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Facts
The assessee was levied a penalty of Rs.1,50,000 under Section 271B for the Assessment Year 2018-2019 due to the late submission of the audit report. The assessee contended that there was a reasonable cause for the delay (son's illness) and the report was filed before the assessment was completed, but the CIT(A) upheld the penalty.
Held
The Tribunal found that the audit report was submitted before the completion of assessment, and the illness of the assessee's son constituted a reasonable cause under Section 273B of the Act for the delay. Therefore, the Tribunal deleted the penalty levied under Section 271B.
Key Issues
Whether a penalty under Section 271B for late submission of an audit report is leviable if the report is filed before assessment completion or if there is a reasonable cause for delay, such as family illness, falling under Section 273B.
Sections Cited
271B, 273B
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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Inturi Rama Rao & Shri Prakash Chand Yadav
O R D E R
Per Prakash Chand Yadav, JM :
The present appeal of the assessee is arising from the order of the National Faceless Appeal Centre / learned Commissioner of Income-tax (Appeals) [“CIT(A)” for short] dated 26.11.2024, having DIN & Order No.ITBA/NFAC/S/250/2024- 25/1070655447(1) and relates to the assessment year 2018- 2019.
The solitary issue involved in this appeal is levy of penalty u/s.271B of the Act. The department has levied the penalty of Rs.1,50,000 on the ground that the assessee failed to submit the audit report within the time prescribed by the CBDT. The . Vadakkekarayil Ramakrishnan Nair Surendran Nair. submissions of the learned Counsel for the assessee are (a) there was a reasonable cause for the delay in filing the audit report, (b) the audit report was filed before the completion of assessment on 1st July 2020 and hence no penalty is leviable, and (c) the penalty levied is barred by limitation, if the limitation period would be reckoned from the date of assessment order, i.e., 1st July 2020. The CIT(A) has affirmed the view of the AO discarding the submissions of the assessee.
Aggrieved with the order of the CIT(A), the assessee has come up in appeal before us and reiterated the submissions made before the authorities below.
The learned DR relied upon the orders of the authorities below.
After considering the rival submissions, we are of the view that this is a case where audit report has been submitted before the completion of assessment and hence in our view the penalty cannot be levied in such cases. The second aspect of the matter is that the assessee was not able to file the audit report as he was busy with the illness of his son, which constituted a reasonable cause and hence no penalty is leviable on this count also. It is pertinent to refer here to the decision of this bench on the same set of facts in the case of Attinkara Electronics in (order dated 01.03.2019) wherein it has been held that ill health of a partner was a reasonable cause within the meaning of
In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 26th day of May, 2025.