Murugesh Shantveerya Hiremath Vs DCIT (ITAT Pune)
Income Tax Appellate Tribunal (ITAT) Pune ruled in favor of Dr. Murugesh Shantveerya Hiremath, setting aside a ₹1,50,000 penalty imposed under Section 271B of the Income Tax Act. The penalty was initially levied due to the delayed submission of the tax audit report for Assessment Year 2018-19. The assessee, a cardiologist, had gross professional receipts exceeding the audit threshold but failed to submit the audit report within the due date. The delay stemmed from the Income Tax Department impounding key financial records during a survey in 2017, making it impossible to finalize accounts on time. Additionally, the Chartered Accountant handling the audit ceased practice, further delaying the process. The ITAT accepted these as valid reasons, concluding that the delay was beyond the assessee’s control.
The tribunal cited legal precedents, emphasizing that penalties under Section 271B should not be imposed when there is a reasonable cause for non-compliance. It noted that financial records for the previous year (2016-17) had to be finalized before auditing the subsequent year, making timely compliance unfeasible. By applying the principles from a similar case, APL (India) Pvt. Ltd. vs. JCIT, ITAT Pune ruled that the penalty was unjustified and directed its removal. The ruling reinforces that procedural delays beyond an assessee’s control should be considered before imposing penalties, ensuring fairness in tax compliance enforcement.
