MUTHIAN LAKSHMANAN,MADURAI vs. ACIT, NON CORPORATE CIRCLE 2, , MADURAI

आदेश / O R D E R PER MANJUNATHA.G, AM: This appeal filed by the assessee is directed against the order of the

Commissioner of Income Tax (Appeals), Income Tax Department, National

Faceless Appeal Centre (NFAC), Delhi, dated 28.03.2023, and pertains to

assessment year 2018-19.

field his return of income for AY 2018-19 on 17.02.2019, admitting a total

income of Rs.2,91,990/-. During the course of assessment proceedings,

the AO noticed that although, the assessee is liable to furnish Tax Audit

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Report as required u/s.44AB of the Income Tax Act, 1961 (in short “the

Act"), but such Tax Audit Report was not filed on or before due date

prescribed under the Act. Therefore, issued a show cause notice and

proposed to levy penalty u/s.271B of the Act, and called upon the assessee

to explain ‘as to why’ penalty shall not be levied for non-furnishing of Tax

Audit Report. In response, the assessee submitted that although, the Tax

Audit Report was not filed on or before due date for filing return of income,

but such audit report has been filed on 17.02.2019 before the AO completed

the assessment u/s.143(3) of the Act, on 16.06.2020. Therefore, the delay

in filing of Audit Report at best can be considered as a technical error and

for said technical error, penalty cannot be levied u/s.271B of the Act. The

AO after considering relevant submissions of the assessee, levied penalty

of Rs.1,50,000/- u/s.271B of the Act, for non-submission of Audit Report

on or before due date prescribed under the Act.

appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee has

reiterated the submissions made before the AO and argued that delay in

filing of Audit Report, is a technical mistake, for which, penalty cannot be

levied u/s.271B of the Act. The Ld.CIT(A) after considering relevant

submissions of the assessee opined that although, the assessee is required

to file Tax Audit Report u/s.44AB of the Act, on or before 31.10.2018, but

the assessee has filed said Audit Report on 17.02.2019 beyond the due

date prescribed under the Act. Therefore, opined that there is no error in

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the reasons given by the AO, to levy penalty u/s.271B of the Act. Aggrieved

by the order of the Ld.CIT(A), the assessee is in appeal before us.

confirming the penalty levied u/s.271B of the Act, without appreciating the

fact that Tax Audit Report was filed on 17.02.2019 with a short delay and

that delay was also explained by the assessee. Therefore, for delay in filing

of Audit Report, penalty cannot be levied. He further submitted that when

the Audit Report was made available to the AO before completion of

assessment, then, the delay in filing of Audit Report at best can be

considered as technical breach, which cannot be treated as fatal for levying

penalty u/s.271B of the Act. In this regard, he relied upon the decision of

ITAT Chennai benches in the case of Rajendran Sreedharan v. ACIT in ITA

No.165/Chny/2023 dated 21.04.2023.

submitted that when the statute is provided for due date for filing certain

reports, including Audit Report, the assessee ought to have complied with

the provisions and file the Audit Report on or before due date. Therefore,

the AO after considering relevant facts that the assessee did not file the

Audit Report as required u/s.44AB of the Act, on or before due date, has

rightly levied penalty u/s.271B of the Act, and their orders should be

upheld.

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on record. The fact borne out from the record clearly indicates that the

assessee has filed Tax Audit Report as required u/s.44AB of the Act, on

17.02.2019 i.e. much before the AO completed assessment u/s.143(3) of

the Act on 16.06.2020. Therefore, the issue of levy of penalty needs to be

considered in light of delay in filing of Audit Report as required under the

Act. Admittedly, it is a well settled principle of law by the decision of the

Hon’ble Madras High Court in the case of P. Senthil Kumar v. PCIT reported

in 416 ITR 336 (Madras), where the Hon’ble Madras High Court by

considering the decision of the Hon’ble Supreme Court in the case of

Hindustan Steel Ltd. v. State of Orissa reported in [1972] 83 ITR 26 (SC)

held that non-filing of Audit Report on or before due date, is a technical

breach and admittedly, when such Tax Audit Report has been filed before

assessment was passed by the AO, the question of levy of penalty u/s.271B

of the Act, does not arise. The ITAT Chennai Benches in the case of

Rajendran Sreedharan in ITA No.165/Chny/2023 dated 21.04.2023 had

considered an identical issue and held that when the Tax Audit Report was

made available to the AO before he completes assessment u/s.143(3) of

the Act, then penalty u/s.271B of the Act, cannot be levied for delay in filing

of such Audit Report. In this case, there is no dispute with regard to the

fact that the assessee, although, filed Tax Audit Report beyond due date

prescribed under the Act, but such Audit Report has been filed before the

AO completes the assessment. Therefore, we are of the considered view

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that the AO is erred in levying penalty u/s.271B of the Act, for non-

furnishing of Tax Audit Report, and thus, we direct the AO to delete the

addition made towards penalty levied u/s.271B of the Act.

Order pronounced on the 28th day of June, 2023, in Chennai. Sd/- Sd/- (वी. दुगा� राव) (मंजूनाथा.जी) (MANJUNATHA.G) (V. DURGA RAO) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER चे�ई/Chennai, �दनांक/Dated: 28th June, 2023. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�/CIT 5. गाड� फाईल/GF 2. ��यथ�/Respondent 4. िवभागीय �ितिनिध/DR