Case Law Details
Bhushan Aviation Limited Vs ACIT (ITAT Delhi)
Introduction: Bhushan Aviation Limited’s appeal in ITAT Delhi brings to focus the complexities surrounding penalties imposed under section 271B of the Income Tax Act. Central to this dispute is the levy of a penalty due to the delay in filing an audit report, attributed by the company to the insolvency proceedings of its holding company.
Analysis: The essence of the appeal lies in the contention that the imposed penalty of INR 1,50,000 for a delayed audit report was not warranted. The primary reasoning the company provided for this delay was the insolvency proceedings involving its holding company, Bhushan Steel Company, which subsequently was taken over by Bamnipal Steel Ltd., a Tata Group subsidiary. This takeover ostensibly affected the pace at which financial records and relevant data were compiled, consequently delaying the audit report.
However, the Assessing Officer and the Ld.CIT(A) disregarded this justification, leading to the appeal at ITAT. At the tribunal, the core argument was whether the delay was genuinely due to ‘reasonable cause’ as claimed by Bhushan Aviation.
Conclusion: Upon evaluating the presented facts and arguments, ITAT Delhi leaned towards the rationale provided by Bhushan Aviation. Acknowledging that the proceedings under the Insolvency and Bankruptcy Code (IBC) involving the holding company could feasibly cause delays in the subsidiary’s operations, the tribunal ruled in favor of Bhushan Aviation. The penalty was deemed unjust, solidifying the principle that the imposition of penalties must always be rooted in clear justification, not merely procedural adherence.
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