NANDIGAM VEERABRAHMAM,RAJAHMUNDRY vs. THE INCOME TAX OFFICER, WARD-1(1), RAJAHMUNDRY

PER OMKARESHWAR CHIDARA, ACCOUNTANT MEMBER: This appeal is filed by the Assessee against order of Learned Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter in short “Ld.CIT(A)”) dated 18.12.2025 passed under section 250 of Income Tax Act, 1961 (hereinafter in short “the Act”) for the Assessment Year 2018-19.

ITA 199/VIZ/2026 NANDIGAM VEERABRAHMAM Learned Authorized Representative (hereinafter in short “Ld.AR”) of the appellant has stated that the notice under section 148 of the Act was quashed by the ITAT, Visakhapatnam Bench and hence the assessment order dated 31.10.2024 passed on the basis of such notice and all the penalty proceedings initiated during the re-assessment proceedings falls to ground automatically and hence the penalty order dated 05.07.2024 under section 271B of the Act is liable to be quashed because the same is void ab initio. Moreover, the appellant has filed the Audit Report and Return of Income in response to notice under section 148 of the Act for the A.Y. 2018-19 on 02.05.2022. Since the appellant has filed the Audit Report before completion of assessment, now it is a settled law that the penalty under section 271B is not leviable. Ld.AR of the appellant has also stated that the order of Ld.CIT(A) is cryptic and not a reasoned order. In the order of Ld.CIT(A), the contentions of the appellant were reproduced. At Para No. 5.4, Page No. 10 of the Ld.CIT(A) order, it was mentioned that since the turnover of the appellant is Rs.3.84 crore which is far more than the prescribed limit for getting the books of account audited in terms of section 44AB of the Act, the penalty levied by the Ld.AO was upheld. The Ld.CIT(A) did not consider the various submissions made before the Ld.CIT(A) that since the business was not profitable the same was closed in the month of February, 2018 itself.

ITA 199/VIZ/2026 NANDIGAM VEERABRAHMAM return of income within the due date mentioned under section 139(1) of the Act, for the following reasons:

a. The notice under section 148 of the Act is the genesis to file the Return of Income and when the notice itself was quashed by the ITAT, Visakhapatnam Bench, entire assessment proceedings would be invalid for want of valid assumption of jurisdiction. Any proceedings based on such invalid notice is also bad in law and needs to be quashed, in view of the decision of the Coordinate Bench in the case of Smt. Anita Awasthi v. ITO, Ward 3(5), Sonebhadra, in ITA No. 243/VNS/2019 dated 03.06.2022.

b. Filing of audit report within the due dates mentioned by the Income Tax Department are only directory in nature and not mandatory as held by several High Courts and if the 44AB report was filed before completion of the assessment, the same is to be treated as proper compliance and to be treated as filed within the due date. In this case, the appellant has filed the 44AB report along with the return of income before completion of the assessment. This view was taken by the Coordinate Bench decision of Visakhapatnam in the case of Sree Siva chaitany Agro Industries v. ITO in ITA No. 256/VIZ/2024 dated 13.09.2024. In this case, the Coordinate Bench has held that if the tax audit report was filed before the date of passing of assessment order, the penalty under section 271B of the Act cannot be levied. In this Coordinate Bench decision, the ITAT relied on the decision of the Hon’ble Madras High court in the case of P. Senthil Kumar v. Pr.CIT [416 ITR 336 (Madras)] where in similar circumstances the Hon’ble Madras High Court has held that the penalty under section 271B cannot be levied if the tax audit report is filed before passing the assessment order. Respectfully following the decision of

ITA 199/VIZ/2026 NANDIGAM VEERABRAHMAM the Coordinate Bench of Visakhapatnam and Hon’ble Madras High Court, the penalty levied by the Ld.AO is deleted.

Order pronounced in the open court on 10th July, 2026. Sd/- Sd/- RAVISH SOOD OMKARESHWAR CHIDARA JUDICIAL MEMBER ACCOUNTANT MEMBER Visakhapatnam Dated: 10.07.2026 Giridhar, Sr.PS

ITA 199/VIZ/2026 NANDIGAM VEERABRAHMAM Copy to:

NANDIGAM VEERABRAHMAM, 28, JAMPETA, RAJAHMUNDRY, 1 RAJAHMUNDRY-533103, ANDHRA PRADESH

THE INCOME TAX OFFICER, WARD-1(1), INCOME TAX OFFICE, AAYAKAR BHAVAN, 2 VEERABHADRA PURAM, RAJAHMUNDRY-533105, ANDHRA PRADESH

3 THE PCIT / CIT, 4 THE D.R., ITAT, VISAKHAPATNAM BENCH 5 GUARD FILE