VEE ESS Hardwares Vs ACIT (Kerala High Court)
Kerala High Court held that issuance of notice for imposition of penalty under section 271B for failure to furnish audit report after more than four years of completion of assessment is barred by limitation as per section 275(1)(c) of the Income Tax Act.
Facts- Petitioner is a firm engaged in the business of retail trade of Hardwares and Ceramic Tiles. Consequent to a survey carried out u/s. 133A of the Act, petitioner was assessed to income tax u/s. 143(3) of the Act for the assessment year 2017-18, by an order dated 26.12.2019. In the aforesaid order, though AO specifically observed that proceedings for imposition of penalty u/s. 270A ought to be initiated, there was no reference for initiating proceedings u/s. 271B of the Act.
More than four years later, on 21.03.2024, a notice was issued u/s. 274 of the Act proposing to impose penalty u/s. 271B of the Act, for not filing the audit report in the prescribed form as required u/s. 44AB of the Act for the above referred assessment year. By the impugned order dated 25.09.2024, a penalty of Rs.1,50,000/- was imposed upon the petitioner under the said provision. Consequent demand has also been issued. Petitioner challenges the order imposing penalty contending that it was issued beyond the time limit specified in section 275(1)(c) of the Act.
