DCIT, CHENNAI vs. BEST CAST IT LTD., CHENNAI

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ITA 810/CHNY/2017Status: DisposedITAT Chennai09 June 2017AY 2004-053 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that while filing the audit report is mandatory, the time limit for filing is discretionary. The delay in filing did not jeopardize the determination of taxable income and the CIT(Appeals) rightly relied on a CBDT circular.

What were the facts?

The assessee failed to file the audit report by the due date of 31.10.2004, submitting it instead on 25.10.2005. The Assessing Officer levied a penalty under Section 271B, which the CIT(Appeals) deleted.

What were the issues?

Whether a penalty under Section 271B is attracted solely for delayed filing of the audit report, even when the delay did not prejudice the assessment.

Which sections of the Income-tax Act were involved?

Section 271B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN

For Respondent: Shri A.R. Ahmed Sheriff, FCA
Hearing: 31.05.2017Pronounced: 09.06.2017

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) -1, Chennai, dated 30.01.2017 and pertains to assessment year 2004-05 deleting the penalty levied by the Assessing Officer under Section 271B of the Income-tax Act, 1961 (in short 'the Act').

2.

Smt. Pavuna Sundari, the Ld. Departmental Representative, submitted that the assessee failed to file the audit report within the due date. According to the Ld. D.R., the due date for filing the audit report was 31.10.2004. However, the audit report was filed on 25.10.2005. Therefore, the Assessing Officer levied penalty of `1 lakh. The CIT(Appeals), however, deleted the penalty levied by the Assessing Officer by referring to circular issued by CBDT.

According to the Ld. D.R., the CIT(Appeals) failed to consider the delay in filing the audit report.

3.

We have heard Shri A.R. Ahmed Sheriff, the Ld. representative for the assessee, also. Admittedly, the audit report was filed on 25.10.2005 even though the due date for filing of audit report was 31.10.2004. It is well settled principle of law that the filing of audit report is mandatary but, time limit for the same is discretionary. The audit report is only to assist the Assessing Officer to complete the assessment determining the taxable income.

In this case, determination of taxable income was not jeopardized by non-filing of audit report within the due date. As rightly observed by the CIT(Appeals), merely because the assessee could not file the audit report along with the return of income or within the due date, that alone would not attract penalty under Section 271B of the Act. The CBDT vide its Circular No.3 of 2009 has clarified the same and it was rightly relied on by the CIT(Appeals). This Tribunal is of the considered opinion that the circular issued by the CBDT is binding on all the authorities, therefore, the CIT(Appeals) has rightly deleted the penalty levied by the Assessing Officer under Section 271B of the Act. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

4.

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

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