M/S. IN CONSTRUCTIONS PRIVATE LIMITED,JAMMU vs. INCOME TAX OFFICER WARD- 1 (2), JAMMU

Brief fact of the case is thatthe penalty was levied u/s 271B for delay filing of tax audit report for assessment year 2016-17 by contravening section 44AB of the Act. The penalty was levied amount of Rs.81,843/- against the assessee.

The ld. AR filed a written submission which is kept in the record. The ld. AR first placed that the assessee company filed its audit report for assessment year 2016-17 on dated 22.03.2018 beyond the due date because the fact that it went into litigation with one on its major client namely M/s Simula Infra Pvt. Ltd. (Paradise Avenue). The litigation was necessitated due to the fact that a cheque amounting to Rs. 73,00,000/- issued by M/s Simula Infra Pvt. Ltd., got dishonoured as the payment was stopped by the drawer and the client refused to clear the pending dues. The copy of the complaint, cheque and dishonoured instrument are duly filed in APB 1 to 4. The ld. AR claimed that the tax audit report was completed within due date i.e. 30.09.2016 but due to the litigation and in hazardous condition the tax audit was filed in delay.

The ld. DR argued and fully relied on the order of the revenue authorities and invited our attention in para 5.3 page 4 of the appeal order which is annexed as below: “5.3 Grounds of Appeal Nos. 2 & 5: In these grounds, the AR has contended that the AO has levied the penalty u/s 271B on account of the fact that the assessee did not submit the audit report within the specified date in the prescribed form duly signed and verified by the accountant as provided u/s 44AB of the Income Tax Act, 1961. During the appellate proceedings, the AR submitted that the assessee company filed its Audit Report for AY 2016-17 on 22.03.2018 which was beyond the due date as it went into litigation with one of its major clients namely M/s. Simula Infra Pvt. Ltd. The AR further submitted that the assessee company had submitted his books of accounts to the Auditor and the audit was completed well before the due date i.e. 30.09.2016 but the assessee company erred in filing the tax audit report belatedly on 22.03.2018 because of the distraction created by the litigation with Simula Infra Pvt. Ltd. The wordings of the section 44AB are very clear in this regard and the assessee is required to fulfil both the conditions i.e. to get the accounts audited and to furnish by the specified date,

We heard the rival submission and relied on the documents available in the record. The assessee completed the tax audit within the due date. But the assessee filed the tax audit report before the authority with a delay which is contravening of section 44AB of the Act. The assessee filed a proper reason for delay in filing tax audit report. In factual matrix the assessee was suffering a financial exigency with legal battel. In our consider view, this is a sufficient reason for delay in filing the tax audit report before the authority which follow the Section 273B of the Act.