KARALAN ARUL KUMAR,NAMAKKAL vs. ITO, WARD-2,, NAMAKKAL

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ITA 1967/CHNY/2026Status: DisposedITAT Chennai17 July 2026AY 2021-227 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the delay in furnishing the tax audit report was a technical or venial breach, as the report was available to the AO at the time of assessment completion. Therefore, the penalty levied under Section 271B was not warranted.

What were the facts?

The assessee filed his income tax return belatedly, along with a tax audit report that was also submitted after the due date. The Assessing Officer (AO) initiated penalty proceedings under Section 271B for failure to furnish the tax audit report within the prescribed time.

What were the issues?

Whether penalty under Section 271B is leviable for belated filing of tax audit report when the report was available to the AO during assessment proceedings and the delay was a technical breach.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 271B,Section 139(4),Section 274,Section 273B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & MS PADMAVATHY S

Hearing: 16.07.2026Pronounced: 17.07.2026

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: These appeals filed by the assessee are directed against four orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (all the orders of NFAC are dated 26.03.2026)

ITA Nos.1965 to 1968 /CHNY/2026 - 2 - Karalan Arul Kumar passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The orders of CIT(A)-NFAC arise out of the orders of the AO imposing penalty u/s.271B of the Act. The relevant Assessment Years are 2017-18, 2018-19, 2021-22 & 2023-24.

ITA No.1965/CHNY/2026, Assessment Year 2017-18 2. Brief facts of the case are as follows: The assessee is an individual. For the assessment year 2017-18, the assessee filed his return of income belatedly u/s. 139(4) of the Act on 05.02.2018 declaring total income of Rs.9,77,640/-. As the assessee’s turnover exceeded the prescribed threshold, the assessee was liable to furnish the tax audit u/s.44AB of the Act within the prescribed time. The assessee furnished the audit report on 05.02.2018. Hence, the AO observed that the assessee had failed to furnish the tax audit report within the due date prescribed u/s. 44AB of the Act. Accordingly, penalty proceedings u/s. 271B were initiated by issuing notice u/s. 274 r.w.s. 271B of the Act dated 27.08.2024. Though the assessee filed his explanation in response thereto, the AO was not convinced and, vide order dated 13.02.2025, levied a penalty of Rs.1,50,000/- u/s. 271B of the Act.

ITA Nos.1965 to 1968 /CHNY/2026 - 3 - Karalan Arul Kumar 3. Aggrieved by the said order, the assessee preferred an appeal before the First Appellate Authority (FAA). However, the FAA upheld the action of the AO and confirmed the levy of penalty, thereby dismissing the appeal.

4.

Aggrieved by the order of the First Appellate Authority confirming the levy of penalty u/s. 271B of the Act, the assessee has preferred the present appeal before the Tribunal. The Ld. AR submitted that the assessee has submitted the audit report along with the return of income on 05.02.2018 and that the assessment was completed u/s.143(1) of the Act only on 30.05.2018 by accepting the returned income of the assessee. It was contended that the audit report was very much available on record at the time of completion of the assessment. According to the Ld. AR, the delay in furnishing the audit report was merely a technical and venial breach which did not result in any loss to the Revenue or prejudice to the assessment proceedings. The Ld.AR contended that the AO has also accepted the income returned by the assessee. Therefore, it was submitted that the levy of penalty u/s. 271B was not justified and deserved to be deleted. In support of the above contention, the Ld. AR placed reliance on the decision of the Hon’ble Jurisdictional High Court in the case of P.Senthilkumar vs. PCIT reported in 416 ITR 336 and Chennai Bench

ITA Nos.1965 to 1968 /CHNY/2026 - 4 - Karalan Arul Kumar of the Tribunal in the cases Kalaiarasan Selvaraj vs. ITO in ITA No.3448/Chny/2025 (order dated 04.02.2026) and Balaji Logistics vs. ACIT reported in [2023] 147 taxmann.com 647.

5.

The Ld.DR supported the order of the AO and the FAA.

6.

We have heard rival submissions and perused the material on record. The undisputed fact is that, though the assessee failed to furnish the tax audit report within the due date prescribed u/s. 44AB of the Act, the same was furnished on 05.02.2018 along with the return of income filed belatedly. The assessment was completed on 30.05.2018, and the AO himself has recorded in the impugned penalty order that the tax audit report had been filed on 05.02.2018. Thus, the tax audit report was available before the AO at the time of completion of the assessment, and the delay in furnishing the audit report constituted only a technical or venial breach.

7.

We find that the AO sought to distinguish the decision of the Hon'ble Madras High Court in the case of P. Senthil Kumar (supra) on the ground that the said decision was rendered in the context of "reasonable cause" mentioned u/s.273B of the Act. However, we find that the Hon'ble High Court, while answering the substantial question

ITA Nos.1965 to 1968 /CHNY/2026 - 5 - Karalan Arul Kumar of law as to ‘whether the Tribunal was justified in deleting the penalty when the tax audit report was filed along with the return and hence, constitutes only a venial breach’, held in favour of the assessee by observing that the tax audit report was available before the AO during the assessment proceedings and, therefore, the non-furnishing of the report within the prescribed due date amounted only to a technical or venial breach. In the present case also, though the audit report was not furnished within the due date prescribed u/s.44AB of the Act, it was admittedly available before the AO during the assessment proceedings.

8.

On identical facts, the issue is squarely covered by the decisions of the Chennai Bench of the Tribunal in the case of Shri Kalaiarasan (supra) and Balaji Logistics (supra), wherein, the penalty levied u/s.271B of the Act was deleted by holding that where the tax audit report was available before the AO at the time of completion of the assessment and the assessment was completed after taking note of the said report, the delayed furnishing of the audit report amounted only to a technical or venial breach.

9.

Respectfully following the aforesaid decision of the Hon'ble Jurisdictional High Court and the orders of the Chennai Bench of the

ITA Nos.1965 to 1968 /CHNY/2026 - 6 - Karalan Arul Kumar Tribunal, we hold that the delay in furnishing the tax audit report is merely a technical or venial breach and does not warrant levy of penalty u/s.271B of the Act. Accordingly, the penalty levied by the AO is directed to be deleted. It is ordered accordingly.

ITA Nos.1966 to 1968/CHNY/2026, AYs 2018-19, 2021-22 & 2023-24 10. Since the facts and circumstances of the assessment years 2018- 19, 2021-22 & 2023-24 are materially identical to those considered by the Tribunal for assessment year 2017-18, the findings and conclusions recorded therein para Nos.6 to 9, shall apply mutatis mutandis to the years under consideration. Accordingly, the penalty levied u/s.271B of the Act are directed to be deleted. It is ordered accordingly.

11.

In the result, the appeals filed by the assessee are allowed.

Order pronounced in the open court on 17th July,2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (प�मावती एस) (PADMAVATHY S) (GEORGE GEORGE K) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 17th July, 2026

ITA Nos.1965 to 1968 /CHNY/2026 - 7 - Karalan Arul Kumar

RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Salem 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.07.17 17:30:36 +05'30'

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