Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (1) TMI 330 - AT - Income TaxPenalty levied u/s 271B - tax audit report was not obtained and furnished before the due date for filing return of income - Proof of Reasonable cause - HELD THAT:- Under sec. 273B of the Act, the penalty u/s 271B shall not be imposable, if the assessee proves that there was reasonable cause for the failure to comply with the provisions of sec.44AB. The approach to be adopted on levy of penalty u/s 271B has been explained by Hyderabad Special Bench of ITAT in the case of ACIT vs. Gayatri Traders [1996 (4) TMI 157 - ITAT HYDERABAD-B] In the instant case, it is an admitted fact that the assessee did not have good relationship with its auditors before the end of the financial year. It has filed complaint against its earlier auditor in July, 2014. Subsequently, it has engaged another CA and furnished audit report before the completion of the assessment. Thus the delay in filing tax audit report has occurred due to strained relationship with its earlier auditor. We notice that the tax authorities have taken the view that the assessee should have appointed new CA immediately after knowing misdeeds of earlier CA. However, provisions of sec.273B exempts from levying of penalty, if the assessee proves that there was reasonable cause. If the cause shown by the assessee appeals or satisfies any reasonable mind, then the same shall constitute reasonable cause. In our view, strained relationship with the earlier CA would constitute reasonable cause. The tax authorities have pointed out time gap in getting a tax audit report from a new CA - As a known fact that it might have taken some time to severe relationship with the earlier CA. However, the fact remains that the tax audit report has been filed with the AO before completion of assessment. The tax authorities have mentioned about non-filing of tax audit report electronically. We notice that the provisions of sec.44AB do not mention about the same. Hence non-filing of audit report electronically cannot be the reason for imposing penalty u/s 271B. There was reasonable cause for the assessee in not filing the tax audit report in time. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete the penalty levied u/s 271B - Decided in favour of assessee.
|