SMT. G. PADMINI,CHENNAI vs. ITO, CHENNAI

The assessee has raised several grounds in her appeal, However, the crux of the issue is that ld. CIT(A) had erred by levying penalty under Sec. 271B of the Act for not furnishing audit report under section 44AB of the Act within the stipulated period prescribed under the Act.

The assessee is an individual filed her return of income for the assessment year 2013-14 electronically on 15.10.2013 admitting total income of Rs.4,27,060/-. During the course of the assessment proceedings under section 143(3) of the Act, ld.AO observed that the assessee had not furnished audit report under section 44AB of the Act. When the assessing officer queried the assessee explained that the chartered accountant of the assessee was unable to upload the audit report due to his ill health. The assessee had further replied stating that the audit report was obtained within the due date prescribed under the Act and the same was filed electronically on 20.11.2014 and the manual copy was enclosed along with the reply to the Ld.AO dated 23.12.2014. However, the Ld.AO levied penalty U/s.271B of the Act, because the assessee had not filed the audit report within the due date. On appeal the Ld.CIT(A) agreeing with the view of the Ld.AO confirmed his order.

At the outset, the Ld.AR pointed out that the Chennai Bench of the Tribunal in in the case of Mrs. Muthurajan Padmavathi for the assessment year 2013-14 vide order dated 10.01.2017 had condoned the delay in filing the audit report and thereby directed the Ld.AO to delete the penalty levied U/s.271B of the Act in similar circumstances. Therefore it was pleaded that in the case of the assessee also relief may be granted. The Ld.DR on other hand argued in support of the orders of the Revenue.

We have heard the rival submission and carefully perused the material on record. We find merit in the submission of the Ld.AR. In somewhat similar circumstances on earlier occasion, the Chennai bench of the Tribunal in the order cited herein above had deleted the penalty levied U/s.271B of the Act. The relevant portion of the order is extracted herein below for reference:

“7.We have heard the rival submissions and carefully perused the materials on record. From the facts of the case, it appears that there is no much merit in the contention of the learned Authorized Representative. As stated by the learned Commissioner of Income Tax (Appeals) in his order, the CDBT vide Circular No.F.225/117/2013/ITA.II dated 26.09.2013 had allowed the assessee to file the tax report manually with the jurisdictional officer within the due date of filing of return and thereafter to file the same electronically on or before 31.10.2013. However, the assessee has failed to do so and only e-filed the audit report on 13.01.2015 i.e., after the issue of notice of penalty under section 271B of the Act. However, from further perusing the matter, it appears that the assessee has entrusted the compliance with his authorized representatives and they have failed to comply with the mandatory requirements. In this situation, it would be harsh to levy penalty on the assessee who appears to be a small time trader. Therefore in the interest of justice invoking our powers under section 273B of the Act we hereby direct the learned Assessing Officer to delete the penalty levied under section 271B of the Act in the case of the assessee.”

Since the facts of the case of the assessee is somewhat similar to the facts of the case cited by the Ld.AR, we do not have any hesitation to follow the same decision rendered by us on the earlier occasion. Accordingly we hereby direct the Ld.AO to delete the penalty levied U/s.271B of the Act in the case of the assessee.

In the result, the appeal of the assessee is allowed.