Makashood Asharaf Vs ITO (ITAT Lucknow)
Section 271B Penalty initiated for Not Auditing Books Invalid if Levied for not furnishing audit report i.e. notice issued on the basis of non-existing infringement is bad in law and cannot be the basis of levy of penalty on another charge
In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Lucknow, has invalidated a penalty imposed under Section 271B of the Income Tax Act. The penalty was initially levied for the failure to submit an audit report on time, even though the assessee, Makashood Asharaf, had already had his accounts audited. The ruling clarifies key issues regarding the imposition of penalties for failure to furnish audit reports.
Case Background
The case revolves around the appeal filed by Makashood Asharaf, an individual involved in the business of wholesale sale and supply of eggs. The dispute arose after the Income Tax Officer (ITO) initiated penalty proceedings against Asharaf for failing to file the audit report (Form 3CB) within the stipulated deadline of September 30, 2016. Despite this, the assessee had obtained the audit report and filed it electronically by March 31, 2017, well before the filing of the return of income. However, the delay in submitting the audit report led to the penalty under Section 271B, which the ITO imposed for non-compliance with the filing timeline.
