No Escape from 271B Penalty if Audit Report Not Signed in Time: ITAT Lucknow

Moqeetur Rahman Khan Vs ITO (ITAT Lucknow)

Blaming Auditor Won’t Save You – ITAT Upholds Penalty for Delay in Furnishing Tax Audit Report; No Escape from Section 271B Penalty if Audit Report Not Signed in Time, Rules ITAT Lucknow

Lucknow ITAT confirmed the levy of penalty u/s 271B  holding that failure to get the accounts audited &  to furnish the audit report within the prescribed time cannot be excused merely by blaming the Chartered Accountant for delay in e-filing.

Assessee, engaged in derivative trading, had a turnover declared at ₹43.60 crore in Form 10DB &  ₹11.28 crore in his ITR. Since the turnover exceeded the threshold limit prescribed u/s 44AB,  Assessee was required to obtain &  furnish a tax audit report. AO noticed that no audit report was filed by the due date &  accordingly levied penalty of Rs 1,50,000 u/s 271B.

Before  CIT(A),  Assessee contended that the accounts had in fact been audited on 31.10.2018, which was within the extended due date prescribed by CBDT. It was argued that the delay occurred only because the Chartered Accountant failed to upload the audit report in time &  such lapse constituted a reasonable cause covered by section 273B.  CIT(A) however found that the audit report was digitally signed only on 27.01.2022, which clearly showed that it was not completed within the statutory time limit. Since the plea of CA’s negligence was not raised during the assessment stage but only before the appellate authority, it was treated as an afterthought. The penalty was therefore confirmed.