D B ENGINEERING P. LTD.,DELHI vs. ACIT CIRCLE 7(1), DELHI, DELHI

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”: NEW DELHI

BEFORE SHRI M.BALAGANESH, ACCOUNTANT MEMBER AND MS MADHUMITA ROY, JUDICIAL MEMBER

ITA No. 425/Del/2026 (A.Y 2016-17) D B Engineering P. Ltd. Vs. Assistant Commissioner 81, Jor Bagh, Delhi of Income Tax, Circle-7(1), Delhi (Appellant) (Respondent) PAN: AAACD0622Q

Assessee by : Sh. R. S. Singhvi, CA, Sh. Satyajeet Goyal, CA & Sh. Rajat Garg, CA Revenue by: Shri Om Prakash, Sr. DR

Date of Hearing 12/05/2026 Date of pronouncement 06/08/2026 O R D E R PER MADHUMITA ROY, J. M.: The instant appeal filed by the assessee is directed against the

order dated 29.03.2022 passed by the Ld. Commissioner of Income-

tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter

referred to as the Ld. CIT(A)/’NFAC’] under Section 250 of the

Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out

of the penalty Order dated 26.09.2022under Section 271B of the

Income Tax Act, 1961 ('Act' for shot) for Assessment Year 2016-17.

under Section 147/144/144B of the Act on 29.09.2022 upon

assessing income at Rs. 12,79,71,380/-. On 29.03.2022 itself,

2 ITA No. 425/Del/2026 D B Engineering P Ltd. Vs. ACIT anotice under Section 274 of the Act read with 271B of the Act was

issued alleging that the Assessee failed to get the accounts audited

or failed to furnish report of such audit as required under Section

44AB of the Act. The Assessee submitted the reply. However, the

same was not found to be acceptable and penalty, therefore, to the

tune of Rs. 1,50,000/- was imposed in the hands of the Assessee for

committing default in not filing the return of income along with the

tax audit report as per requirement under Section 44AB within the

specified time under Section 139(1) of the Act. The same was further

confirmed by the First Appellate Authority. Hence the instant appeal

before us.

preceding Assessment Year 2015-16 in a regular manner and has

been regularly filing income tax return for more than 30 years

previously. Since, there was a dispute repeatedly between

Directors of the Assessee company during the F.Y 2015-16 and the

litigation since still pending before the Hon’ble Delhi High Court and

in National Company Law Tribunal (‘NCLT’)-2 on various issues and

further that the business operations of the Company, bank

accounts, books of accounts etc. non operative and, therefore,

transactions were done only under the supervision of the Hon’ble

High Court of Delhi at that relevant point of time, the return could

3 ITA No. 425/Del/2026 D B Engineering P Ltd. Vs. ACIT not be filed in time neitheraccounts were audited within the

prescribed time period. Such submission made before the

Department, was also reiterated before us by the Ld. AR. It was

further submitted by him that the taxes to the tune of Rs.

75,00,000/- for A.Y 2015-16 i.e. the preceding year and Rs.

25,00,000/- for the year under consideration were paid by the

Assessee company by and under the directions passed by the

Hon’ble High Court of Delhi; direction was given to that effect by the

order dated 22.03.2018 and 28.03.2018 when it was represented to

the Hon’ble High Court of Delhi that the Company was facing

situations beyond control due to the aforesaid disputes amongst the

Directors and becoming defaulters for filing ITR etc. Relevant to

mention that copies of each of the orders passed by the Hon’ble High

Court have been duly furnished before us.

therefore, contended by the Ld. AR that since sufficient reasons were

duly explained before the authorities below in regard to non filing of

return in time and also books of accounts not been audited in due

time, the penalty under Section 271B not to be imposed. However,

inspite of same, the case made out by the Assessee has not been

accepted by the authorities below.

4 ITA No. 425/Del/2026 D B Engineering P Ltd. Vs. ACIT 5. On the other hand, the Ld. DR relied upon the orders passed

by the authorities below.

been able to file the return in time and also the books of accounts

audited delayed. Such reasons assigned as above cannot be

doubted in view of the series of orders passed by the Hon’ble High

Court and also dispute pending before NCLT.

Act gives relaxation in imposing penalty rather throws light on the

issue wherein penalty not to be imposed including penalty under

Section 271B of the Act which is the subject matter before us.

Section 273B clarifies and specifically directs that no penalty shall

be imposable on the person or the Assessee, as the case may be, for

any failure referred to in the said provision if he provides that there

was reasonable cause for the said failure. Thus, the explanations

rendered by the Assessee for not been able to file return of income in

due time or that neither accounts was audited in due time since

found to be acceptable having regard to the orders and directions

and compliance made by the Assessee as above particularly the

orders passed by the Hon’ble High Court and the proceeding pending

before the NCLT, and further taking into considering the provision of

5 ITA No. 425/Del/2026 D B Engineering P Ltd. Vs. ACIT Section 273B as above, the penalty against the Assessee, in our

considered opinion ought not to have been imposed. The reasons as

narrated above not found to be acceptable by the authorities below

which is germane to the issue involved in the matter supported by

relevant evidences is not justified rather it demonstrates that just in

order to impose penalty, the order has been issued by the Ld. AO

further confirmed by the First Appellate Authority without assigning

any proper reason contrary to the factual aspect of the matter

particularly considering the orders by the Hon’ble High Court of

Delhi. The gamut of the matter has not been found to have been

considered in is proper perspective by the authorities below. Having

regard to the facts of the matter and the provision of Section 273B of

the Act imposition of penalty could not be the logical conclusions.

Thus, with the above observations imposition of penalty is found to

be palpably bad and not sustainable particularly taking into

consideration the provisions of Section 273B of the Act. The

impugned penalty under Section 271B of the Act is, thus, quashed.

Order pronounced in the open court on 06/08/2026.

Sd/- Sd/- (M.BALAGANESH) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 06/08/2026 R. Naheed, Sr PS Page | 5

6 ITA No. 425/Del/2026 D B Engineering P Ltd. Vs. ACIT Copy forwarded to