HARI GAS SERVICE,MUMBAI vs. INCOME TAX OFFICER 21(1)(4), MUMBAI

The present appeal filed by the assessee firm is directed against the order passed by the CIT(A)-33, Mumbai, dated 31.08.2018, which in turn arises from the order passed by the A.O under Sec. 271B of the Income Tax Act, 1961 (for short ‘Act’), dated 27.02.2015 for A.Y. 2013-14.

Briefly stated, on the basis of information received by the A.O from the office of the Commissioner of income Tax (CPC), that the assessee had failed to file the ‘audit report’ as required under Sec.44AB(a) of the Act, the A.O called upon the assessee to ‘show cause’ as to why penalty under Sec. 271B may not be imposed on it. In reply, it was submitted by assessee, that although the tax ‘audit report’ for the year under consideration i.e A.Y. 2013-14 was obtained within the stipulated time period i.e on 24.09.2013, however, the same on account of technical problems could not be uploaded within the stipulated time period i.e latest by P a g e | Hari Gas Service Vs. CIT(A)-33 31.10.2013. Also, it was the claim of the assessee that the year under consideration was the first year wherein the assessee was obligated to upload the tax ‘audit report’ electronically. Apart therefrom, it was the claim of the assessee that as the staff member who was looking after the e-filing work had been taken unwell, since long, therefore, also for the said reason compliance to the aforesaid statutory obligation could not be carried out as per the mandate of law. However, the A.O after deliberating on the explanation of the assessee was not inclined to accept the same. A.O was of the view, that the claim of the assessee that the tax ‘audit report’ could not be uploaded by the ‘due date’ because of a technical problems did not merit acceptance. Apart therefrom, the A.O observed that though it was the claim of the assessee that its ‘books of account’ had been audited within the stipulated time period, however, in the absence of a copy of the said audit report the said claim could not be accepted. On the basis of his aforesaid observations the A.O imposed a penalty of Rs.1,00,000/- under Sec.271B.

Aggrieved, the assessee carried the matter in appeal before the CIT(A). In the course of the appellate proceedings, it was submitted by the assessee that due to lack of technical knowledge, knowhow requirements and scanty knowledge of law, its staff had though got the tax audit completed by the ‘due date’, however, the electronic filing of the same was delayed. Observing, that the assessee had failed to substantiate its aforesaid claim by leading any documentary evidence, the CIT(A) declined to accept the same and confirmed the penalty imposed by the A.O under Sec.271B of the Act.

The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. It was averred by the Authorized Representative (for short ‘A.R’) for the assessee, that though the accounts were got audited as on 24.09.2013, however, due to technical problems the same could not be uploaded within the stipulated time period i.e latest by 31.10.2013. It was submitted by the ld. A.R, that as there was an inadvertent delay in uploading of the ‘audit report’ which though was obtained within the stipulated time period i.e on 24.09.2013, therefore, considering the said facts the penalty imposed by the A.O under Sec.271B may be vacated.

Per contra, the ld. Departmental Representative (for short ‘D.R’) relied on the orders of the lower authorities. It was submitted by the ld. D.R, that as the assessee had failed to P a g e | Hari Gas Service Vs. CIT(A)-33 substantiate that the delay in filing of the ‘audit report’ within the stipulated time period was on account of a bonafide mistake and not on account of any lapses and laches on its part, therefore, the CIT(A) had rightly upheld the penalty imposed by the A.O under Sec.271B of the Act. It was averred by the ld. D.R, that as the appeal of the assessee was devoid and bereft of any merit, therefore, the same was liable to be dismissed.

We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. Admittedly, the assessee had failed to upload its ‘audit report’ for the year under consideration within the stipulated time period as envisaged in Sec. 44AB(a) of the Act. As per Sec.44AB, the assessee is required to get his accounts audited by an accountant before the specified date i.e the ‘due date’ for furnishing of the return of income under sub-section (1) of Sec.139, and furnish by that date, report of such audit in the prescribed form duly signed and verified by such accountant, therein setting forth such particulars as may be prescribed. On a failure on the part of the assessee to get his accounts audited and furnishing of the report as required under Sec.44AB, would therein renders him liable for penalty under Sec.271B of the Act. As per Section 273B of the Act, no penalty under Sec. 271B shall be imposed on the assessee for failure on its part to comply with the mandate of Sec. 44AB, however, the exception therein carved out casts an obligation upon the assessee to prove that there was a reasonable cause for the said failure. In the case before us, we find, that the assessee except for claiming that the delay in filing of the ‘audit report’ had occasioned on account of technical problems, however, it had neither before the lower authorities nor before us had placed on record any material which could go to substantiate the bonafides of its aforesaid claim. In sum and substance, the aforesaid explanation of the assessee as regards the failure on its part to upload the ‘audit report’ within the stipulated time period as envisaged in Sec.44AB is found to be totally unsubstantiated. Accordingly, we are of the considered view, that as the assessee had failed to come forth with a reasonable cause for the failure on its part to upload the ‘audit report’ within the stipulated time period, therefore, we find no infirmity in the view taken by the lower authorities. Accordingly, finding no justifiable reason to dislodge the well reasoned order of the CIT(A), we uphold the same.

Resultantly, the appeal filed by the assessee is dismissed.