ACCU GRINDWAYS,BANGALORE vs. ITO, BANGALORE

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ITA 1300/BANG/2015Status: DisposedITAT Bangalore27 July 2016AY 2008-094 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the delay in obtaining the audit report and filing the return was due to the death of a partner, which constituted a reasonable cause. Therefore, the penalty imposed under Section 271B was deleted.

What were the facts?

The assessee declared 'nil' income for AY 2008-09. The AO initiated penalty proceedings under Section 271B for belated audit report and filing of return, as the turnover exceeded the threshold for mandatory audit.

What were the issues?

Whether the delay in obtaining and filing the audit report, due to the death of a partner, constitutes a reasonable cause for not imposing penalty under Section 271B.

Which sections of the Income-tax Act were involved?

Section 271B,Section 44AB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, BANGALORE

Before: SHRI SUNIL KUMAR YADAV & SHRI INTURI RAMA RAO

For Appellant: Shri Anil Kumar,CA
For Respondent: Shri C.N.Bipin, JCIT(DR)
Hearing: 04/07/2016Pronounced: 27/07/2016

O R D E R Per INTURI RAMA RAO, AM :

This is an appeal filed by the assessee directed against the order of the CIT(A), Bangalore-3, Bangalore, dated 29/07/2015 for the assessment year 2008-09.

2.

Briefly, facts of the case are that the assessee-company filed return of income for the assessment year 2008-09 on 29/11/2008 declaring ‘nil’ income. Assessment u/s 143(3) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for Page 2 of 4 short] was completed at ‘nil’ income. During the course of assessment proceedings, the AO noticed that the assessee- company had declared turnover of Rs.1,65,47,579/- for the year under consideration. Therefore, AO was of the opinion that the assessee-company was required to get books of account audited and submit report u/s 44AB of the Act on or before 30/09/2008. However, the AO noticed that the accounts were audited on 16/10/2008 and the report was filed on 29/11/2008. Therefore, the AO had initiated proceedings under the provisions of section 271B and accordingly the assessee-company was show caused vide his letter dated 22/11/2010. In response to this, assessee- company has submitted that the audit report was obtained on 16/10/2008 and the due date for filing return of income was 31/10/2008. It was further submitted that even return of income was submitted belatedly i.e. on 29/11/2008. The AO brushed aside the explanation of the assessee-company and imposed penalty of Rs.82,379/- vide order dated 9/5/2011 passed u/s 271B of the Act.

3.

Being aggrieved, an appeal was preferred before the CIT(A), who vide impugned order dismissed the appeal. It was contended before the CIT(A) that the delay was on account of death of one of the partners of the firm viz. M.Ramaiah on 29/9/2008. In support of this, death certificate issued by the Registrar of Birth & Death was also filed. But the CIT(A) rejected

Page 3 of 4 this explanation by saying that the fact of death of M.Ramaiah was not mentioned before the AO.

4.

Being aggrieved, assessee is before us in the present appeal.

4.1 We heard rival submissions and perused the material on record. In the present case, the issue is whether the AO was justified in levying penalty of Rs.82,379/- u/s 271B of the Act. There is a variation in the explanation tendered by the assessee- company before the AO and the CIT(A). Before the AO, the assessee-company merely stated that it was under mistaken assumption that due date for filing of return was 31st October and therefore, the audit report could not be obtained before 30/09/2008 whereas before the CIT(A) it was stated that delay in obtaining audit report had occurred on account of death of one of the main partners viz., Mr.Ramaiah. There is no dispute about death of partner Ramaiah. In the given circumstances, we have to adjudicate the validity of penalty imposed. Even without going into the explanation offered by the assessee-company, there are judicial precedents to the effect that if the audit report is filed before completion of assessment proceedings, it would be sufficient compliance with requirement of obtaining and filing of audit report. Obviously, in this case, audit report was filed before completion of assessment proceedings. Mere fact that audit report was obtained belatedly has no impact on the assessment

Page 4 of 4 proceedings. Furthermore, explanation tendered by the assessee-company that death of one of the partners has caused delay cannot be un-believed. In the circumstances, we are of the considered opinion that it is not a fit case for levy of penalty of Rs.82,379/- u/s 271B of the Act. Therefore, we direct the AO to delete penalty of Rs.82,379/-.

5.

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

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