Sahana Jewellery Exports Private Limited Vs ITO (ITAT Chennai)
Penalty u/s 271B Deleted for Delay in Audit Report Due to Managing Director’s Illness: ITAT Chennai Grants Relief
The Chennai Bench of the ITAT allowed the assessee’s appeal for AY 2016-17 and deleted the penalty of ₹1.50 lakh levied under Section 271B for delayed furnishing of audit report under Section 44AB. The assessee, a private limited company engaged in jewellery business, had filed its tax audit report on 11.01.2017, beyond the extended due date of 17.10.2016, leading the Assessing Officer to levy penalty which was upheld by the NFAC–CIT(A).
Before the Tribunal, the assessee demonstrated that its Managing Director, aged about 68 years, was bedridden during the crucial period due to illness, as evidenced by a medical certificate. Since the company was closely held and statutory compliances were supervised by the Managing Director, his sudden medical exigency prevented timely filing. The ITAT held that such circumstances clearly constitute “reasonable cause” within the meaning of Section 273B.
Observing that the delay was neither deliberate nor contumacious, that the audit report was ultimately furnished, and that penalty provisions being quasi-criminal cannot be applied mechanically, the Tribunal set aside the CIT(A)’s order and directed deletion of the penalty. The appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
