Chinnayellappa Chandrashekar Vs ITO (ITAT Bangalore)
When the tax audit report was made available to AO before completion of the assessment proceedings, then for technical venial breach without any malafide intention, penalty cannot be levied u/s 271B of the Act.
In a recent ruling by the Income Tax Appellate Tribunal (ITAT) Bangalore, the court deliberated on the imposition of penalty under Section 271B of the Income Tax Act, 1961, for a technical breach concerning the late filing of an audit report. The case, Chinnayellappa Chandrashekar Vs. ITO, was brought before the tribunal after the appellant, a business owner, was penalized by the National Faceless Appeal Centre (NFAC) for failing to submit the required tax audit report within the stipulated time.
The assessment year in question was 2017-18. The appellant had filed his return of income on March 30, 2019, reporting a taxable income of Rs. 13,56,930. However, the audit report, which is mandated under Section 44AB of the Income Tax Act for individuals with a business turnover exceeding Rs. 1 crore, was filed late. The due date for the audit report was extended to October 31, 2017, but the appellant had only completed the audit on March 30, 2019. In light of this delay, the Assessing Officer (AO) initiated penalty proceedings under Section 271B for not adhering to the deadline.
