CHINNADURAI KUMAR,SETHIYATHOPE vs. ITO, WARD-3,, CUDDALORE

PDF · subscribers
ITA 1106/CHNY/2025Status: DisposedITAT Chennai22 August 2025AY 2011-12Bench: SHRI MANU KUMAR GIRI (Judicial Member), SHRI JAGADISH (Accountant Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had obtained the audit report within the due date and had a reasonable cause for not filing it as the income was below the taxable limit. Therefore, the penalty levied by the Assessing Officer was not justified.

What were the facts?

The assessee, engaged in wholesale trading of paddy, filed an appeal against a penalty levied under Section 271B for failure to get accounts audited and file the return within the prescribed time. The assessee contended that the accounts were audited on time, and the return was not filed as income was below the taxable limit.

What were the issues?

Whether penalty under Section 271B is leviable when the assessee had a reasonable cause for not furnishing the audit report by the due date, especially when income was below the taxable limit.

Which sections of the Income-tax Act were involved?

Section 271B,Section 44AB,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI MANU KUMAR GIRI & SHRI JAGADISH

Hearing: 19.08.2025Pronounced: 22.08.2025

आदेश / O R D E R

PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2011-12 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 18.02.2025.

2.

The effective ground of appeal is against the order of the Ld. CIT(A) in confirming the order of the Assessing Officer (A.O.) in levying penalty of Rs. 1,21,810/- u/s. 271B of the Act for failure to get the accounts audited within the time prescribed u/s. 44AB of the Act.

1.

1. 3. The A.O has levied penalty u/s. 271B of the Act on the ground that the assessee had contract receipts of Rs.2,20,74,420/-, but neither filed the return of income nor got the accounts audited as required u/s. 44AB of the Act. The assessee, however, contended before the A.O. that the books of accounts were duly audited u/s. 44AB of the Act within the stipulated time, but return of income was not filed since the total income was below the taxable limit. The A.O. rejected the explanation observing that the assessee filed the return of income only in response to notice u/s. 148 of the Act on 28.11.2018 and the audit report was not submitted within the prescribed time.

Aggrieved by the same, the assessee preferred an appeal before the Ld. CIT(A), who confirmed the penalty order by holding that the assessee had not produced any evidence to establish that the audit report was submitted to the jurisdictional A.O. within the due date, and therefore, the assessee’s claim could not be accepted.

4.

The learned Authorized Representative (A.R.) of the assessee submitted that the assessee was engaged in the business of wholesale trading of paddy and did not have taxable income for the relevant year. It was further submitted that the assessee had duly got the accounts audited by a Chartered Accountant on 30.09.2011, i.e., within the due date, but the audit report was not filed under Rule 12(2) of the Income-tax Rules, 1962 (“the Rules”) for A.Y. 2011-12, as at that time there was no mandatory requirement to electronically file the audit report along . The Ld. A.R. contended that electronic filing of audit reports became mandatory only from A.Y. 2013-14. It was thus argued that penalty u/s. 271B of the Act was not leviable in the present case.

5.

On the other hand, the learned Departmental Representative (D.R.) relied upon the orders of the lower authorities and submitted that since the assessee had not furnished the audit report within the prescribed due date, the A.O. had rightly levied penalty u/s. 271B of the Act.

6.

We have heard the rival submissions and perused the material available on record. The assessee has filed a copy of Form 3CD dated 30.09.2011 signed by Mr. Rathinasabapathy, Chartered Accountant, to demonstrate that the audit was completed within the prescribed time.

The assessee has explained that the audit report was not filed because his income was below the taxable limit and he was not required to file the return and so the audit report was also not filled, though obtained. On perusal of the records, we find that the assessee had obtained the audit report in Form 3CD on 30.09.2011, i.e., before the due date of filing of return and the income as per Profit & Loss account was Rs 1,59,62 which below the taxable income limit. In view of above, there was reasonable cause for not filling the audit report. We therefore hold that the A.O was not justified in levying penalty u/s. 271B of the Act. Accordingly, the penalty levied is cancelled.

7.

In the result, the appeal filed by the assessee is allowed.

Order pronounced on 22nd day of August, 2025 at Chennai.

More judgments on Section 271B

All 1,993 judgments and leading authorities on Section 271B →

Recent GST High Court judgments

Search GST case law →