Reasonable cause for failure to submit Tax Audit Report- ITAT deletes Penalty

Air India Air Transport Services Ltd. Vs DCIT (ITAT Mumbai)

We find some force in the submission of assessee that assessee being a Public sector company Act had to submit its audit report in Form 3CA in which report u/s 44AB is required to be submitted for the said purpose. The Tax Audit report u/s section 44AB of I.T. Act has to be provided with copy of statutory audit report alongwith audited P & L Account and balance sheet. The Tax Auditor in the case of assessee whose accounts are required to be audited on any other law will have to commence his work only on the basis of such audited accounts together with information required to be submitted in Form 3CD. Being a public sector unit, the assessee company after completion of statutory audit under Companies Act is required to obtain report by CAG. The assessee accounts for the year ended 31.03.13 were not finalized and audited before the specified dated i.e. 30^th September 2013. The statutory audit was completed only on 23^rd January 2014 and the reports from the CAG was obtained in March 2014, thereafter the tax audit report was undertaken only after April 2014 and the report u/s 44AB was obtained on 17^th September 2014. These facts were stated by the assessee before the AO as well as before Ld. CIT(A).

Considering the totality of the facts of the case, we are of the opinion that there was reasonable cause for the assessee for not getting the accounts audited before the statutory due date. In spite of best effort of the assessee to get it accounts audited and obtained audit report before the specified date, it could not be so due to circumstances beyond its control. Therefore, we are inclined to hold that assessee has shown reasonable cause for its failure to comply with the requirement of section 44AB before the specified date. This being the case, we are of the opinion that this is not a fit case for levy of penalty u/s 271B of the Act. We, therefore, set aside the order of Ld. CIT(A) and quash the impugned penalty order.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

The present Appeal has been filed by the assessee challenging the impugned order dated 27^th February 2019, passed by the Ld. Commissioner of Income Tax (Appeals) – 16 in short refeIreUVHsV „ d.VII J.1IG)^I, Mumbai, dated 04.04.19 for Assessment Year (in short AY) 2013-13. The assessee has raised the following grounds of appeal, which are as under:-

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