e.f. 10.9.1986).][section 271-F, ] [Substituted by Act 26 of 1997, Section 55, for " section 271-F" (w.r.e.f. 1.4.1997).][section 271-FA,] [ Substituted by Act 18 of 2005, Section 61, for " Section 271-FA" (w.e.f. 1.4.2006).] [section 271FAB, section 271FB, section 271G, section 271GA] [Substituted 'section 271-FB, section 271-G' by Finance Act, 2015 (No. 20 of 2015), dated 14.5.2015.][, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272-A, sub-section (1) of section 272-AA or ] [Inserted by Act 46 of 1986, Section 26 (w.e.f. 10.9.1986).][section 272-B or] [ Inserted by Act 20 of 2002, Section 106 (w.e.f. 1.6.2002).] [sub-section (1) or sub-section (1-A) of ] [Substituted by Act 21 of 2006, Section 55, for " sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable cause, existence of which has to be established by the assessee, is the sine qua non. 8. Levy of penalty under section 271B is not automatic. Before levying penalty, the concerned officer is required to find out that even if there was any failure referred to in the concerned provision, the same was without a reasonable cause. The initial burden is on the assessee to show that there existed reasonable cause which was the reason for the failure referred to in the concerned provision. Thereafter the officer dealing with the matter has to consider whether the explanation offered by the assessee or the person, as the case may be, as regards the reason for failure, was on account of reasonable cause. 'Reasonable cause' as applied to human action is that which would constrain a person of average intelligence and ordinary prudence. It can be described as a probable cause. The cause shown has to be considered and only if it is found to be frivolous, without substance or foundation, the prescribed consequences will follow. 9. Taking into cumulative effect of the explanations offered by the assessee and from a reading of the relevant provisions of Section 271B read with Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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