Case Law Details
Jayaraj Charles Vs ITO (ITAT Chennai)
Introduction: The Jayaraj Charles Vs ITO case, adjudicated by ITAT Chennai, delves into the imposition of penalties under section 271B of the Income Tax Act. This particular case centres on the penalty confirmation for the Assessment Year (AY) 2017-18 due to the alleged failure of the assessee to upload a Tax Audit Report within the prescribed timeframe.
Analysis: The case evolved from the allegation that the assessee failed to upload the Tax Audit Report on time, leading to a penalty of Rs.1,50,000/- for AY 2017-18. Although the Tax Audit Report was obtained within the extended limit and presented during the assessment proceedings, the return was treated as non-existent (non-est) as it was not visible on the e-filing portal. This non-visibility led to the penalty being imposed on the assessee.
However, the ITAT Chennai acknowledged that substantial compliance with the law was made by the assessee. In light of this, the ITAT cited a previous case, Shri Ramunaicker Raja vs. ACIT, and ruled that this wasn’t a fit case for levy of the said penalty.
Conclusion: The ruling by ITAT Chennai in the case of Jayaraj Charles Vs ITO provides an important precedent, clarifying that no penalty should be imposed under section 271B of the Income Tax Act due to a return not appearing on the e-filing portal. It underlines the necessity for proper consideration of law compliance, even when technicalities, such as visibility on the e-filing portal, are in question.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. Aggrieved by confirmation of penalty u/s 271B for Rs.1,50,000/- for Assessment Year (AY) 2017-18, the assessee is in further appeal before us. The impugned order has been passed by learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 07-02-2023 in the matter of impugned penalty levied by Ld. Assessing Officer [AO] u/s. 271B of the Act vide order dated 02-11-2021. In the penalty order, the penalty has been levied on the allegation that the assessee failed to upload Tax Audit Report in Form No.3CB and 3CD within prescribed time. As per facts available on record, the assessee filed audit report u/s 44AB as well as its Income Tax Return on 17-03-2018. Considering the provisions of Sec. 139(1) / 139(4), the return was treated as non-est and an invalid return. The extended due date for furnishing of Tax Audit Report was 07-11-2017 as per press release dated 31-10-2017.The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us.
2. From para-3 of the assessment order dated 17-12-2019, it emerges that the Tax Audit has been completed in assessee’s case on 07-112017 and a copy of the same was also furnished by the assessee during the course of assessment proceedings. The same has apparently been uploaded by the assessee on 17-03-2018 along with the return of income. This fact has also been noted by Ld. AO in para-3 of penalty order dated 02-11-2021. However, Ld. AO has treated the return as non-est and imposed impugned penalty on the assessee on the reasoning that the return was not appearing on the e-filing portal.
3. From the stated facts, it could be seen that substantial compliance of law was made by the assessee and Tax Audit Report was obtained within the extended time limit. The copy of the same was also furnished by the assessee during the course of assessment proceedings. It is another fact that the return has been held to be non-est only because the same was not appearing on the e-filing portal possibly because the assessee did not verify the ITR-V. Nevertheless, it is not a fit case for levy of impugned penalty considering the fact that substantial compliance of law was made by the assessee. The decision of this Tribunal in Shri Ramunaicker Raja vs. ACIT (ITA No. 603/Chny/2022 dated 15-02-2023) supports the case of the assessee. Therefore, we delete the impugned penalty.
4. The appeal stand allowed.
Order pronounced on 29th May, 2023
