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Facts
The assessee filed her income tax return for AY 2017-18 on 09.02.2018, which was after the due date of 07.11.2017, along with the Tax Audit Report (TAR). The assessee's turnover exceeded Rs. 34 lakhs, making a TAR mandatory under Section 44AB. The Assessing Officer (AO) initiated penalty proceedings under Section 271B for the belated filing.
Held
The Tribunal noted that the TAR was filed before the assessment order was passed, and the delay in filing was due to the assessee's mother's serious illness and subsequent demise, which caused her significant personal distress and inability to concentrate. The Tribunal considered this a technical breach and a reasonable cause, not a deliberate omission.
Key Issues
Whether penalty under Section 271B is leviable when the Tax Audit Report is filed belatedly but before the completion of assessment, and there exists a reasonable cause for the delay.
Sections Cited
44AB, 271B, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI S.S. VISWANETHRA RAVI, HON’BLE & SHRI S. R. RAGHUNATHA, HON’BLE
आदेश /O R D E R
PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18, vide order dated 21.05.2024.
The assessee has raised the following grounds of appeal: 1. The order of CIT(A) is bad in law and liable to be set aside in toto.
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2. The CIT(A) erred in upholding the penalty levied u/s.271B of the IT Act, 1961 without appreciating the facts and circumstances of the case.
3. The CIT(A) having taken note of the fact that the Return of Income along with Audit Report had been filed before completion of assessment, ought to have deleted the penalty in toto.
4. The CIT(A) failed to appreciate the fact that there was a reasonable cause in not filing the Audit Report within the due date as contemplated under the provisions of the IT Act, 1961, ought to have deleted the penalty in toto. 5. The CIT(A) erred in not appreciating the settled position of law that no penalty u/s.271B can be levied if the Audit report is filed before the completion of assessment and there being a reasonable cause in not filing the Audit Report. 6. Any other grounds that may be adduced at the time of hearing.
Brief facts relevant for levy of penalty u/s.271B of the Act, are that the assessee is an individual and had filed her return of income for AY 2017-18 on 09.02.2018, whereas, she had to file the return of income along with Tax Audit Report (hereinafter in short "TAR") on or before 07.11.2017, since the assessee’s turnover for the impugned A.Y. was Rs.34,39,57,229/- and was liable to be get her accounts audited by a Chartered Accountant U/s.44AB of the Act. The AO found that the assessee had belatedly filed return of income along with the TAR only on 09.02.2018 for AY 2017-18 and therefore, having violated the provisions of Sec.44AB of the Act, he initiated penalty u/s.271B of the Act for AY 2017-18 on :-3-: ITA. No:1684/Chny/2024 02.12.2021 and thereafter, not satisfied with the reply of the assessee levied penalty of Rs.1,50,000/- for A.Y. 2017-18 by order dated 31.05.2022.
Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who was pleased to confirm the penalty. Aggrieved, the assessee is in appeal before this Tribunal.
We have heard both the parties and perused the material available on record. We find that the assessee had belatedly filed the return of income along with TAR for AY 2017-18 on 09.02.2018 and the Assessment Order u/s.143(3) of the Act was passed on 03.12.2019 for AY 2017-18 by accepting the returned income as assessed Income, which means the TAR was filed well before the assessment was framed u/s.143(3) of the Act for AY 2017-18; which means, the TAR was available with the AO before the Assessment Order was framed for AY 2017-18. Thus, we find that the non-filing of the TAR before the due date i.e., 07.11.2017 (AY 2017-18) was a technical breach; and undisputedly, the assessee filed the TAR along with the return of income on 09.02.2018 for AY 2017-18 and that the assessment was framed by the AO only on 03.12.2019 for :-4-: ITA. No:1684/Chny/2024 AY 2017-18 on which date undisputedly TAR was very much available on the file of the AO. In such a scenario, the explanation of the assessee that the TAR was belatedly filed due to illness of assessee’s mother who was suffering from cancer acutely for about 8 months from March 2016 and died on 10/11/2016. Hence, the assessee could not concentrate on the accounts for about one year as the assessee had to attend her mother totally till her demise and thereafter the assessee was also mentally sick due to demise of the mother. Therefore, there was no deliberate omission on the part of the assessee which on the peculiar facts of the case as explained by the assessee is found to be reasonable; and therefore, we are of the considered opinion that this is not a fit case for imposing penalty on the assessee and for such preposition, we rely on the decision of the Hon’ble Madras High Court in the case of P.Senthil Kumar v. CIT reported in (2019) 416 ITR 336 (Mad.)(HC) and also the decision of the Tribunal Cuttak Bench in the case of Sibonarayan Patro & Bros Vs. ITO [1998] 67 ITD 1 (CTK).
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