Case Law Details
Vrinda Sales P. Ltd Vs ITO (ITAT Delhi)
The issue under consideration is whether CIT(A) is correct in levying penalty under Section 271B for not auditing books of accounts/ furnishing reports of the audit of books of accounts on the due date of filing Income Tax Return (ITR)?
ITAT states that, in the instant case, they find that the assessee was required to get his books of accounts audited on or before the due date of filing of the return of income. There was no relaxation in getting the books of account audited by a Chartered Accountant and relaxation was given only for furnishing the Tax Audit Report. The penalty u/s 271B can be levied for either not getting books of account audited before the specified date or for not furnishing the audit report before the specified date. The requirement of furnishing the audit report before the specified date has been dispensed with for the relevant assessment year. But , the Assessing Officer emphasized only on the fact Audit Report was not furnished on or before the due date of filing of return of income. He did not examine whether the books of account were audited before the due date of return of Income. He has even not verified authenticity of the Audit Report from the Chartered Accountant, whose name is appearing on the Audit Report. The AO has not verified the records of the Chartered Accountant like, register of dispatch of Audit Report or team member engaged in Audit, records on the basis of which report was prepared, correspondence or comment of the assessee on the deficiencies pointed out by the team etc. In the Audit Report in clause 28(a), detail of opening stock, closing stock, purchase & sales has been given by the Tax Auditor. The AO has even not verified whether these details have been incorporated by the assessee in return of Income filed by the assessee on 06.11.2017. As the AO has failed in his duty in verifying whether books of account were audited before the specified date and only emphasized on the fact of furnishing the audit before the specified date , ITAT do not find any reason for confirming the penalty levied u/s 271B of the Act. The Ld CIT(A) has insisted for obtaining the Audit report before the specified. We find that word “obtain before” has been susctitued in section 44AB by the word “ furnish by” w.e.f 1-7-1995 and therefore for the relevant obtaining the report before the specified date is not relevant. In view of the above discussion, ITAT set aside the order of the learned CIT(A) and delete the penalty of Rs. 1.00 lakh levied by the AO u/s 271B of the Act for violation of the provisions of section 44AB of the Act. In the result, the appeal filed by the assessee is allowed.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessee is directed against order dated 08/04/2019 passed by the learned CIT(Appeals)-9, New Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2010-11 in relation to levy of penalty by the Assessing Officer for not auditing books of accounts/ furnishing report of audit of books of accounts on or before due date of filing return of income. The grounds raised by the assessee are reproduced as under:
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