Deepak T. Dhanwani Vs ITO (ITAT Chennai)
The case of Deepak T. Dhanwani vs Income Tax Officer (ITO) before the Income Tax Appellate Tribunal (ITAT) Chennai deals with the consequential matters of delay in submission of tax audit reports and ensuing penalties under section 271B. In this case, the delay was attributed to the sudden departure of the accountant responsible for managing the accounts, a circumstance beyond the control of the assessee.
The case commenced with the imposition of a penalty on Dhanwani for the late submission of the Tax Audit Report during the Assessment Year 2018-19. During the appeal, Dhanwani attributed the delay to the unexpected departure of the accountant responsible for the accounts. Despite this explanation, the CIT(A) upheld the penalty, leading Dhanwani to appeal to the ITAT.
After noting the 93-day delay in the appeal process, due to adverse medical conditions faced by the assessee’s wife, the tribunal agreed to condone the delay and proceeded to adjudicate the appeal based on its merits. It emerged that the assessee had furnished the Tax Audit Report along with the return of income filed under section 139(4).
The tribunal referred to a similar case, Shri Ramunaicker Raja vs. ACIT, where it was decided that the circumstances did not warrant a penalty under section 271B. Following this precedent, the tribunal waived the penalty levied on Dhanwani.
The verdict in Deepak T. Dhanwani vs ITO marks a pivotal moment in tax law, considering the accountant’s unavailability as a valid reason for the delay in filing a tax audit report. The case reiterates the importance of assessing individual circumstances while deciding on the levying of penalties. This verdict paves the way for a more empathetic and holistic approach in tax procedures and penalty imposition, setting a substantial precedent for future cases.
