MADAPATTU MUHAMMED,PALAKKAD vs. ITO, WARD 1 & TPS, PALAKKAD

& SA No. 39/Coch/2024 Madapattu Muhammed 2. Brief facts of the case are that the assessee is an individual engaged in the business of dealing in hardware, paints and glass. The return of income for AY 2018-19 was filed on 05.01.2019 disclosing income of Rs. 4,28,250/-. Against the said return of income assessment was completed by the Income Tax Officer, Ward 1, Palakkad (hereinafter “the AO”) and it was found during the course of assessment proceedings that the turnover for the relevant assessment year was Rs. 2,81,73,410/- and, therefore, the provisions of section 44AB of the Income Tax Act, 1961 (the Act) are applicable. The AO found that the prescribed audit report in Form 3CD was not filed within the stipulated period provided in the Act but was filed on 01.01.2019. The AO also found certain discrepancies in the audit report filed and accordingly the audit report was treated as defective and incomplete, initiated penalty proceedings u/s. 271B of the Act vide show cause notice dated 31.03.2021. In response to the show cause notice no explanation was filed by the assessee and accordingly a penalty of Rs. 1,50,000/- was levied vide order dated 29.12.2021 passed u/s. 271B of the Act.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.

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

When the appeal was called none appeared on behalf of the assessee nor there any application for adjournment. Therefore, we proceed to dispose the appeal after hearing the ld. Sr. DR.

After hearing the learned Sr. DR and pursuing the written submission filed by the assessee, we are of the considered opinion that it is not a fit case for & SA No. 39/Coch/2024 Madapattu Muhammed levy of penalty, inasmuch as, no prejudice is caused to the department on account of belated submission of the tax audit report, as returned income was accepted by department. Further, we note that the assessee cannot be held liable for the mistakes and lapses committed by the tax auditor. Therefore, we direct the AO to delete the penalty of Rs. 1,50,000/- levied u/s. 271B of the Act.

Since the quantum appeal of the assessee is disposed of, the stay application becomes infructuous, hence dismissed.

In the result, the appeal filed by the assessee is allowed and the stay application is dismissed.