M/S.RAMRAJ AND COMPANY,KANNUR vs. ITO, KANNUR

Shri R. Krishnan, CA represented the assessee and Shri V. Roy Jose, CIT- DR represented Revenue.

It was the submission of the learned A.R. that the assessee runs a petrol bunk. It was submitted that due date for filing the return for 2017- 18 was 30.09.2017. The return was filed for the relevant assessment year on 28.02.2018 along with audit report. It was the submission that as there was delay of nearly 5 months, the AO levied penalty under Section 271B of the Act to the extent of Rs.1,50,000/-. It was submitted that the assessee’s return was taken up for scrutiny and no addition had been made. It was submitted that the delay in getting the accounts audited for the 2 M/s Ramraj and Company immediately preceding year lead to the delay in getting the accounts audited for the relevant assessment year and the consequential filing of the same along with the return. It was submitted that the audited accounts for the immediately preceding assessment year was completed on 14.12.2017 and within two months, on 27.02.2018 audit of the accounts for the relevant year also got completed. It is prayed that the reasonable cause may be accepted and the penalty be cancelled.

In reply the learned D.R. vehemently supported the orders of the AO and the CIT(A). It was the submission that the purpose of Section 271B of the Act was to ensure that the accounts are audited within time which in effect affects the transparency of the return filed. It was submitted that the delay of earlier years normally shows the conduct of the assessee.

We have considered the rival contentions. A perusal of the penalty order clearly shows that the due date in the assessee’s case was 07.11.2017 as mentioned by the AO. However, the audit report has been obtained only on 27.02.2017, i.e. delayed by nearly 3 months. A perusal of the penalty order also shows that the audited report for the immediately preceding assessment year was completed on 19.12.2017 and filed along with the return on 27.02.2018. The audit report for the relevant assessment year was completed on 03.01.2018 which is within a short period of about 2 months from the completion of the audit for the immediately preceding assessment year. Completion of audit for immediately preceding year was also completed after the due date for the relevant assessment year. In these circumstances we are of the view that the assessee has reasonable cause for delay in obtaining audit report for the relevant assessment year and its delayed filing along with the return of income for the relevant assessment year. As we find that there is reasonable cause for the delay, the penalty as levied by the AO and as confirmed by the learned CIT(A) is cancelled in view of the provisions of Section 273B of the Act.