Section 271B of the Income-tax Act, 1961 provides for imposition of penalty at the rate of one-half per cent of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years, or ₹ 1,50,000 whichever is less for failure by a person to get his accounts audited in respect of any previous year or years relevant to an assessment year or to furnish a report of such audit as required under section 44AB.
It may be noted that the said provision causes undue hardship to the genuine assessees especially the small businessmen. The assessee is penalized even for a few days of delay in furnishing his tax audit report. In order to make the ease of doing business in India a reality, such high amount of penalty need to be liberalized.
It is suggested that the penalty under section 271B may be levied on the basis of delay in number of days in filing/furnishing the tax audit report which may be ₹ 1000 per day subject to maximum amount of ₹ 1,50,000.