MAHAVIRSINH JUVANSINH JADEJA,GANDHIDHAM vs. INCOME TAX OFFICER, WARD-5, MUNDRA, MUNDRA

ITA 326/RJT/2025Status: DisposedITAT Rajkot30 September 2026AY 2018-195 pages
AI SummaryAllowed

What were the facts?

The assessee, Mahavirsinh Juvansinh Jadeja, is in appeal against the penalty order passed under section 271B of the Income-tax Act, 1961, for Assessment Year 2018-19. The Assessing Officer (AO) levied a penalty of Rs. 1,50,000/- because the assessee's turnover exceeded the limit specified in section 44AB, requiring an audit report. The assessee was required to submit the audit report by 31/10/2018 but approved it on 05/03/2019. The AO initiated penalty proceedings, and the National Faceless Appeal Centre (NFAC), Delhi (also referred to as Ld.CIT(A)), confirmed the penalty. The assessee contends that the delay in approving the audit report was due to technical error and ill health, and the report was e-filed on time.

What did the Tribunal hold?

The Tribunal held that the penalty under section 271B of the Act is leviable for failure to get accounts audited or failure to furnish the audit report. In this case, the books of accounts were duly audited, and the audit report was electronically filed on or before the due date of filing the return of income (31.10.2018). The system status confirmed successful e-filing on that date. The delay in approving the audit report was attributed to the assessee's ill health, which constituted a reasonable cause under section 273B of the Act. The Tribunal found the default to be merely technical and venial. Citing the judgment in Hindustan Steel Ltd. (83 ITR 26), the Tribunal noted that penalties are not mandatory and should not be levied for technical breaches without willful defiance of the law. Therefore, the penalty imposed under section 271B was deleted. The ground of appeal was allowed.

What were the issues?

1. Whether the penalty order passed under section 271B of the Act is bad in law and facts, considering the circumstances of the case. 2. Whether the Assessing Officer erred in levying a penalty of Rs. 1,50,000/- under section 271B, and whether the Ld. CIT(A) erred in confirming the same. Assessee's Contentions: The assessee argued that the audit report could not be approved due to ill health and was approved belatedly on 05.03.2019. The audit report was e-filed before the due date of filing the return, and the delay in approval was merely a procedural lapse. The assessee relied on the principle that penalties should not be levied for mere technical or venial breaches, citing the Hon'ble Apex Court judgment in Hindustan Steel Ltd. (83 ITR 26). Revenue's Contentions: The Ld. DR for the Revenue primarily reiterated the stand taken by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 271B,Section 44AB,Section 273B,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: Dr. Arjun Lal Saini

For Appellant: Shri Vimal Desai. Ld. AR
For Respondent: Shri Shishir Kumar, Ld. SR DR
Hearing: 29/07/2026Pronounced: 30/09/2026

Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2018-19, is directed against the order passed under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 25.03.2025 by the National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income Tax (Appeals) [in short ‘Ld.CIT(A)’] which in turn arises out of penalty order passed by the Assessing Officer (in short ‘AO’) u/s 271B of the Act da

The order continues below.

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