S.KIRUBAKARAN,CHENNAI vs. ITO, CHENNAI

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 5, Chennai dated 29.09.2016 for the assessment year 2013-14. The only effective ground raised in the appeal of the assessee is that the ld. CIT(A) has erred in confirming the penalty levied under section 271B of the Income Tax Act, 1961 [“Act” in short].

The appeal of the assessee is found to have been filed late by 53 days before the Tribunal. The assessee filed petition for condonation of delay in filing the appeal in support of affidavit along with medical certificate of the assessee’s Chartered Accountant. By referring to the medical certificate and the petition, the ld. Counsel for the assessee has submitted that the assessee’s C.A. Shri V.V.T. Niraiyyagham, who was preparing the appeal for filing the same before the Tribunal on or before 21.01.2017 against the penalty order passed under section 271B of the Act, which was received by the assessee on 22.11.2016, has been hospitalized and underwent heart surgery. After recovery from his illness, the appeal of the assessee was filed before the Tribunal on 15.03.2017 and thus, by filing the affidavit as well as medical certificate of the C.A., the ld. Counsel for the assessee has pleaded that there was no wilful delay in filing the appeal and prayed for condonation of delay in filing the appeal. We have perused the records and found that there is sufficient cause for delay in filing the appeal. The ld. DR did not object to the plea of the ld. Counsel for the assessee. Accordingly, we condone the delay of 53 days in filing the appeal and admit the appeal for hearing and adjudication.

Brief facts of the case are that the assessee is an individual and engaged in transport contractor, filed his return of income admitting an income of ₹.7,83,360/-. On going through the Profit and Loss account for the year ending 31.03.2013, the Assessing Officer has noticed that the assessee had admitted a turnover of ₹.3,74,72,428/-, which requires the assessee to comply with the provisions of section 44AB of the Act. However, the assessee has not complied with the provisions of section 44AB of the Act and filed the audit report before the Assessing Officer. Accordingly, penalty proceedings were initiated by issuing notice under section 271B of the Act dated 28.08.2014. In response to the above notice, it was the submission of the assessee that “ Due to personal legal issues, we could not upload the tax audit return within the due date and we filed it on 15th June, 2014 and requested to drop the penal proceedings under section 271B of the Act.” After considering the submissions of the assessee, the Assessing Officer observed that the assessee has not complied with the provisions of section 44AB of the Act. Further, the assessee has filed the audit report only on 15.06.2014, which was almost delay by one year and the cause for the delay was not sufficient to drop the penalty proceedings, the Assessing Officer levied penalty under section 271B of the Act at ₹.1,50,000/-.

The assessee carried the matter in appeal before the ld. CIT(A). After considering various submissions of the assessee and by following the decision of the Hon’ble Rajasthan High Court in the case of Madhuban Chemicals & Fertilizers Ltd. v. CIT 157 Taxman 374 (Raj), the ld. CIT(A) confirmed the penalty levied under section 271B of the Act.

On being aggrieved, the assessee is in further appeal before the Tribunal. The ld. Counsel for the assessee has submitted that though the tax audit report was completed on 24.09.2013, the same could not file due to personal legal issues affected the CA of the assessee, being the sufficient cause for the delay in filing the tax audit report before the Assessing Officer, he prayed for deleting the penalty levied under section 271B of the Act. On the other hand, the ld. DR has submitted that if the audit report was completed on 24.09.2013, the assessee should have filed the same atleast manually before the Assessing Officer within the prescribed due date of filing of the same and not done so. Therefore, the assessee has not complied with the provision of section 44AB of the Act and thus, levy of penalty under section 271B of the Act is very much warranted in this case.

We have heard both sides, perused the materials available on record and gone through the orders of authorities below. Since the assessee has admitted turnover of ₹.3,74,72,428/-, the assessee was required to comply with the provisions of section 44AB of the Act. The due date for furnishing the audit report was 30.09.2013. In this case, the assessee has not furnished any valid reason for not filing the audit report on or before 30.09.2013, which was claimed to have been completed on 24.09.2013. Be as it may, there was some problem in uploading the audit report electronically, but, the assessee should have filed the audit report, atleast manually, before the Assessing Officer, which was not done so in this case. Since the C.A. of the assessee has been hospitalized and underwent heart surgery, being a reasonable cause for the delay in filing the appeal, we have very well condoned the delay in filing the appeal and admitted the appeal for adjudication. However, because of personal issues, the C.A. of the assessee could not file the audit report before the Assessing Officer, cannot be held as a reasonable cause for not filing the report within the due date. In this case, since the assessee has not complied with the statutory requirements under section 44AB of the Act, we are of the opinion that the Assessing Officer has validly levied penalty under section 271B of the Act, which was confirmed by the ld. CIT(A). Thus, we find no reason to interfere with the order of the ld. CIT(A) on this issue and accordingly, the ground raised by the assessee is dismissed.

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