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Facts
The assessee, engaged in the timber business, failed to file their return of income and get their accounts audited under Section 44AB of the Income Tax Act by the due date for Assessment Year 2017-18. The tax audit report was filed belatedly after the due date, and the return of income was filed only after a notice under Section 142(1) was issued.
Held
The Tribunal held that the assessee failed to establish a reasonable cause for not complying with the mandatory requirement of filing the tax audit report within the due date as per Section 44AB of the Act. The medical certificate produced was considered too distant from the due date and lacked corroboration, making the plea under Section 273B unacceptable.
Key Issues
Whether the assessee had a reasonable cause for non-compliance with the provisions of Section 44AB, and if Section 273B of the Act is applicable for penalty under Section 271B.
Sections Cited
139(1), 142(1), 148, 44AB, 271B, 273B
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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K
Per Laxmi Prasad Sahu, Accountant Member :
This appeal is filed by the assessee against the Order passed by the CIT(A) vide DIN and Order No.ITBA/N FAC/S/250/2025-26/1076392749(1) dated 22.05.2025 challenging the penalty Order passed by the learned CIT(A) under section 271B of the Act.
Briefly stated, the facts of the case are that assessee is engaged in business in the name and style of A. R. Timber at NS13, Main Road, Chennagiri – 577213, Davangere, Karnataka. The case was reopened after issue of notice under section 148 of the Act and the assessee filed return of income. It was noted that the assessee did not file his return of income for the year under consideration u/s 139(1) of the Act. Accordingly, notice under Page 2 of 5 section 142(1) of the Act was issued to the assessee. Subsequently, other statutory notices were issued to the assessee. From the information received it was furnished that for the impugned Assessment Year the turnover of the assessee was Rs.4,95,72,103/- and assessee was required to file tax audit report under section 44AB of the Act before the due date by 07.11.2017 extended by CBDT for the Assessment Year 2017-18. Assessee filed belatedly on 29.03.2019 after the specified dated under section 44AB of the Act. The return was filed by the assessee on 30.03.2019 bearing acknowledgement No.44968071300319. The assessee failed to get the accounts audited or failed to furnish tax audit report as required under section 44AB of the Act. The penalty proceedings under section 271B of the Act initiated on 30.12.2019. Accordingly, notice was issued to the assessee and case was fixed for hearing. Assessee furnished reply. The AO observed that the assessee has not brought anything on record expressing difficulty in filing 44AB report in time. The difficulties faced by the assessee are not in any way hindrance in complying with statutory requirement i.e., filing of 44AB report within the time provided in the law. Assessee did not provide any documentary evidence in support of the illness and even otherwise filing of 44AB audit report within specified time as mandatory and passed the penalty Order under section 271B of the Act for Rs.1,50,000/-.
Aggrieved from the above Order, assessee filed appeal on before the CIT(A). The learned CIT(A) also fixed the case for hearing and assessee filed written submissions on 16.08.2024 which is reproduced in his Order. The learned CIT(A) relied on the judgment of the Co-ordinate Bench in the case of ACIT Vs. Gayatri Traders reported in [1996] 58 ITD 121 HYD. dated 30.04.1996 and he distinguished the judgments relied on by the learned Counsel and confirmed the penalty against which the assessee filed appeal before the Tribunal.
Page 3 of 5 4. The learned Counsel reiterated the submissions made before the lower authorities and he has filed the written synopsis. In addition to the above, he submitted that the assessee had reasonable cause for not complying with the provision of section 44AB of the Act within the specified due date and assessee was advised by the doctor to take rest, was frequently on administration of medication. In this regard he referred to medical certificate issued by Maax Diagnostics issued on 14.06.2017 and affidavit dated 20.06.2025 was produced and requested that penalty may be deleted because section 273B is very much applicable to the case of the assessee.
The learned DR relied on the Order of the lower authorities and he submitted that assessee had turnover of Rs.4.05 Crores and he was required to get his books of accounts audited and has to file within due date specified under section 44AB of the Act but the assessee after laps of period obtained audit report on 29.03.2019 and assessee did not file his return of income. He only filed his return of income after issue of notice under section 142(1) of the Act by the Department. The medical certificate is produced by assessee is dated 14.06.2017 and after that there was long period in between the date of medical certificate and extended due date 07.11.2017 and the medical certificate issued by the doctor which is casual certificate, there is no registration number and there is no follow up action to prove ill health. Therefore there is no reasonable cause to the assessee. He must be aware about income tax proceedings like filing of return of income because his turnover is more than the specified limit as per section 44AB of the Act.
Considering the rival submissions and perusing the entire material available on record and Orders of authorities below, we noted that assessee did not file his return of income u/s 139(1) of the Act in spite of having turnover as prescribed for audit u/s 44AB of the Act. and the books of accounts Page 4 of 5 were not got audited as specified under section 44AB of the Act. When the AO issued notice identifying that assessee is a non-filer, assessee filed return after issuance of notice under section 142(1) of the Act. On 30.03.2019the books of accounts were got audited on 29.03.2019 and filed audit report vide acknowledgment No.448049681290319 dated 29.03.2019. Assessee has taken plea that the assessee had reasonable cause for not getting his books of accounts audited within the due date as per section 44AB of the Act and it comes under section 273B of the Act. In this regard, we found substance on the arguments submitted by the learned DR. Therefore, assessee had no reasonable cause and both the authorities below have not accepted the medical certificate produced by the assessee dated 14.06.2017 is much more before the due date as specified in section 44AB of the Act extended due date is 07.11.2017. There is long gap between these two dates. Therefore the plea taken by the assessee by way of affidavit is not acceptable. Accordingly, assessee could not explain the reasonable cause as per section 273B of the Act. Accordingly, we confirm the penalty levied under section 271B of the Act. The learned CIT(A) has rightly distinguished the case law relied on by the learned Counsel. Accordingly, we confirm the Order of the CIT(A) and dismiss appeal of the assessee.
In the result, appeal filed by the assessee is dismissed.