Tarlok Singh Vs ITO (ITAT Amritsar)
ITAT Amritsar held that non-filing of tax audit report due to technical glitch is the reasonable cause shown. Accordingly, penalty under section 271B of the Income Tax Act not leviable for such non-filing of tax audit report.
Facts- AO has initiated the penalty under section 271B of the Income Tax Act, 1961 for late filing of audit report under section 44AB of the Act against the assessee. AO noted that the gross receipt of the assessee for the year under consideration was Rs. 1,70,27,553/- and hence the assessee was required to get its account audited and liable to file the audit report as required under section 44AB of the Act before the due date. Accordingly, AO has levied minimum penalty of Rs. 1,50,000/- on violation of provisions of Section 271B of the Act for non filing the Tax Audit Report within time as prescribed under the law.
Conclusion- In the present case, the non filing Tax Audit Report before the due date has been a technical glitch and admittedly, the assessee filed the Audit Report under section 44AB. During the course of assessment proceedings and the assessment was framed by the Assessing Officer after considering the Audit Report and statement of account. In our view the explanation filed by the assessee can be accepted as a reasonable cause for his failure to file Audit Report with in time and it is not a fit case for imposing penalty under section 271 B of the Act. Accordingly, the penalty levied under section 271 B of the Act is deleted.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
Both the above appeals have been filed by the Assessee against the common order of the Ld. CIT(A)/NFAC, Delhi each dt. 10/01/2023.
2. Firstly we shall deal with the appeal in ITA No.70/Asr/2023 for the A.Y. 2017-18
wherein assessee has raised the following grounds:
1. That the CIT(A) has erred in confirming the penalty order passed by Ld. A.O u/s 271B of the income tax act 1961 is against the fact of the case and bad in law.
2. That the CIT(A) has erred in confirming penalty u/s 271B levied by the AO for non filing of audit report. The AOfailed to appreciate the fact that the assessee has been regularly filing audit report for years previous to A.Y.2017-18 and also for the future assessment years.
3. That the CIT(A) has erred in not appreciating that the failure to file audit report for A.Y.2017-18 was solely on account of expiry of digital signature and as such was prevented by reasonable cause to file audit report.
4. That the CIT(A) has erred in confirming penalty u/s 271B levied by the AO for failure to file audit report even when the assessee duly submitted the audit report along with balance sheet, P&L A/C and other annexure during the assessment proceedings. Furthermore, the Id. AO had also examined the financials submitted in audit report and the same was accepted by the Ld. AO in Para no 2 at page no 2 of the order u/s 144 dated 19.12.2019,
5. That the CIT(A) has erred in not appreciating that the AO while confirming the penalty u/s 271B has not considered the submissions of the assessee.
6. That the appellant craves leave to add or amend any of the grounds of appeal before the appeal is finally heard or disposed off.
3. At the outset the Ld. Counsel for the Assessee has submitted that the Assessing Officer has initiated the penalty under section 271 B of the Income Tax Act, 1961 for late filing of audit report under section 44AB of the Act. He has further submitted that the gross receipt of the assessee for the year under consideration was Rs. 1,70,27,553/- and hence the assessee was required to get its account audited and liable to file the audit report as required under section 44AB of the Act before the due date. Accordingly, the Assessing Officer has levied minimum penalty of Rs. 1,50,000/- on violation of provisions of Section 271 B of the Act for non filing the Tax Audit Report within time as prescribed under the law.
3.1 The Ld. AR has argued that the assessee has obtained its Tax Audit Report from the Chartered Accountant on 31/10/2017 and furnished the same before the Assessing Officer during the course of assessment proceeding. Therefore he contended that when the Tax Audit Report was made available to the Assessing Officer before completion of assessment proceedings, then for venial technical breach without any malafide intention, penalty cannot be levied under section 271 B of the Act.
3.2 The Ld. AR has brought to the notice of the Bench that the same fact has duly been brought to the knowledge of the Assessing Officer during the course of assessment proceeding that the only delay in not filing the Audit Report in time was due to technical glitch in the system on account of old digital signature of the assessee were expired and new digital signature could not be updated due to the reasons that there was mismatch in the particulars as uploaded on the online portal and as per the Aadhaar Card.
3.3 Thus, the assessee was prevented by sufficient cause as per the provisions prescribed under section 273B of the Income Tax Act for not filing the Audit Report in time. He argued that thought the assessee has filed Tax Audit Report beyond the stipulated time but the said Tax Audit Report made available to the Assessing Officer before completing the assessment with explaining the reasons for delay in filing the Tax Audit Report (Assessment Order page 12). He has also explained that the Assessing Officer has considered the Audit Report and passed the Assessment Order accepting the return of income subject to nominal disallowance of Rs. 28,092/- in respect of personal nature. In support he placed reliance on the following decisions:
