Case Law Details
S. A. Poultry Farms Vs ITO (ITAT Chennai)
Introduction: In the case of S. A. Poultry Farms vs. ITO, the Income Tax Appellate Tribunal (ITAT) Chennai addressed the imposition of a penalty under Section 271B for the failure to upload the income tax return electronically. This article provides a detailed analysis of the case and the reasons behind the ITAT’s decision to delete the penalty.
Detailed Subheading-Wise Analysis:
1. Background of the Case: The appeal by the assessee pertains to the Assessment Year (AY) 2017-18 and arises from the order of the Commissioner of Income Tax (Appeals) [CIT(A)], confirming a penalty under Section 271B for Rs.1.50 Lacs. The penalty had been levied by the Assessing Officer (AO) for the failure to comply with tax audit requirements.
2. Failure to Upload Return Electronically: The assessee, a partnership firm engaged in the poultry farm business, filed its Tax Audit Report electronically in response to a notice under Section 142(1). However, due to technical issues, the return of income could not be uploaded electronically as required by law. The AO, on 22-11-2019, assessed the income on a best judgment basis and imposed a penalty under Section 271B.
3. Appeal and Submissions: In the appellate proceedings, the assessee contended that there was a reasonable cause for the delay in uploading the return under Section 273B of the Income Tax Act. The work had been entrusted to the auditor, and the delay was due to technical issues. However, the CIT(A) upheld the penalty, deeming it mandatory.
4. ITAT’s Decision: The ITAT Chennai considered the facts that the assessee had obtained the Tax Audit Report on 20-08-2017, and it was uploaded electronically on 25-11-2019. The delay in furnishing the return was attributed to technical issues, and the assessee had relied on the auditor for the upload. The ITAT held that this constituted sufficient cause under Section 273B, making it not a suitable case for imposing a penalty.
Conclusion: In the case of S. A. Poultry Farms vs. ITO, the ITAT Chennai deleted the penalty imposed on the assessee for the failure to upload the income tax return electronically. The decision was based on the finding that there was sufficient cause for the delay, as technical issues had hindered the process, and the auditor had been entrusted with the task. This ruling provides clarity on the application of Section 273B in cases of technical glitches affecting electronic filings.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [CIT(A)] dated 29-032023 confirming penalty u/s 271B for Rs.1.50 Lacs. The impugned penalty has been levied by Ld. AO vide order dated 23-06-2021. At the time of hearing, none appeared for assessee. The Ld. Sr. DR submitted that penalty was mandatory in nature and therefore, the impugned order may be confirmed. Having considered material on record, the appeal is disposed-off as under.
2. The impugned penalty stem from the facts that the assessee is a partnership firm carrying on business of running a poultry farm. The assessee, in response to notice u/s 142(1), filed Tax Audit Report dated 20-08-2017 on 25-11-2019 electronically. However, due to technical issues, the return could not be uploaded electronically. The Ld. AO, framed assessment on best judgment basis on 22-11-2019 and triggered impugned penalty u/s 271B for failure to get the accounts audited u/s 44AB. Rejecting assessee’s submissions, Ld. AO levied impugned penalty of Rs.1.50 Lacs.
3. During appellate proceedings, the assessee submitted that there was reasonable cause u/s 273B since the work was entrusted to the auditor. However Ld. CIT(A) held that penalty was mandatory in nature and accordingly, confirmed the impugned penalty. Aggrieved, the assessee is in further appeal before us.
4. We find that the assessee got his accounts audited and obtained Tax Audit Report on 20-08-2017. The same was uploaded electronically on 25-11-2019. However the return of income could not be furnished due to technical issues. The assessee was depended on auditor for uploading of the return along with return of income. Therefore, the same, in our considered opinion, is sufficient cause within the meaning of Sec. 273B and therefore, not a fit case for imposition of penalty. By deleting the impugned penalty, we allow the appeal.
5. The appeal stand allowed.
Order pronounced on 31st August, 2023.
