No Section 271B penalty if reasonable cause exist for delay in furnishing Tax Audit Report

Sanjeev Kumar Goyal Vs ITO (ITAT Delhi)

The appeal in the case of Sanjeev Kumar Goyal versus Income Tax Officer (ITO) before the Income Tax Appellate Tribunal (ITAT) Delhi centered around the imposition of a penalty under section 271B of the Income Tax Act, 1961, for Assessment Year 2013-14. Let’s delve into the details of the case to understand the context, arguments, and the tribunal’s decision.

Background:

• Sanjeev Kumar Goyal, an individual engaged in the business of trading and manufacturing timber products and firewoods, filed his income tax return for A.Y. 2013-14, declaring an income of Rs. 4,82,499/-. This income was later revised to Rs. 6,34,500/-.
• During the assessment proceedings, it was revealed that the audited Profit and Loss Account submitted with the revised return showed gross receipts of Rs. 17,89,07,251/-. However, the assessee failed to get his accounts audited as required under section 44AB of the Act.

Penalty Proceedings:

• The Assessing Officer (AO) initiated penalty proceedings under section 271B of the Act due to the non-furnishing of the Tax Audit Report within the stipulated time.
• The assessee requested the AO to keep the proceedings in abeyance until the disposal of his first appeal pending before the CIT(A), Muzaffarnagar.
• After the disposal of the quantum first appeal, the AO issued a show cause notice and subsequently imposed a penalty of Rs. 1,50,000/- on the assessee.

Appeal and Tribunal’s Decision:

• The assessee appealed against the penalty before the CIT(A), which was dismissed, leading to the appeal before the ITAT Delhi.
• Despite the summons for physical hearing, no one attended on behalf of the assessee, and the appeal proceeded with only the Senior Departmental Representative (DR) present.
• The ITAT considered the arguments and records, noting that the Tax Audit Report was filed along with the revised return, albeit after the stipulated time.
• The tribunal observed that the AO himself acknowledged the submission of the Audit Report with the revised return. It was not disputed that the original return was filed within the prescribed time under section 139(1) of the Act.
• The assessee provided explanations for the delay, citing personal and unavoidable circumstances such as the death of his elder brother, who managed the financial affairs, and his own critical medical condition.
• The tribunal found reasonable cause for the delay in furnishing the Tax Audit Report and held that the penalty under section 271B was not justified.
• Consequently, the ITAT Delhi allowed the appeal of the assessee, vacating the penalty.

FULL TEXT OF THE ORDER OF ITAT DELHI