Loading judgment…
Facts
The assessee filed the return of income and tax audit report with a delay of 15 days. Penalty proceedings under Section 271B were initiated for the delayed filing of the tax audit report. The assessee claimed the delay was due to the accountant's ill health.
Held
The Tribunal held that the ill health of the accountant, supported by medical evidence, constituted a reasonable cause for the delay in filing the tax audit report. Since the report was obtained before the extended due date, the levy of penalty could not be sustained.
Key Issues
Whether the delay in filing the tax audit report due to the accountant's ill health constitutes a reasonable cause for avoiding penalty under Section 271B of the Income Tax Act.
Sections Cited
143(3), 271B, 44 AB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”, HYDERABAD
Before: SHRI K. NARASIMHA CHARY & SHRI MADHUSUDAN SAWDIA
आदेश / ORDER PER K. NARASIMHA CHARY, J.M: Aggrieved by the order dated 11/09/2024 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (“learned CIT(A)”), in the case of Venkateswara Rao Vaditya (“the assessee”), assessee preferred this appeal.
Assessee is running a petrol bunk. For the assessment year 2017-18 2. he filed the return of income along with the tax audit report with a delay of 15 days, namely, on 21/11/2017 whereas the extended due date was 7/11/2017. Assessment under section 143(3) of the Income Tax Act, 1961 (for short “the Act”) was complete by order dated 20/12/2019 with an addition of ₹ 1,07,280/- and the assessee paid the taxes thereon. Subsequently penalty proceedings under section 271B of the Act were initiated in respect of the 14 days in filing the tax audit report under section 44 AB of the Act. Assessee pleaded that the tax audit report was in fact obtained on 12/10/2017 from the Chartered Accountant, but subsequently due to the health of the accountant of the assessee the same could not be uploaded in time. Assessee pleaded that the moment the accountant recovered from the ill health, ITR and the tax audit report for filed on 27/11/2017.
Both the authorities, namely, learned Assessing Officer and the learned CIT(A) are of the opinion that since the lapse is admitted, the liability of the assessee under section 271B of the Act is crystallized in terms of section 44 AB or section 271B of the Act and there is no escape of the assessee from the liability of penalty.
Learned AR submitted that the ill-health of the accountant of the assessee, as is evidenced by the prescription and medical certificate, produced before the learned CIT(A), constitutes a sufficient reason for the delay in filing the audit report in time, whereas the Form 3CB clearly shows that the same was obtained on 12/10/2017 well within the time. He submitted that the cause could be considered by the authorities, and the penalty proceedings could have been dropped, but the authorities did not to get the things in the proper perspective.
He placed reliance on the view taken by a coordinate Bench in the case of M/s Suryavathi Gandiboina vs. ACIT in /Hyd/ 2023 for the assessment year 2017-18 by order dated 24/3/2023 and M/s
Page 2 of 4 Virudhunagar District Co-Operative Consumer’s Cooperative Stores Ltd vs. ITO in by order dated 29/12/2020 wherein it was held that ill-health of the key person constitutes sufficient reason and the availability of the same before the date of completion of the assessment proceedings should also be considered.
Learned DR placed heavy reliance on the orders of the authorities below and submitted that the letter of law requires compliance with the provisions and any failure to comply with the same will automatically ensue the consequences and therefore, the authorities are justified in levying and upholding the penalty.
We have gone through the record in the light of the submissions made on either side. It could be seen from the record that the assessee produced the medical certificate relating to his accountant supported by prescription, before the learned CIT(A) and the copies thereof are produced by way of paper book in this appeal. Learned CIT(A) did not think it was suitable to verify the veracity of these documents, but he proceeded on the basis of the undisputed fact that the ITR and the tax audit report were filed on 21/11/2017 whereas the extended due date for filing the same was 7/11/2017 resulting in a delay of 14 days. According to the learned CIT(A) in respect of the reason for delay, the delay itself automatically ends up in levy of penalty. Though learned CIT(A) recorded that there is no dispute about the fact that the audit report was not obtained before the specified date and the assessee failed to comply with the requirements of law, the Form 3CB produced before the learned CIT(A) clearly shows that it was obtained on 12/10/2017, which is well before the extended date to file the same along with ITR.
In the authorities cited at bar by the learned AR it is clearly held that the ill health of the person concerned, which caused the delay in filing the tax audit report, constitutes reasonable cause and once it is proved the levy of penalty could be avoided. Undisputedly the tax audit report is Page 3 of 4 available on record before the date of completion of assessment proceedings. The very fact that it was obtained on 12/10/2017, well within the time of extended due date shows that there is no deliberate conduct on the part of the assessee insofar as the delay in filing the same is concerned. In the circumstances, while following the decisions relied upon by the learned AR, we are of the considered opinion that there was a reasonable cause on the part of the assessee in not being able to furnish the tax audit report well within time allowed for filing of the same, and therefore, the levy of penalty cannot be sustained. We answer the ground accordingly.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on this the 6th February, 2025.