JAYAKUMAR,KANCHIPURAM vs. ITO WARD 1, KANCHEEPURAM, KANCHEEPURAM

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ITA 239/CHNY/2026Status: DisposedITAT Chennai13 May 2026AY 2018-195 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty under Section 271B is not maintainable if the audit report is available before the completion of assessment. Since the audit report was available to the AO before passing the assessment order, the penalty was deleted.

What were the facts?

The assessee obtained an audit report on 12.09.2022 but uploaded it on 19.01.2023, after the due date. The Assessing Officer (AO) initiated penalty proceedings under Section 271B for non-compliance. The CIT(A) confirmed the penalty.

What were the issues?

Whether penalty under Section 271B is leviable when the audit report is available before the completion of assessment, despite being filed late.

Which sections of the Income-tax Act were involved?

Section 271B,Section 142(1),Section 148

AI-generated summary — verify with the full judgment below

Before: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunatha

Hearing: 27.04.2026Pronounced: 13.05.2026

आयकर अपीलीय अिधकरण, ’सी’ �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI �ी एस.एस. िव�ने� रिव, �ाियक सद� एवं �ी एस.आर. रगुनाथॎ, लेखा सद� के सम� Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri S.R. Raghunatha, Accountant Member आयकर अपील सं./I.T.A. No.239/Chny/2026 िनधा�रण वष�/Assessment Year: 2018-19 Jayakumar, 12-A/H1 Sheikpet South Vs. Income Tax Officer, Ward 1 Street, Kanchipuram - 631501. Kancheepuram Ward 1, Kancheepuram. [PAN: ALGPJ1352D] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri V. Padmanabhan, C.A. ��थ� की ओर से/Respondent by : Ms. Anitha, Addl. CIT सुनवाई की तारीख/ Date of hearing : 27.04.2026 घोषणा की तारीख /Date of Pronouncement : 13.05.2026 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

This appeal filed by the assessee is directed against the order dated 10.12.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi, for the assessment year 2018–19.

2.

The assessee raised four grounds of appeal, amongst which the only issue emanating for our consideration is as to whether the ld. CIT(A) is justified in confirming the penalty levied under Section 271B of the Income Tax Act, 1961 (for short, “the Act”).

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3.

At the outset, it is noted that the AO initiated proceedings under Section 271B of the Act for not filing the audit report within the due date as prescribed under law. On perusal of the penalty order dated 14.01.2025, we note that the assessee made no compliance in the assessment proceedings in spite of receipt of notice under Section 142(1) of the Act as well as show cause notice. Further, we note that no compliance was made for the penalty proceedings as well, which is evident from Page No. 3 of the penalty order. The assessment unit, having no option, levied penalty of Rs.91,940/- being 1% of total sales under Section 271B of the Act. The assessee filed an appeal before the ld. CIT(A), who, considering the remand report, confirmed the order of penalty under Section 271B of the Act. Being aggrieved by the same, the assessee is before us.

4.

Ld. AR Shri V. Padmanabhan, C.A., submits that the assessee filed return of income declaring the total income of Rs.3,38,290/- on 19.01.2023. He further submits that the assessee obtained the audit report on 12.09.2022 and drew our attention to Page No. 1 of the paper book. He submits that the audit report was obtained on 12.09.2022 but, however, it was uploaded on 19.01.2023. He argued that the said audit report was available before the AO before passing the assessment order.

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He referred to the order of this Tribunal in the case of Haneefa Sahib Shajahan in ITA No. 931/Chny/2022 for AY 2017–18 and submits that this Tribunal held that the levy of penalty under Section 271B of the Act is not maintainable if, in case, the audit report is available before completion of assessment. The ld. AR prayed to cancel the penalty imposed under Section 271B of the Act.

5.

Learned DR Ms. Anitha, Addl. CIT, submits that the assessment proceedings as well as the penalty proceedings are independent of each other and the assessee is expected to file the audit report within the due date prescribed under law. She argued vehemently that though the audit report was obtained prior to filing of return of income, it was not filed within the specified time. She submits that the assessee is not entitled to seek relief by stating that the audit report was available before the AO on record before completion of the assessment order. She submits that filing of the audit report is mandatory as prescribed under statute and, since no audit report was uploaded within due time, the AO rightly imposed penalty under Section 271B of the Act.

6.

Having heard both the parties and on perusal of the record, we note that the assessee filed return of income on 19.01.2023 in response to the notice under Section 148 of the Act, which is evident from page No. 5 of

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the assessment order dated 06.03.2023. The AO completed the assessment on 06.03.2023, which clearly establishes that the said audit report was available before the AO before completion of assessment proceedings. Further, on similar circumstances, this Tribunal, in the case of Haneefa Sahib (supra), held that the penalty under Section 271B of the Act is not maintainable if the tax audit report is available before the completion of assessment. In the present case also, there is no dispute with regard to filing of audit report along with the return of income on 19.01.2023 in response to notice under Section 148 of the Act. We find no dispute with reference to obtaining the audit report before filing the return of income on 12.09.2022, which is evident from page No.1 of the paper book, and there is no dispute with regard to passing of assessment order on 06.03.2023, where the audit report was available on record before the AO in completing the assessment proceedings. Therefore, we find the facts and circumstances in the present case are similar to the facts and circumstances of the case of Haneefa Sahib (supra). Thereby, we hold that the penalty levied under Section 271B of the Act, which was confirmed by the ld. CIT(A), is not justified; thus, it is deleted. Thus, grounds raised by the assessee are allowed.

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7.

In view of our decision in ground Nos.1 to 4, the revised additional grounds of appeal become academic, requiring no adjudication. In the result, the appeal of the assessee is allowed.

Order pronounced in the open Court on 13th May, 2026 at Chennai.

Sd/- Sd/- (S.R. RAGHUNATHA) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, 13.05.2026 MM/- आदेश की �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant, 2.��थ�/ Respondent, 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR & 5. गाड� फाईल/GF.

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