NIRJA AGRAWAL,VARANASI vs. ITO, VARANASI

IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI BENCH, VARANASI BEFORE SH. SUDHANSHU SRIVASATVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA Nos.72 & 74/VNS/2025 A.Ys. -2013-14 & 2012-13 Nirja Agrawal, vs. ITO, Varanasi CK 13/5 Kunj Gali Varanasi-221001 PAN: ABSPA7110N (Appellant) (Respondent) Assessee by: Sh. O.P. Shukla & Sh. Awdhesh Dubey, Advocates Revenue by: Sh. Sudipta Paul, Sr. DR Date of hearing: 06.08.2026 Date of pronouncement: 16.10.2026 O R D E R PER BENCH.: These two appeals have been filed by the assessee against the orders of the ld. CIT(A), Varanasi (for the A.Y. 2012-13) and the ld. CIT(A), NFAC (for the A.Y. 2013-14), wherein the ld. CIT(A) have dismissed the appeals of the assessees that were filed against the separate orders of the Assessing Officers, both dated 8.06.2017, levying penalty under section 271B upon the assessee for the A.Ys. 2013-14 and 2014-15. The grounds of appeal in these appeals are as under: - ITA No. 74/VNS/2025 “1. Because, the Ld. Commissioner of Income Tax (Appeals) was not justify to pass an ex parte order and confirmed the imposition of penalty u/s 271B of the income Tax Act Rs 150000/-. 2. Because, the Ld. Commissioner of Income Tax (Appeals) was not justify to confirm the penalty u/s 271B of the income Tax Act to ignored the circular of CBDR vide circular no. 03/2009 dt. 21.05.2009, if the audit has duly been completed within stipulated time limit before filling of audit report and return of income the penalty u/s 271B may not be attract. 1

ITA Nos.72 & 74/VNS/2025 Nirja Agrawal A.Ys. 2013-14 & 2012-13 3. Because the appellant craves for a right to raise any additional ground during the course of hearing of the case. 4. Because the order passed by the Ld. Assessing officer is erroneous, bad in law and on facts and is liable to be deleted.” ITA No. 72/VNS/2025 “1. Because, the Ld. Commissioner of Income Tax (Appeals) was not justify to confirm the penalty u/s 271B of the income Tax Act Rs 150000/- by contravention of provision u/s 139 of the income tax Act. 2. Because, the Ld. Commissioner of Income Tax (Appeals) was not justify to confirm the penalty u/s 271B of the income Tax Act to ignored the circular of CBDR vide circular no. 03/2009 dt. 21.05.2009, if the audit has duly been completed within stipulated time limit before filling of audit report and return of income the penalty u/s 271B may not be attract. 3. Because the appellant craves for a right to raise any additional ground during the course of hearing of the case. 4. Because the order passed by the Ld. Assessing officer is erroneous, bad in law and on facts and is liable to be deleted.”

ITA Nos.72 & 74/VNS/2025 Nirja Agrawal A.Ys. 2013-14 & 2012-13 regards, ITA No. 72/VNS/2025, the facts of the case are that the ld. Assessing Officer received information that the assessee had deposited Rs. 15,01,49,945/- in her bank account in cash during the course of the financial year relevant to the assessment year 2013-14. She has not filed her returns and not filed any audit report. The ld. Assessing Officer came to the conclusion that income amounting to Rs. 15,01,49,945/- had escaped assessment and therefore, he issued a notice under section 148 on 31.03.2016. In response to the same, the assessee filed a return of income on 14.12.2016. Upon examination of the same, the ld. Assessing Officer discovered that the assessee was a wholesaler of Sarees and had made sales amounting to Rs. 13,17,46,358/- during the course of the year, but she had neither filed a return of income or an audit report within the time allowed under section 139(1) of the Income Tax Act due to which he found her to be in violation of section 44AB of the Income Tax Act, 1961 and accordingly initiated penalty under section 271B for the said violation. Accordingly, notices were issued and served upon the AR of the assessee on 30.12.2016, but the ld. Assessing Officer records that no reply was furnished in response to the said notice. Therefore, another show cause notice was issued to the assessee by speed post on 23.05.2017, but the ld. Assessing Officer records that no response was received with effect from the same. From the same, he presumed that the assessee had nothing further to say in this regard and thereafter, he proceeded to levy a penalty of Rs. 1,50,000/- upon the assessee under section 271B of the Act for violation of section 44AB of the Income Tax Act. 3. Aggrieved with the said penalty order, the assessee filed an appeal before the ld. CIT(A). Before the ld. CIT(A), it was submitted that the ld. Assessing Officer was not justified in imposing the penalty as the delay was primarily on the part of the counsel and was not in the knowledge of the 3

ITA Nos.72 & 74/VNS/2025 Nirja Agrawal A.Ys. 2013-14 & 2012-13 assessee. When the assessee received the notice under section 148, she filed the audited return alongwith the audit report under section 44AB of the Act. It was further submitted that the assessee’s books of account and balance- sheet had been duly audited by Ram K. Raj & Associates, Chartered Accountant, by its partner Sh. Kastubh Garg on 30.09.2013, which was well before the time stipulated under the Act and the same had been given to the counsel for the filing of the return. But the counsel had not filed the return and due to this delay, the said balance-sheet was filed only in response to the notice under section 148. This was due to the mistake on the part of the counsel and not the assessee. The assessee placed reliance on the judgments of Hon’ble Madhya Pradesh High Court in the case of Mahaveerprasad Jain vs Commissioner Of Income-Tax, 72 ITR 331, wherein the Court had held that the failure of the counsel to appear before the ld. CIT(A) could not lead to the assessee being penalized. The assessee also placed reliance on the judgment of the Hon’ble Allahabad High Court in the case of Subhash Malik vs. Commissioner of Income Tax & Anr, (2010) 325 ITR 243 (All), wherein the court had held that if the assessee had acted in particular manner on wrong advise given by his local advisor, she could not be held guilty of negligence and that sufficient cause should receive a liberal construction so as to advance substantial justice. She also placed reliance on judgments of ITAT, Agra Bench in ITA No. 22/AGR/2010, Sevak ICE and Cold Storage Pvt. Ltd., in ITA No.457/2010. The assessee further submitted that his case was covered by the Circular of the CBDT numbering 03/2009 dated 21.05.2009, which stated that if the audit had been completed within the stipulated time under section 44AB of the Income Tax Act by a Chartered Accountant before furnishing of the return under section 139, the penalty under section 271B could not be attracted. Since in the case of the assessee, the audit report had been signed by the auditor on 30.09.2013 therefore, the assessee’s case was 4

ITA Nos.72 & 74/VNS/2025 Nirja Agrawal A.Ys. 2013-14 & 2012-13 fully covered by the said Circular and the levy of penalty under section 271B could not be attracted in the assessee’s case. Placing reliance on various other judgments, the assessee prayed that the penalty imposed under section 271B may kindly be quashed. The ld. CIT(A) considered the submissions of the assessee but found them to be de void of merit. He pointed out that non-compliance of any statutory law could not be blamed upon the mistake of any other person and the fault for not filing the return vested entirely upon the assessee. Furthermore, the Circular No.3/2009 was not applicable to the facts of the assessee’s case because the assessee had not filed a return at all and therefore, the relevant column was not filled in the return in terms of that Circular. Accordingly, he dismissed the appeal of the assessee and confirmed the penalty levied by the ld. Assessing Officer. 4. The assessee is aggrieved at this dismissal on his appeal by the ld. CIT(A). Sh. O.P. Shukla, Advocate (hereinafter referred to as the ld. AR) appearing on behalf of the assessee submitted that in fact the income of the assessee during the year was only Rs. 1,75,908/- which was below a taxable limit and therefore, no taxes had been deposited or any income furnished. However, the assessee had got its account audited by the Chartered Accountant on or before the due date. The only reason that the same had not been furnished was on account of the Circular No. 3/2009 which stated that the same should be furnished if and when called for by the ld. Assessing Officer. When the ld. Assessing Officer had issued a notice under section 148, then the assessee had filed a return and alongwith the said return, she had filed a copy of her audit report. The mistake was not that of the assessee. The provisions of Circular No. 3/2009 were quite clear where the accounts had been audited on time, the penalty under section 271B could not be levied. Furthermore, various Courts had held that the assessee could not be penalized on account of the failure of the counsel. Accordingly, it was prayed 5

ITA Nos.72 & 74/VNS/2025 Nirja Agrawal A.Ys. 2013-14 & 2012-13 that there was no basis for the penalty under section 271B and therefore, the penalty levied should be quashed. 5. On the other hand, Sh. Deepak Yadav, Sr. DR (hereinafter referred to as the ld. DR) pointed out that these issues had already been addressed by the ld. CIT(A). He pointed out that there was no evidence on record to suggest that the audit had in fact been completed by 30.09.2013. The audit report could always have been prepared at a later date and back dated to suit the assessee. The ld. Sr. DR pointed out that an essential condition of Circular No. 3/2009 was that the details with regard to the audit report should be filled out in the relevant columns of the return forms on the basis of such report and that the return should be filed on time. However, in the instant case, the assessee had not filed any return of income under section 139(1) and therefore, had not adhered to these basic conditions as laid down in the said Circular. She could not therefore, claimed to be benefited under the said Circular on this account. As regards, the plea that, the return could not be filed due to the negligence of the counsel, the assessee had not submitted any proof in this regard and in fact her stance was contradictory. On the one hand, she had taken the plea before the lower authorities that there was a mistake on the part of the counsel and was now stating that she was not obliged to file the return because her income was below the taxable limits. Either way, this does not absolve her from fulfilling her obligations under section 44AB and therefore, the penalty under section 271B should be confirmed. 6. We have duly considered the facts and circumstances of the case and the arguments advanced by both parties. Section 44AB requires a person carrying on a business if his total sales, turnover or gross receipts, as the case may be in the business exceeds Rs. 1 Crore to get his accounts audited before

ITA Nos.72 & 74/VNS/2025 Nirja Agrawal A.Ys. 2013-14 & 2012-13 the specified date and to furnish by that date the report of such audit in the prescribed form duly signed and verified by such Accountant setting forth such particulars as may be prescribed. This condition of furnishing the audit report before the due date of the filing of the return has been waived by the Circular No. 03/2009 to the extent that if a return is filed before the due date in which the columns are filled up on the basis of such audit report, then the assessee need not furnish the audit report alongwith the return of income but could furnish it later when demanded by the ld. Assessing Officer and in such circumstances, penalty under section 271B would not be imposed. However, we note that in the case of the assessee, no return has been furnished at all. The assessee has first taken the plea (below the lower authorities) that this was on account of the failure of his counsel who was supposed to file the return, but no evidence in this regard has been furnished at any level to bear this out. Before us, it has been contended that since the assessee did not have income above the minimum limit that was taxable, she was not obliged to file her return. Be that as it may, if the assessee did not file a return in which the columns were filled up in accordance with the audit report obtained by her before the due date of the filing of the return, then she could not claim the benefit of Circular No. 3/2009. As per the provisions of section 44AB, she would be required to furnish the report to the ld. Assessing Officer or be liable for penalty under section 271B. In view of the fact that the assessee has neither furnished the audit report nor furnished a return of income before the due date of filing of returns, in which the columns were filled up in accordance with such audit report, it is held that the penalty under section 271B was leviable on the assessee and has rightly been imposed by the ld. Assessing Officer. Accordingly, the penalty is upheld and the appeal of the assessee is dismissed.

ITA Nos.72 & 74/VNS/2025 Nirja Agrawal A.Ys. 2013-14 & 2012-13 7. In the result, both ITA No. 74/VNS/2025 and ITA No. 72/VNS/2025 are dismissed. Order pronounced on 16.10.2026 in the Open Court. Sd/- Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16/10/2026 Sh Copy forwarded to: 1. Appellant – 2. Respondent – SHAMS Digitally signed by SHAMSHAD HAD HUSAIN 3. CIT DR, ITAT Date: 2026.10.21 HUSAIN 15:19:40 +05'30' 4. CIT, 5. The CIT(A) By order Sr. P.S.