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Income Tax Appellate Tribunal, KOLKATA BENCH “B”, KOLKATA
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma]
ORDER
Per Sonjoy Sarma, JM:
This appeal of the assessee for the assessment year 2014-15 is directed against the order dated 14.03.2023 passed by the ld. Commissioner of Income-tax, Appeals, NFAC, Delhi [hereinafter referred to as ‘the ‘ld. CIT(A)’]. The assessee has raised the following grounds of appeal:
“1. For that the orders passed by the lower authorities are arbitrary, erroneous, without proper reasons, invalid and bad-in-law, to the extent to which they are prejudicial to the interests of the appellant.
2. For that the Ld. CIT (A) erred in dismissing the appeal of the appellant without properly considering the facts and the law applicable.
For that the appellant had submitted appeal against order u/s 271B of the Income Tax Act, 1961 passed by the A.0. whereby penalty of Rs.l,10,966/- was imposed towards alleged failure to furnish audited accounts within time.
4. For that even though the Ld. CIT (A) has noted relevant facts in brief but he ought to have properly considered the contentions raised by the appellant that as a matter of fact there was no basis for imposition of penalty u/s 271B of the Act.
Dipankar Sarkar 5. For that at any rate the penalty of Rs.1,10,966/- levied by the A.O. ought to have been deleted by the Ld. CIT (A) by properly considering all relevant facts and the contentions raised by the appellant.
6. For that the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/or rescind any or all of the above grounds.”
Brief facts of the case are that the case of the assessee was selected for scrutiny on the basis of information that the assessee had deposited cash of Rs. 28,70,000/- in his bank account during the period of demonetization as the assessee did not file his return of income for the A.Y. 2017-18. The ld. AO issued notice u/s 142(1) of the Act calling for return of income. In consequence to that, assessee filed a condonation of delay petition u/s 119(2)(b) of the Act and filed a return of income on 21.09.2019 after getting necessary approval from PCIT-8, Kolkata. During the course of assessment proceeding, the ld. AO noticed that the turnover of the assessee was Rs. 2,21,93,393/- and as the turnover of assessee exceeded Rs. 1 crore during the year, therefore, it was required to get the books of account audited u/s 44AB of the Act within the time prescribed under the Act. But the assessee failed to do so within the prescribed time as provided u/s 44AB of the Act. Since, the assessee violated the provisions of section 44AB of the Act, the ld. AO initiated penalty proceeding and issued notice u/s 274 r.w.s. 271B of the Act on 23.12.2019. But the assessee did not make any compliance to any of these notices issued by the AO and in turn the AO by passing an ex-parte order u/s 144 of the Act against the assessee. As the assessee failed to adhere to the provisions of section 44AB of the Act, the AO levied penalty u/s 271B of the Act @ 0.05% ot total turnover of Rs. 2,21,93,393/- which amounted to Rs. 1,10,966/-.
Dipankar Sarkar 3. Aggrieved by the above order, assessee filed an appeal before the ld. CIT(A). However, the appeal of the assessee was dismissed by sustaining the order passed by the AO u/s 271 of the Act.
Dissatisfied with the above order, assessee is in appeal before the Tribunal raising multiple grounds of appeal. However, the core issue for adjudication before us against the order passed u/s 271B of the Act by the AO whereby penalty of Rs. 1,10,966/- was imposed towards alleged failure to furnish audited accounts within time prescribed by the assessee. The ld. counsel for the assessee submitted before the bench that audit report u/s 44AB of the Act was furnished by the assessee on 30.03.2018 and return of income was submitted by the assessee on 21.09.2019 which was after the due date as prescribed by the Act. However, same was filed by assessee before completion of the assessment order passed by the AO and to substantiate his argument, ld AR by relying upon the decision of Tribunal in the case of Balaji Ligistics vs ACIT in dated 07.09.2022, he prayed before us for deleting the penalty levied u/s 271B of the Act.
On the other hand, ld. DR strongly supported the orders of the authorities below.
We have heard both the sides, perused of the materials available on record. In the penalty order, the Assessing Officer had noted that the assessee’s gross receipt in the year under consideration were to the tune of Rs. 2,21,93,393/-. Therefore, assessee was required to get his accounts audited u/s 44AB of the Act and has to be filed within due date. Since the assessee has not Dipankar Sarkar filed the tax audit u/s 44AB of the Act before the due date, the Assessing Officer levied penalty of Rs. 1,10,966/- u/s 271B of the Act which was confirmed by the ld. CIT(A), NFAC.
Before us, ld. AR submitted before us by stating that the audit report u/s 44AB of the Act was furnished by the assessee before completion of the assessment by the AO.
We after hearing the rival submission of the parties and on perusal of the material available on record and going through the similar issue on an identical fact which was the subject matter in appeal before the co-ordinate bench in the case of Balaji Logistics vs ACIT in dated 07.09.2022 for the A.Y. 2015-16, wherein the Tribunal has observed as under: “6. We have heard both the parties. perused the materials available on record and gone through orders of the authorities below. It is an admitted fact that although the assessee has filed Tax Audit Report in 3CB as required u/s 44AB of the Act, beyond due date specified u/s. 139(1) of the Act, but such Tax Audit Report was made available to the AO before completion of assessment proceedings u/s 143(3) of the Act. on 22.11.2017. It is evident from the fact that the assessee has obtained Tax Audit Report from an Accountant on 28.03.2016 and furnished before the AO during the course of assessment proceedings. Therefore, we are of the considered view that when the Tax Audit Report was made available to the AO before completion of assessment proceedings, then for venial technical breach without any mala fide intention, penalty cannot be levied u/s. 271B of the Act. Further, a similar issue has been considered by the co-ordinate Bench of the Tribunal in the case of Ms. TPD 101 Uthangarai Milk Producers Co- operative Society Ltd. (supra), where on identical set of facts, penalty levied u/s. 271B of the Act, has been deleted. The relevant findings of the Tribunal are as under.
"..7. We have heard both the parties and perused the materials available on record and gone through the orders of the authorities below. The assessee supposed to have been filed audit report as Dipankar Sarkar required u/s.44AB of the Act, on or before 31.10.2015. However, such audit report has been filed on 05.03.2016, which is before the date of completion of assessment proceedings u/s. 143(3) of the Act. In other words, although the assessee has filed tax audit report beyond the stipulated period, but such tax audit report was made available to the AO before he completes assessment proceedings. The assessee has given reasons for delay in filing tax audit report. As per which, the audit of accounts of society done by the Dept. of Cooperative Audit, could not be completed on or before 31.10.2015 and said delay was not in the hands of the assessee. Therefore, there is a reasonable cause for not filing the tax audit report within prescribed time limit ad thus, penalty cannot be levied. We find merits in the submission of the assessee for the simple reason that non-filing of audit report within the due date is a venial technical breach without any mala fide intention on the part of the assessee. Because, completion of audit of books of accounts of the society is under the control of Dept. of Cooperative Audit and thus, unless the Dept. of Cooperative Audit completes audit, the assessee cannot file return of income along with tax audit report. Therefore, we are of the considered view that reasons given by the assessee for not filing tax audit report prescribed u/s.44AB of the Act, is neither intention nor any mala fide intention, but it is venial technical breach and for this reason, penalty u/s 271B of the Act, cannot be levied. This principle is supported by the decision of the Hon'ble jurisdictional High Court in the case of P. Senthil Kumar v PCIT reported in 416 1TR 336, where an identical issue had been considered by the Court and held that for venial technical breach without any mala fide intention, penalty cannot be levied The ITAT Cochin Bench in vide order dated 05.02.2019 had held that once audit report has been made available before the AO, when the assessment proceedings were completed, then, there is no reason for levy of penalty.
8. In this View of the matter and considering the facts and circumstances of the case, we are of the considered view that reasons given by the assessee for not filing tax audit report within due date comes under reasonable cause as provided u/s. 271B of the Act, and thus, the AO is erred in levying penalty u/s.271B of the Act. Hence, we direct the AO to delete penalty levied u/s. 271B of Act."....
Dipankar Sarkar 7. In this view of the matter and by following the decision of the coordinate bench of the Tribunal in the case of M/s. T.P.D. 101 Uthangarai Milk Producers Co-operative Society Ltd. (supra), we direct the AO to delete penalty levied u/s 271B of the Act.
8. In the result, the appeal filed by the assessee is allowed.”
8.1. We, respectfully following the above decision of the Co- ordinate Benches of the Tribunal in the case of Balaji Logistics vs ACIT (supra) for the assessment year 2015-16, we are of the considered opinion that it is not a fit case for the levy of penalty under section 271B of the Act and accordingly, the penalty levied stands deleted.
In the result, the appeal of the assessee is allowed.