SHRI MOHAN VASANTHA KUMARESAN,CHENNAI vs. ITO, CHENNAI

आदेश / O R D E R

PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:

This is an appeal filed by the assessee against the Order dated 07.09.2016 of Commissioner of Income Tax (Appeals)-5, Chennai, in for the AY 2013-14.

ITA No.3068/Mds/2016 :- 2 -:

2.0 All the grounds of the appeal are related to the penalty levied by the Assessing Officer (in short ‘AO’) u/s.271B of Income Tax Act (in short ‘the Act’). The assessee filed the return of income electronically on 26/10/2013 admitting the total income of Rs.9,81,870/-. The assessee required to get his accounts audited and obtain the Audit Report u/s.44AB of Income Tax Act. The AO found that the assessee has not furnished the Audit Report u/s.44AB before the AO before the due date. Therefore, the AO initiated penalty u/s.271B and called for the Explanation of the assessee. The assessee explained that the audit was completed and obtained the Audit Report, the assessee explained before the AO as under:

The assessee in his letter dated 14.10,2015 stated that – “It was not my intention to violate any of the provisions of the income Tax Act and that the accounts were audited u/s.44AB of the Income Tax Act, 1961 and for the year under consideration, my accounts was audited u/s.44AB of the Income Tax Act and obtained Form-3CB & 3CD Report dated 30.09.2013. Based on the Audit Report, I have also filed the return of income on 26.10.2013. Moreover, for the year under consideration, it was for the first time the tax Audit Report had to be filed online and it is technical aspect. The report was not able to be filed even after repeated attempts as there were lots of difficulties. The said forms were modified more than 12 times which created the problem in filing. After coming to my knowledge that the Audit Report was not e-filed, I have taken steps and approached my Auditor and they have also filed the Audit Report on 12.03.2015. As the fault is a technical nature and filing the Report is beyond my control and as it was no fault of him, I request not to levy penalty u/s.271B of the Income Tax Act, 1961”.

3.0 The AO did not accept the explanation of the assessee and imposed the penalty of Rs.1,50,000/- u/s.271B of the Act @ 0.25% of sales.

4.0 Aggrieved by the order of the AO, the assessee went on appeal before the Learned Commissioner of Income Tax (Appeals) (hereinafter referred to as ‘Ld.CIT(A)’) and the Ld.CIT(A) confirmed the penalty imposed by the AO and hence the assessee is in appeal before us.

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5.0 Appearing for the assessee, the Learned Authorized Representative (hereinafter referred to as ‘Ld.AR’) argued that the audit in the assessee’s case was completed before the due date i.e. 30.09.2013 and the assessee obtained the Audit Report before the due date and on the basis of Audit Report the return of income was filed on 26.10.2013 electronically. The assessee filed return of income on 26.10.2013 electronically and the Audit Report was uploaded on 12.03.2015. The Ld.AR further submitted that the Audit Report could not be uploaded because of software problem of the Department. It was the first year of introduction of uploading the Tax Audit Report online and there were technical bugs crept in the software which hindered the uploading of Tax Audit Report and hence the assessee could not upload the Tax Audit Report in spite of making several attempts due to repeated technical problems occurred in the software of the Department. Finally, after making several attempts, the assessee could upload the Tax Audit Report on 12.03.2015. The Ld.AR argued that for the mistake of the department the assessee should not be placed in adverse position. On the other hand, the Learned Departmental Representative (hereinafter referred to as ‘Ld.DR’) argued that though there were certain problems in uploading the Tax Audit Report online, The CBDT has issued directions u/s.119(2)(a) of the Act to furnish the Tax Audit Report manually before the jurisdictional AO before the due date as an alternative remedy and to upload subsequently on or before 31.10.2013. The assessee has neither furnished the Tax Audit Report manually nor uploaded before the ITA No.3068/Mds/2016 :- 4 -: prescribed date and there was a delay in filing the Tax Audit Report and this is a fit case for levying penalty u/s.271 of the Act.

6.0 We heard the rival submissions and perused the material placed before us.

Admittedly, in this case, the Tax Audit Report was uploaded on 12.03.2015 against the due date for filing the Tax Audit Report on 30.09.2013. The assessee stated that the Audit Report was obtained before 30.09.2013 but could not upload the Audit Report due to technical problems in uploading the Audit Report. However, the CBDT has relaxed the norms for uploading the Tax Audit Report electronically and issued guidelines to file the Audit Report before the jurisdictional AO before the prescribed due date. Further, the CBDT also clarified that the Audit Report should be furnished electronically on or before 31.10.2013. For ready reference, we re-produce the relevant guidelines of the CBDT which was discussed in Page No.1 of the Penalty Order extracted for the sake of convenience:

“As per the guidelines/instruction F.No.225/117/2013/ITA.II Dated 26.9.2013 which is reproduced as follows "CBDT in exercise of power u/s.119(2)(a) of the I.T.Act, 1961 read with Sec.139 and Rule 12. has decided to relax the requirement of furnishing the Report of Audit electronically as prescribed under the proviso to sub-rule (2) of Rule 12 of the IT Rules for the Assessment Year 2013-14 as under- (a) The assessees, who are presently finding it difficult to upload the prescribed Report of Audit (as referred to above) in the system electronically may also furnish the same manually before the jurisdictional Assessing Officer within the prescribed due date (b) The said Report of Audit should however be furnished electronically on or before 31.10.2013." Further vide circular/instruction/direction issued by CBDT in No. F. No.225/117/2013/ITA.II Dated 24.10.2013 the CBDT had instructed vide Order u/s.119 of the Income Tax Act, 1961 "In exercise of powers conferred u/s.119 of the Income-Tax Act. 1961. the Central Board Direct Taxes, in continuation to Order u/s119 dated 26.09.2013 in F. No.225/117/2013/ITA.II, hereby directs that in cases where the 'due date' of furnishing reports of audit and corresponding income-tax return was 30th September, 2013 such ITA No.3068/Mds/2016 :- 5 -: reports of audit and returns of income shall be deemed to have been furnished within the 'due date prescribed under section 139 of the Income Tax Act 1961”.

7.0 In the instant case, the due date for furnishing the Tax Audit Report was 30.09.2013 manually before the AO and electronically 31.10.2013.

The assessee has neither furnished the return before the AO within the prescribed time limit nor uploaded electronically before the extended date of 31.10.2013. The Tax Audit Report was uploaded only on 12.03.2015 with a delay of more than 16 months. The Ld.AR could not justify the reasons for delay in uploading the report and also did not justify the reason for non-furnishing the Tax Audit Report before the AO. Therefore, we do not find any error in the CIT(A)’s Order and the same is upheld.

8.0 In the result, the appeal of the assessee is dismissed.

Order pronounced in the Open Court on 17th March, 2017, at Chennai.