SHRI T. MUNIAPPAN,,KARUR vs. ACIT, CENTRAL CIRCLE - 2,, TRICHY

The appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-19, Chennai dated 23.06.2019 relevant to the assessment year 2013-14.

Facts are, in brief, that the assessee is an individual and carrying on business of trading of bus body materials in the name of M/s. Om Muruga Traders and deriving income from lorry hire charges. The assessee filed his return of income belatedly on 01.01.2015 by declaring total income of ₹.32,74,930/- and completed the assessment under section 143(3) of the Income Tax Act, 1961 [“Act” in short] dated 31.12.2015.

Subsequently, the Assessing Officer initiated penalty proceedings. The case of the Assessing Officer is that as per the provisions of section 44AB of the audit report ought to have been filed on or before 30.09.2013, whereas, the assessee has filed the audit report only on 29.11.2014. For the delay in filing the audit report under section 44AB of the Act, penalty notice under section 271B of the Act has been issued calling explanation of the assessee. After considering the explanation of the assessee, the Assessing Officer noted that there is a delay of fifteen months in filing the audit report. Since the assessee has not given any satisfactory reply and the assessee has not discharged its onus of proof with evidences for the inordinate delay of fifteen months in filing the audit report, the Assessing Officer levied penalty under section 271B of the Act at ₹.1,50,000/-. On appeal, the ld. CIT(A) confirmed the penalty levied by the Assessing Officer.

Against confirmation of penalty levied under section 271B of the Act, the assessee is in appeal before the Tribunal. By reiterating the submissions as made before the ld. CIT(A), the ld. Counsel for the assessee prayed for deleting the penalty levied under section 271B of the Act.

On the other hand, the ld. DR supported the orders of authorities below.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the Department has conducted a search in the assessee’s premises and the firms in which the assessee is a partner. Before the ld. CIT(A), the assessee has submitted the reasons for the delay in filing the audit report that this being the first year in which the income tax assessment of the assessee and the compulsory audit provisions under section 44AB of the Act are attracted. It was further submitted that the assessee was able to get the search proceedings completed only in the month of March, 2013 for the assessment years 2007-08 to 2011-12 and mainly due to this, the assessee’s filing of subsequent year’s return of income got delayed. Further, it was submitted that nearly more than 170 firms in which the assessee was a partner in most of the firms were also subjected to search and survey along with the search proceedings in the case of the assessee and therefore, finalizing the accounts and filing the return of income got delayed. The above explanation given by the assessee was neither disputed by the Assessing Officer nor the ld. CIT(A). On perusal of the appellate order, we find that the Department has conducted a search under section 132 of the Act on 11.11.2010 and the search related assessments were completed in all the cases on 28.03.2013. The Department has seized the books of account and other records of the assessee and all the firms at the time of search in the middle of financial year 31.03.2011. It is also a fact that the assessee filed the return of income belatedly only on 01.01.2015 for the assessment year 2013-14. It is also a fact that the assessee is also a partner in various firms, wherein, search was conducted and books of accounts were taken under the custody of the Department. The delay was caused due to search conducted by the Department and the books of accounts are not readily available with the assessee. Under the above facts and circumstances, the delay was occurred, in our opinion, the delay in filing the audit report was neither wilful nor wanton or inadvertently, it was only beyond the control of the assessee. From the above facts, it is clear that there is a reasonable cause for the delay in filing the audit report within time by the assessee. Therefore, imposing penalty under section 271B of the Act for belated filing the audit report is unwarranted and not reasonable. We find that both the authorities below have not considered the explanations of the assessee. In view of the above, we set the order passed by the ld. CIT(A) and penalty levied under section 271B of the Act stands cancelled.

In the result, the appeal filed by the assessee is allowed. Order pronounced on 11th January, 2022 at Chennai.