Shark Dyeing Mills Vs ITO (ITAT Chennai)
Reasonable Cause Saves Assessee: Penalty u/s 271B Deleted for Delay in Filing Audit Report
The Chennai Bench of the ITAT, in Shark Dyeing Mills v. ITO (AY 2018-19), deleted the penalty of ₹1.50 lakh levied under section 271B for delay in furnishing the tax audit report. The Tribunal accepted the assessee’s explanation that its operations were severely disrupted due to liquidation proceedings before the NCLT and the prolonged illness and subsequent death of the partner managing accounts.
The ITAT held that these circumstances constituted “reasonable cause” within the meaning of section 273B. It further noted that the audit report was filed before completion of the assessment and was duly considered by the Assessing Officer, resulting in no loss to the Revenue. Treating the lapse as a venial breach, the Tribunal set aside the penalty and allowed the appeal
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 01.08.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2018-19.
2. The order of the First Appellate Authority (FAA) is emanating from the order of the AO imposing penalty u/s.271B of the Act amounting to Rs.1,50,000/-.
