No Penalty U/s 271B Can Be Levied If There Is Reasonable Cause For Failure In Timely Furnishing Tax Audit Report: Delhi ITAT

However, finding that there was reasonable cause for failure in furnishing the Tax Audit Report in time, the ITAT clarified that the present case is not a case of not getting the accounts audited in time, and therefore, held that the penalty u/s 271B is not exigible

The Bench of Dr. BRR Kumar (Accountant Member) and Astha Chandra (Judicial Member) observed that “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. The assessee has filed revised return within the legally permissible time along with Audit Report. During 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”. (Para 6)

As per the brief facts of the case, the assessee is an individual engaged in business of trading and manufacturing of timber products and fire woods. He e-filed his return declaring income of Rs. 4,82,499/- which was later revised to Rs. 6,34,500/-. on 17.06.2014. During assessment, it was noticed that as per the copy of audited P&L A/c furnished with revised return, the gross receipts were Rs. 17,89,07,251/-. Since the assessee had failed to get his account audited u/s 44AB of the Act, proceedings u/s 271B were initiated. After the disposal of the quantum first appeal, the AO issued show cause notice and imposed penalty for want of compliance by the assessee.

The Bench found from the assessment order that the assessee filed Tax Audit Report dated 04.08.2013 along with the revised return on 17.06.2014 which has been duly considered.

In the assessment order, the AO himself observed that the Audit Report has been furnished on 17.06.2014 with the revised return and hence it is not filed within the stipulated time, and therefore, the AO initiated the penalty proceedings u/s 271B for non-furnishing of Tax Audit Report in time, added the Bench.

Before the CIT(A) in reply uploaded on the ITBA Portal on 06.10.2021, the Bench stated that it was submitted that the assessee himself was going through a critical medical condition in the year under consideration.

The Bench also stated that the assessee has also submitted that the delay in furnishing Audit Report in time was caused due to inadvertent mistake committed by his Chartered Accountant, but the assessee's explanation has merely been disbelieved.

Hence, the ITAT vacated the penalty and allowed assessee's appeal.

Counsel for Appellant/ Assessee: None

Counsel for Respondent/ Revenue: Piyush Tripathi

Case Title: Sanjeev Kumar Goyal verses ITO

Case Number: ITA No. 3187/Del/2023

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