2023 (6) TMI 111 - AT - Income Tax

Penalty u/s. 271B - assessee had not filed audit report - Qualification of CA doing audit for assessee - assessee pleaded before the AO that assessee had submitted its books to his Chartered Accountant (CA), but he failed to audit the books, then there was some dispute with the CA - HELD THAT - Assessee had not given books to a qualified CA. We do not know, the exact qualification of Mr.Kadam, who calls himself Accountant. As per Section 288 Explanation. In this section, accountant means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) who holds a valid certificate of practice under sub-section (1) of section 6 of that Act . Only a qualified CA is permitted to Audit books of account. In the affidavit it is claimed by the Accountant of the firm, that he had not given data to CA. Thus, in the affidavit he is not referring to books. However, for Audit, books of account are required. Therefore, the claims made in the affidavit are contradictory and hence not reliable. There was no valid reason for not filling Audit report - Decided against assessee.

Summary

Issues:
The appeal against the penalty order u/s. 271B of the Income Tax Act, 1961 for A.Y. 2017-18 due to failure to file audit report within the stipulated time limit.

Brief Facts:
The assessee did not file the return of income for AY 2017-18 and submitted a profit and loss account showing a total turnover of Rs. 2,59,83,830. The Assessing Officer (AO) issued a notice u/s. 271B as the audit report was not filed. The assessee claimed that the Chartered Accountant (CA) failed to audit the books due to a dispute. The AO found the reason insufficient and levied a penalty of Rs.1,29,919 u/s. 271B. The assessee's appeal before the CIT(A) was decided ex parte as no submissions were filed, upholding the penalty order.

Findings & Analysis:
The assessee admitted to maintaining books of accounts and claimed to have given them to an accountant, not a qualified CA as required by law for audit. The affidavit submitted later contradicted the claim, stating the data was not given to a CA. As per the Income Tax Act, only a qualified CA can conduct audits. The Tribunal found the reasons provided by the assessee to be invalid for not filing the audit report, upholding the penalty u/s 271B of the Act.

Decision:
The Tribunal dismissed the appeal of the assessee, affirming the penalty imposed u/s 271B of the Income Tax Act, 1961.