M/S.HOTEL ROYAL,KOZHIKKODE vs. THE ITO, KOZHIKKODE

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ITA 70/COCH/2021Status: DisposedITAT Cochin15 March 2022AY 2014-153 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal accepted the assessee's explanation for the delay, citing the departure of the accountant and the need to make alternate arrangements. Considering this was the first year of exceeding the turnover threshold and the audit report was available during assessment, the penalty was deleted.

What were the facts?

The assessee, M/s. Hotel Royal, appealed against a penalty levied under Section 271B for delayed filing of the audit report for AY 2014-15. The penalty was imposed due to a delay of over 34 months in submitting the audit report required under Section 44AB.

What were the issues?

Whether the delay in filing the audit report was due to a reasonable cause, and if so, whether the penalty under Section 271B should be deleted.

Which sections of the Income-tax Act were involved?

Section 271B,Section 44AB

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN

Before: Shri George Mathan, JM & Shri M.Balaganesh, AM

Hearing: 15.03.2022Pronounced: 15.03.2022

This appeal filed by the assessee against the order of the CIT(A), Kochi-3, dated 03-02-2021, in appeal No.CIT(A), Kozhikode/10174/2018-19 for the AY.2014-15 against the confirmation of penalty levied u/s.271B of the Income Tax Act, 1961 (Act).

2.

None represented on behalf of the assessee. However, adjournment letter has been filed and the same stands rejected. Smt. J.M.Jmunna Devi, Sr.DR appeared on behalf of Revenue.

3.

A perusal of the facts of the present case shows that the AO has levied penalty u/s.271B of the Act on account of delay in filing the audit report. In the statement of facts before the Ld.CIT(A), the assessee has mentioned that while completing the assessment accepting the return of income, the AO has imposed maximum penalty of Rs.1,50,000/- u/s.271B of the Act. The penalty has been imposed for the delay in submitting audit report u/s.44AB of the Act and for not filing the audit report. Thus, basically, penalty has been levied for not filing audit report within the specified time. In the statement of facts, the assessee has mentioned that the accountant had to collect details from different branches situated at different places which had taken some time and compile the same and to get audited and the delay was caused due to the absence of the accountant, who had left the job without any notice and little time was consumed for making alternate arrangement.

4.

In reply, the Ld.DR submitted that there was a delay of more than 34 months. It was the submission that since the delay is un- reasonable and without a reasonable cause, the penalty was rightly confirmed by the Ld.CIT(A).

5.

We have considered the rival submissions. Admittedly, the audited report has been filed along with the return of income even before the assessee has mentioned the reason that the part time accountant, had left the job without any notice and little time was consumed for making alternate arrangement. Further, it is noticed that the FY.2013-14 was the first year the assessee’s turnover exceeded Rs.1 Crore as is mentioned by the Assessing Officer in his penalty order. As the reasonable cause as submitted by the assessee has not been found to be false, and also on account of the fact that the audit report was available with the AO at the time of hearing of the assessment, in view of the decision of the Hon’ble High Court of Madras in the case of CIT Vs. A.N.Arunachalam reported as 208 ITR 481 (MAD) and also taking into consideration the fact that the AY.2013-14 was the first year in which the assessee’s turnover exceeded Rs.1 Crore and normally it will take some time for the assessee to get the same into proper order, the reasonable cause explained by the assessee is accepted and the penalty u/s.271B of the Act as levied by the AO and confirmed by the Ld.CIT(A) stand deleted.

6.

In the result, the appeal of assessee is allowed.

Dictated and pronounced in the open court on 15th March, 2022

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