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Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI KULDIP SINGH & SHRI OM PRAKASH KANT
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 17.04.2022 passed by the National Faceless Appeal Centre, Delhi (the Ld. First Appellate Authority) in relation to penalty order for non-furnishing of audit reports which was required in terms section Abha Rajesh Kapoor 2 ITA No. 1655/M/2022 44AB of the Income Tax Act, 1961 (in short ‘the Act’). The grounds the Income Tax Act, 1961 (in short ‘the Act’). The grounds the Income Tax Act, 1961 (in short ‘the Act’). The grounds raised by the assessee are reproduced as under: raised by the assessee are reproduced as under:
1. On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in the law, the learned CIT (A) has erred in confirming the law, the learned CIT (A) has erred in confirming the law, the learned CIT (A) has erred in confirming penalty of Rs 150000/ imposed by the A penalty of Rs 150000/ imposed by the AO under section O under section 271B of the Act ignoring the reasonable cause as to 271B of the Act ignoring the reasonable cause as to 271B of the Act ignoring the reasonable cause as to uploading of tax audit report required login id, password uploading of tax audit report required login id, password uploading of tax audit report required login id, password and digital signature of the tax auditor which was not and digital signature of the tax auditor which was not and digital signature of the tax auditor which was not possible after the tax auditor passed away on possible after the tax auditor passed away on possible after the tax auditor passed away on 05/06/2014 and it was a fit c 05/06/2014 and it was a fit case for waiver of penalty ase for waiver of penalty u/s 273B of the Act. u/s 273B of the Act.
On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in the law, the learned CIT (A) has erred passing the the law, the learned CIT (A) has erred passing the the law, the learned CIT (A) has erred passing the appellate order against the appellant without adhering appellate order against the appellant without adhering appellate order against the appellant without adhering to the principles of natural justice. e principles of natural justice. 2. Facts in brief of the case are that the assessee was engaged in Facts in brief of the case are that the assessee was engaged in Facts in brief of the case are that the assessee was engaged in Future & Options transactions in the share market having total Future & Options transactions in the share market having total Future & Options transactions in the share market having total turnover of ₹98.49 crores. The assessee filed a return of income in 98.49 crores. The assessee filed a return of income in 98.49 crores. The assessee filed a return of income in the year under consideration on 31.07.2014 declaring total in the year under consideration on 31.07.2014 declaring total in the year under consideration on 31.07.2014 declaring total income of ₹50,000/-. The scrutiny assessment u/s 143(3) of the Act was . The scrutiny assessment u/s 143(3) of the Act was . The scrutiny assessment u/s 143(3) of the Act was completed on 28.12.2016. During the assessment proceedings, the completed on 28.12.2016. During the assessment proceedings, the completed on 28.12.2016. During the assessment proceedings, the Abha Rajesh Kapoor 3 ITA No. 1655/M/2022 Assessing Officer observed that gross receipt on account of Assessing Officer observed that gross receipt on account of Assessing Officer observed that gross receipt on account of sales/turnover of the assessee was of sales/turnover of the assessee was of ₹98,49,90,283/ 98,49,90,283/-. However, no statutory audit u/s 44AB of the Act was carried out or filed by the statutory audit u/s 44AB of the Act was carried out or filed by the statutory audit u/s 44AB of the Act was carried out or filed by the assessee. Accordingly assessee. Accordingly, he initiated penalty proceedings and after he initiated penalty proceedings and after issuing show cause notice to the assessee issuing show cause notice to the assessee, levied a penalty of levied a penalty of ₹1,50,000/-.
Aggrieved, the assessee filed appeal be Aggrieved, the assessee filed appeal before the Ld. CIT(A) and fore the Ld. CIT(A) and sought relief from the penalty on the relief from the penalty on the ground of reasonable cause for reasonable cause for not uploading audit repo not uploading audit report on the website of the Income rt on the website of the Income-tax Department. It was submitted on behalf of the assessee Department. It was submitted on behalf of the assessee Department. It was submitted on behalf of the assessee that the tax audit report for assessment year 20 audit report for assessment year 2014-15 was obtained from 15 was obtained from auditor M/s Manmohan Ka M/s Manmohan Kalra & Associates however, due to demise however, due to demise of Sh. Manmohan Kalra, who was proprietor of the firm of Sh. Manmohan Kalra, who was proprietor of the firm of Sh. Manmohan Kalra, who was proprietor of the firm subsequently, the report could not be uploaded , the report could not be uploaded. According to the . According to the assessee, this constitute a reasonable cause for n constitute a reasonable cause for not uploading ot uploading audit report on the Income report on the Income-tax Portal within the stipulated period. ax Portal within the stipulated period.
Abha Rajesh Kapoor 4 ITA No. 1655/M/2022 However, the Ld. CIT(A) rejected the contention of the assessee and However, the Ld. CIT(A) rejected the contention of the assessee and However, the Ld. CIT(A) rejected the contention of the assessee and held that if the assessee could file return of income on 31.07.2014, held that if the assessee could file return of income on 31.07.2014, held that if the assessee could file return of income on 31.07.2014, which was almost two months after the which was almost two months after the demise of the demise of the Tax Auditor, nothing prevented the assessee from nothing prevented the assessee from uploading the tax audit report uploading the tax audit report alongwith the return with the return of income on the Income-tax portal. The Ld. ax portal. The Ld. CIT(A) rejected the claim of reasonable cause and accordingly CIT(A) rejected the claim of reasonable cause and accordingly CIT(A) rejected the claim of reasonable cause and accordingly, he upheld the penalty levied by the Assessing Officer. upheld the penalty levied by the Assessing Officer.
Before us, none attended on behalf of the assessee despite Before us, none attended on behalf of the assessee despite Before us, none attended on behalf of the assessee despite notifying and therefore, the appeal notifying and therefore, the appeal was heard ex ex-parte qua the assessee after hearing the argument of Ld. Departmental after hearing the argument of Ld. Departmental after hearing the argument of Ld. Departmental Representative (DR). ).
We find that the issue We find that the issue-in-dispute is whether there was any dispute is whether there was any reasonable cause for failure on the part of the assessee in reasonable cause for failure on the part of the assessee in reasonable cause for failure on the part of the assessee in uploading the Tax Audit Report Tax Audit Report on the Income-tax portal. In terms of section terms of section 44AB, the assessee was required to audit and upload a 44AB, the assessee was required to audit and upload a 44AB, the assessee was required to audit and upload audit report
Abha Rajesh Kapoor 5 ITA No. 1655/M/2022 along with return of income. Penalty u/s 271B of the Act is leviable along with return of income. Penalty u/s 271B of the Act is leviable along with return of income. Penalty u/s 271B of the Act is leviable if the assessee fails in in auditing its books of accounts if turnover its books of accounts if turnover is more than the prescribed limit or fails in uploading the said more than the prescribed limit or fails in uploading the said more than the prescribed limit or fails in uploading the said audit report. On perusal of the order of t On perusal of the order of the Ld. CIT(A), we find that he Ld. CIT(A), we find that he has rejected the demise of Tax Auditor as reasonable cause in not rejected the demise of Tax Auditor as reasonable cause in not rejected the demise of Tax Auditor as reasonable cause in not uploading the Tax Audit Report on portal of the Income uploading the Tax Audit Report on portal of the Income uploading the Tax Audit Report on portal of the Income-tax Department. This fact of the demise of the tax auditor has not been This fact of the demise of the tax auditor has not been This fact of the demise of the tax auditor has not been controverted by the Revenue controverted by the Revenue. In such circumstances failure on the such circumstances failure on the part of the assessee to upload tax audit part of the assessee to upload tax audit report without assistance of report without assistance of a Tax Auditor constitute a reasonable cause. It is not the case that constitute a reasonable cause. It is not the case that constitute a reasonable cause. It is not the case that accounts were not audited. The assessee has already filed a copy of accounts were not audited. The assessee has already filed a copy of accounts were not audited. The assessee has already filed a copy of tax audit report before the Ld. CIT(A). In our opinion, demise of the rt before the Ld. CIT(A). In our opinion, demise of the rt before the Ld. CIT(A). In our opinion, demise of the tax auditor constitute a reasonable cause in not uploaded the tax tax auditor constitute a reasonable cause in not uploaded the tax tax auditor constitute a reasonable cause in not uploaded the tax audit report on Income audit report on Income-tax Portal within the stipulated period. The tax Portal within the stipulated period. The penalty levied by the Assessing Officer and sustained by the Ld. penalty levied by the Assessing Officer and sustained by the Ld. penalty levied by the Assessing Officer and sustained by the Ld. CIT(A) is deleted in view of reasonable cause under section 273B of in view of reasonable cause under section 273B of in view of reasonable cause under section 273B of Abha Rajesh Kapoor 6 ITA No. 1655/M/2022 the Act. The grounds of appeal raised by the assessee are . The grounds of appeal raised by the assessee are . The grounds of appeal raised by the assessee are accordingly allowed. accordingly allowed.
In the result, the appeal filed by the assessee is allowed. In the result, the appeal filed by the assessee is allowed. In the result, the appeal filed by the assessee is allowed.