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Income Tax Appellate Tribunal, “SMC” BENCH, CUTTACK
Before: SHRI CHANDRA MOHAN GARG
This appeal has been filed by the assessee against the order of Commissioner of Income Tax (Appeals), Cuttack, dated 30.08.2018 passed in First Appeal No.0147/2015-16 for the assessment year 2013- 2014. 2. The sole issue in this appeal agitated by the assessee is that the ld. CIT(A) was not correct and justified in upholding the penalty u/s.271B of the Income Tax Act ( in short ‘the Act’) on the allegation of wilful default by the assessee not to e-file the audit report with the return of income for relevant assessment year 2013-2014. 3. I have heard the arguments of both the sides and carefully perused the relevant material placed on the record of the Tribunal. The main contention of ld. AR is that the main reason and allegation of the AO for 2 imposing penalty u/s.271B of the Act is that the assessee did not upload or e-file the audit report within the prescribed time limit which is not correct. The ld. AR further pointed out that the assessee got audited his books of accounts and received audit report on 20.09.2013 which was furnished to the department on 21.09.2013 and the assessee filed return of income on 24.09.2013 stating the date of filing of audit report to the tax authorities. Ld. AR further pointed out that the last/due date of filing return and audit report was 31.10.2013 for A.Y.2013-2014 and the assessee complied with this requirement very earlier on 24.09.2013, therefore, imposition of penalty u/s.271B of the Act is not correct and justified as per the provisions of the Act. Accordingly, ld. AR prayed that the penalty may kindly be deleted.
Replying to the above, ld. DR supported the penalty as well as first appellate order and submitted that it is the duty of the assessee to upload and e-file the audit report with the department and, thus, the AO was right in imposing penalty on the basis of list of non-filers of audit report for A.Y.2013-2014 issued by DGIT(System), New Delhi, which was forwarded to the AO by CIT, Cuttack Range, Cuttack for necessary action.
Placing rejoinder to the above, ld. AR submitted that from the copy of ITR-IV i.e. Acknowledgement of e-filing of return for A.Y.2013-2014, it clearly shows that the assessee has mentioned the date of audit report as 20.09.2013 and date of furnishing of audit report to the department as 21.09.2013, therefore, the allegation of non-filing of audit report with the 3 department is apparently not correct and, thus, penalty imposed by the AO is not sustainable and the same may kindly be deleted.
On careful consideration of above submissions of both the parties, first of all, I find it profitable to reproduce the relevant provisions of Section 271B of the Act, which reads as follows :- [Failure to get accounts audited. "271B. If any person fails [***] to get his accounts audited in respect of any previous year or years relevant to an assessment year or [furnish a 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 per cent of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years or a sum of [one hundred fifty thousand rupees], whichever is less"].
In view of the language used by the legislature in the said penalty provision, there are two conditions where the AO may impose penalty u/s.271B of the Act on the assessee i.e. firstly if any person fails to get his accounts audited and secondly fails to furnish such audit report to the AO. In the present case it is not the case of the AO that the assessee did not get audited his books of accounts, therefore, first limb of the provision is not applicable to the present case. However, the AO has imposed penalty on the basis of second part of the penalty provision by alleging that the assessee did not e-file the audit report with the department, but this allegation has no legs to stand as from the copy of acknowledgement of the e-return filed by the assessee, it is apparent that the assessee has not only mentioned the date of audit report but also declared that the same has been filed with the department on 21.09.2013 and the date of filing of return and audit report was 31.10.2013. Thus, I safely presume that the 4 assessee has filed audit report with the department before due date of filing of return and, thus, penalty u/s.271B of the Act cannot be levied on the assessee. I may also point out that the ld. DR could not controvert the fact that the return of the assessee for A.Y.2013-2014 has been processed u/s.143(1) of the Act without any demand and refund and no pending action or requirement was found by the department as on 10.09.2014. The assessee filed reply before the AO to the show cause notice issued during the penalty proceedings and this fact has been noted by the AO in paragraph 2 of the penalty order.
In view of the foregoing discussions, I am convinced and satisfied that there was no failure on the part of the assessee which attracts penalty proceedings u/s.271B of the Act, therefore, the AO was not correct in imposing the panty and ld. CIT(A) was also not justified in upholding the same. Accordingly, the sole ground of assessee is allowed and the AO is directed to delete the penalty.
In the result, appeal of the assessee is allowed. Order pronounced in the open court on 07/03/2019. (CHANDRA MOHAN GARG) न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनांक Dated 07/03/2019 प्र.कु.मम/PKM, Sr.P.S.
5 आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीऱाथी / The Appellant- .
Manoranjan Sahu, Nayabazar, Baleswar-756001 प्रत्यथी / The Respondent-
ITO, Ward-1, Balasore 3. आयकर आयुक्त(अऩीऱ) / The CIT(A), 4. आयकर आयुक्त / CIT ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 5. गार्ग पाईऱ / Guard file. 6. सत्यावऩत प्रयत //// आदेशािुसार/ BY ORDER,
(Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack