SHRI PERIYAKARUPPAN CHETTIYAR & CO.,CHENNAI vs. ITO, CHENNAI

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ITA 2573/CHNY/2016Status: DisposedITAT Chennai08 May 2017AY 2013-144 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal, following a previous similar decision, condoned the delay in filing the audit report. It held that levying penalty would be harsh on the assessee, who had entrusted the compliance to their representative.

What were the facts?

The assessee, a partnership firm, failed to furnish its audit report under section 44AB within the stipulated period due to the chartered accountant's ill health. The Assessing Officer levied penalty under section 271B, which was confirmed by the CIT(A).

What were the issues?

Whether penalty under Section 271B is leviable for delayed filing of the audit report when the delay was due to the chartered accountant's ill health and the assessee had entrusted compliance to them.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 271B,Section 273B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY

Hearing: 03.05.2017Pronounced: 08.05.2017

आयकर अपीलीय अिधकरण, ‘सी’ �यायपीठ, चे�ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI �ी एन.आर.एस. गणेशन, �याियक सद�य एवं �ी ए. मोहन अलंकामणी, लेखा सद�य केसम� BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2573/Mds/2016 िनधा�रण वष� / Assessment Year : 2013-14 M/s. Periyakaruppan Chettiyar & Co., v. The Income Tax Officer, C/o. S. Sridhar, Non Corporate Ward 5(4), New No.14, Old No.82, Flat No.5, Chennai. 1st Avenue, Indira Nagar, Adyar, Chennai – 600020. PAN:AAAFP6538Q (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Shri S. Sridhar, Advocate ��यथ� क� ओर से/Respondent by : Shri A.V. Sreekanth,JCIT सुनवाई क� तारीख/Date of Hearing : 03.05.2017 घोषणा क� तारीख/Date of Pronouncement : 08.05.2017 आदेश आदेश /O R D E R आदेश आदेश PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER:

This appeal is filed by the assessee aggrieved by the order of the Ld. Commissioner of Income Tax (Appeals)-5, Chennai in dated 25.05.2016 for the assessment year 2013-14 passed u/s. 271B of the Act.

2.

The assessee has raised several grounds in its 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.

3.

The assessee is a partnership firm engaged in the business of trading in leather, filed its return of income for the assessment year 2013-14 admitting total income of Rs.2,91,580/- against the turnover of Rs.4,64,57,445/-. 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. 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.

4.

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 in other hand argued in support of the orders of the Revenue.

5.

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.”

6.

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.

7.

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

Order pronounced in the court on 08th May, 2017 at Chennai.

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