GOPINATH PALANI,CHENNAI vs. ITO, NCW08(2), CHENNAI

This appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals) (NFAC) Delhi [CIT(A)] dated 22.08.2025 for Assessment Year 2017-18.

Brief facts of the case are that the assessee instituted appeal before the ld.CIT(A) against the penalty imposed u/s271B of the Act. On further appeal to Gopinath Palani 2 ld.CIT(A), the ld. CIT(A) dismissed the appeal the ld. CIT(A) dismissed the appeal holding that the assessee failed to holding that the assessee failed to furnish the audit report within time prescribed time limit under section 44AB of it report within time prescribed time limit under section 44AB of it report within time prescribed time limit under section 44AB of the Act. He further holds that the has not shown any reasonable cause u/s 273B the Act. He further holds that the has not shown any reasonable cause u/s 273B the Act. He further holds that the has not shown any reasonable cause u/s 273B of the Act. Aggrieved, assessee is in appeal before Aggrieved, assessee is in appeal before this Tribunal.

Before us, the ld. Counsel for the ld. Counsel for assessee submitted that reason for delayed furnishing of report was furnishing of report was on account of assesssee’s very close relative was on account of assesssee’s very close relative was hospitalizes and he had to take ca hospitalizes and he had to take care of them. The ld.DR relied upon the order of The ld.DR relied upon the order of the ld.CIT(A) and pleaded for the dismissal of the appeal the ld.CIT(A) and pleaded for the dismissal of the appeal.

We have heard the rival submissions and perused We have heard the rival submissions and perused We have heard the rival submissions and perused the record. The interaction between Sections 273B and 44AB of the Income Tax Act, 1961 interaction between Sections 273B and 44AB of the Income Tax Act, 1961 interaction between Sections 273B and 44AB of the Income Tax Act, 1961 highlights an important balance in tax law between strict compliance and equity. highlights an important balance in tax law between strict compliance and equity. highlights an important balance in tax law between strict compliance and equity. Although Section 44AB requires c Although Section 44AB requires certain taxpayers to undergo a mandatory tax ertain taxpayers to undergo a mandatory tax audit, the penalty prescribed under Section 271B for non audit, the penalty prescribed under Section 271B for non- -compliance is not imposed automatically. Section 273B acts as a safeguard by permitting relief imposed automatically. Section 273B acts as a safeguard by permitting relief imposed automatically. Section 273B acts as a safeguard by permitting relief from penalties where the assessee can establish that there w from penalties where the assessee can establish that there w from penalties where the assessee can establish that there was a “reasonable cause” for failing to comply with the audit obligation. cause” for failing to comply with the audit obligation.

In the case of Lakshmi Lakshmi Card Clothing Manufacturing Co. (P.) Ltd. vs. Card Clothing Manufacturing Co. (P.) Ltd. vs. Deputy Deputy Commissioner Commissioner of of Income-tax Income tax [2013] [2013] 35 35 taxmann.com taxmann.com 235 235 (Madras)/[2013] 216 Taxman 112 (Madras) (Mag.)/[2013] 353 ITR 544 (Madras)/[2013] 216 Taxman 112 (Madras) (Mag.)/[2013] 353 ITR 544 (Madras)/[2013] 216 Taxman 112 (Madras) (Mag.)/[2013] 353 ITR 544 (Madras)[15-06-2011], the he Jurisdictional High Court ruled that a delay in filing High Court ruled that a delay in filing the tax audit report could be excused due to the illness of the auditor. This e tax audit report could be excused due to the illness of the auditor. This e tax audit report could be excused due to the illness of the auditor. This Gopinath Palani 3 highlighted that the reasonable cause can extend to key professional personnel highlighted that the reasonable cause can extend to key professional personnel highlighted that the reasonable cause can extend to key professional personnel whose health issues directly impact the compliance timeline. whose health issues directly impact the compliance timeline.

Hence, respectfully following the Hence, respectfully following the Jurisdictional High Court High Court judgment, we are of the view that the reason given by the assessee are of the view that the reason given by the assessee is a sufficient cause sufficient cause for not filing the audit report before the extended due date for filing the Tax Audit audit report before the extended due date for filing the Tax Audit audit report before the extended due date for filing the Tax Audit Report i.e; 07.11.2017. i.e; 07.11.2017. Therefore, we delete the penalty imposed by the AO penalty imposed by the AO u/s.271B of the Act.

In the result, appeal of the assessee is allowed. In the result, appeal of the assessee is allowed.