VORA HOME MAKERS P LTD,MUMBAI vs. ASST CIT 9(3), MUMBAI

Rival contentions have been heard and record perused.

The facts in brief are that during the year under consideration, Assessee has filed his return electronically on 28/09/2012. In the course of the assessment, AO found that assessee has not filed audit report alongwith return, therefore, levied penalty under Section 271B for not having the books of account audited in time. The assessee Company, in 2 response to the said notice has furnished following reply through its Authorised Representative, M/s AJ.Kanakia & Co. Chatered Accountants: "As per CBDT Circular No 912006 dated 1011012006, wherein it has been stated that in a case where return is filed electronically, the assessee would not be required to file any document physically, (including tax - audit report). Thus, the circular clearly mentioned that in case of return filed electronically, the obligation of the assessee was limited to gets the report of audit before the due date of filing return of income and retain the said report with itself and such report could be filed during the course of assessment proceedings. Since, assessee had gets its accounts audited on 28/0912011, no penalty can be levied u/s 271B of the Income Tax Act, 1961." However, AO did not agree with the assessee’s contention and observed that assessee has filed its return of income on 28/09/2012 which was due for filing on or before 30/09/2011 without enclosing Audit Report.

By the impugned order CIT(A) confirmed the action of the AO against which assessee in further appealed before us.

Learned AR placed on record copy of CBDT Circular dated 10/10/2006 and also copy of judicial pronouncements of Co-ordinate Bench to the effect that alongwith return filed electronically, the audit report is not required to be filed with the return but at the time of assessment.

On the other hand, learned DR relied on the order of the authorities below.

We have considered the rival contentions and found that issue under consideration is squarely covered by the decision of the Mumbai Bench in the case of B.D.Leasing & Finance Ltd., in ITA No.7355/MUM/2010 vide order dated 04/01/2013, where in the tribunal deleted the penalty imposed u/s.271B after observing as under:- “5. We have heard both parties and their contentions have carefully been considered. The facts stated above are not in dispute. The return has been filed by the assessee by electronic media on 31/3/2008. The return filed by the assessee is belated return. For late filing the return, the AO had also initiated penalty proceedings 3 under section 271F of the Act. The assessee stated the reasonable cause as being under financial constrains. No penalty has been stated to be levied under section 271F of the Act. The penalty for failure to file audit report alongwith return of income is described in section 271B of the Act. According to section 271B if assessee fails to get its account audited in respect of any previous year or furnished report of such audit as required under section 44AB the AO may direct that such person shall pay by way of penalty, and the sum should not exceed Rs. 1.00 lac or ½ % of the total sale / turnover/ gross receipts. Under section 273B penalty cannot be imposed in certain cases, which inter-alia include sections 271B and271F, if assessee is able to prove that there was a reasonable cause for the said failure. In the present case assessee vide letter dated 25/6/2009 has pleaded before the AO that it was not under obligation to file the audit report and such contention of the assessee was supported by the aforementioned circular the relevant portion of which has already been produced in the above part of this order. In the aforementioned circular it has been clearly mentioned that in a case return is filed electronically the obligation of the assessee was limited to get the report of audit before the due date of filing the return and retain the said report with the assessee itself and such report in original could be filed during the course of assessment proceedings. The assessee in the present case has obtained the audit report before due date of filing the return. As the return was filed electronically even though the said return was belatedly filed, the assessee was not under an obligation to submit the audit report which can be submitted during the course of assessment proceedings. The assessee is supported by aforementioned circular. In any case, default of the assessee is only technical default and the assessee is saved by the provisions of section 273B of the Act as reliance on the aforementioned circular can be considered to be a reasonable cause for the alleged failure.

The above decision was followed by ITAT-Indore Bench in the case of Navbharat Powerloom Cooperative Society Limited vide its order dated 10/04/2013.

Applying proposition of law laid down in the above judicial pronouncements, we do not find any merit for imposition of penalty. Though undisputedly audit report was obtained on 28/09/2011 and the same was filed during the course of scrutiny of assessment proceedings, there was no requirement to furnish the copy of the audited account and tax audit report before the due date. The