Case Law Details
R.R. Kapoor Vs ITO (ITAT Pune)
Introduction: In the recent case of R.R. Kapoor vs ITO, the ITAT Pune has ruled in favor of the assessee, setting aside the penalty imposed under Section 271B. The key contention revolved around the delay in filing the audit report, which the tribunal deemed to have a reasonable cause.
Detailed Analysis: R.R. Kapoor admitted to auditing the accounts beyond the due date specified under Section 139(1) of the Income Tax Act. The Assessing Officer (AO) imposed a penalty of Rs.1,50,000 under Section 271B, citing the delayed filing of the audit report.
However, Section 271B is subject to Section 273B, which states that if a “reasonable cause” for non-compliance is established, no penalty should be imposed. The situation involved a change of auditor from the preceding year. The newly appointed auditor sought a no-objection certificate from the earlier auditor, leading to objections and subsequent delays.
Once the objections were resolved, the audit work was promptly undertaken, followed by the filing of the tax audit report and the income-tax return. The Tribunal considered this change of auditor and the subsequent resolution of objections as a reasonable cause for the delayed audit, warranting the withdrawal of the penalty.
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