M/S JAYCHAND LAL BACHHRAJ,KOLKATA vs. ITO, WD-3(1), MALDA, MALDA

Therefore, the only issue is to be decided as to whether the CIT-A was justified in confirming the impugned penalty imposed u/s. 271B of the Act in the facts and circumstances of the case.

Brief facts of the case are that the assessee is a firm and filed its e-return declaring his total income at Rs.1,91,380/-, wherein the AO found that the gross turnover of the assessee is of Rs.8,39,92,521/- and for not filing the Tax Audit Report ( In short TAR) u/s. 44AB of the Act along with the said return within time, the AO initiated the penalty proceedings u/s. 271B of the Act by issuing a notice to the assessee. In response to such notice, the assessee filed a letter on 03-11-2014 along with a declaration of the Chartered Accountant and copy of Form No. 3CD stating its the CA was entrusted to upload the copy of TAR. But, however, the CA did not upload it as its staff failed to follow his instructions. The AO found that the submissions of the assessee in not filing the TAR is a mere excuse and being not satisfied with the same, he imposed a penalty u/s. 271B of the Act @ 0.5% of Rs.8,39,92,521/- i.e. Rs.4,19,962/- .But, however, he restricted the same to Rs.1,50,000/-.

Before the CIT-A, the assessee contended that the assessee obtained the TAR on 25-07-2013 before filing e-return on 29-07-2013 and was in impression that his Chartered Accountant would upload the same, but, unfortunately, the staff of the CA stated to have been not uploaded the same within time. The said failure is not intentional nor wanton and it is a bonafide mistake and sought to cancel the impugned penalty of Rs. 1,50,000/-.

The CIT-A considering the submissions of the assessee and the AO and the material available on record observed that it is the responsibility of the assessee to ensure in filing the TAR along with the return of income on or before the due date of filing of the same u/s. 44AB of the Act. Since the assessee failed to do so, the CIT-A confirmed the impugned penalty imposed u/s. 271B of the Act.

Before us the ld.AR of the assessee submits that it is the first year that filing of TAR is came into effect along with the return. He also submits that though the assessee got his audited accounts before filing of the return, but, however, due to negligence of a staff of the Chartered Accountant of the assessee the TAR could be uploaded in time. The staff of the CA failed to do so. He also referred to pages 23-25 of the paper book and argued that the Chartered Accountant intimated the assessee that he will upload the TAR and further asked the assessee to proceed the filing of return of income. Thereby the assessee was impression that the TAR will be uploaded in time. He further submits that there is reasonable cause for not filing the TAR along with the return of income as mandated u/s. 44AB of the Act. In support of the contention, the ld.AR placed his reliance on the order of Jaipur Bench, ITAT Jaipur in A.Y 2013-14 and argued that the TAR is filed belatedly, which is valid as the assessee got the same in time and prayed to cancel the impugned penalty imposed by the AO and confirmed by the CIT-A.

On the other hand, the ld.DR has relied on the orders of the authorities below.

Heard rival submissions and perused the relevant material on record. It is not disputed that the assessee did not get its accounts audited before the due date of filing of the return. It is also observed that the assessee obtained TAR prior to the date of filing of return i.e. on 25-07-2013, but, due to negligence of a staff of the CA of the assessee, the TAR could not be uploaded along with the return. It is also not in dispute that the CA by an affidavit declared that he undertook that he will upload the same before the due date of filing of the return. But, unfortunately, due to said reason the TAR could not be uploaded within time specified u/s. 44AB of the Act. The order of the ITAT, Jaipur in the case of supra, on which the assessee relied upon, we find that the issue in hand is identical to that of ITA No. 837/JP/2016. In our opinion, there is reasonable cause in not filing the TAR within time by the assessee as it was in the bonafide belief that its Chartered Accountant would upload the same. Beside this, this is first time assessment that the assessee required to file the same within time as specified u/s. 44AB of the Act. Relevant finding of ITAT, Jaipur in the case of supra is reproduced herein below:- “Hence, the penalty should not be levied. In view of the above facts and circumstances of the case, I am of the considered view that the penalty imposed by the lower authorities u/s. 271B of the Act on the assessee is not justifiable as the audit report was to be uploaded by the Chartered Accountants who audited her books of account and the assessee was low educated and she had under bona fide belief that the same had been uploaded in the system developed by the Department. In such a situation, I direct to delete the penalty of Rs.1.50 lacs levied u/s. 271B of the Act. “

In view of above, the imposition and confirmation of penalty of Rs.1,50,000/-is not justifiable in the facts and circumstances of the case. Therefore, the imposition and confirmation of penalty of Rs.1,50,000/- is hereby cancelled. Therefore, the grounds raised by the assessee are allowed on this issue.

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 13-12-2017