Filing of Tax Audit report- confusions, delay and remedy.

[C.A. DEV KUMAR KOTHARI]

S. 44AB- filing of tax audit report (TAR):

As per S. 44AB, as it stands now filing of tax audit report is necessary. The TAR is to be filed within specified date. For the A.Y. 2008-09 it was 30.09.08  (except in areas where extension has been announced- Bihar, Orissa J & K).

To avoid penalty u/s 271B the Tax audit report u/s 44AB should be submitted before specified date that is  before end of 30.09.08 (except in areas where extension has been announced- Bihar, Orissa J & K). merely obtaining TAR within specified time  is not sufficient. In case TAR is not yet submitted, the same should be submitted as early as possible with condonation of delay petition explaining reasonable cause for the delay.

TAR of earlier years:

During discussions with other tax professionals it has come to notice that many assesses who obtained TAR, furnished details of obtaining of such report and also relevant information in the e-return  filed in time did not file TAR on the belief that TAR is to be filed only when the A.O. calls for the same. It has also been reported that in some books like Ready Reckoner it has been mentioned that it is not necessary to file TAR. This has caused confusion amongst tax payers and tax consultants. For example in Taxmann's Ready Reckoner ,31^st Edition at page A-119 in para 52.2 in note no. 2 it is interalia mentioned that

            " The report of audit under section 44AB is not to be attached with new return forms. It should not be furnished separately also before or after the due date -----no penalty under section 271B shall be initiated or levied for not furnishing the tax audit report on or before the due date."

However, in the Schedule of Period of Limitations at page 105 of the same book it is mentioned that limitation for obtaining TAR and furnishing the same to the Department is September 30 of the relevant assessment year.

Therefore we find that there is clear conflict between commentaries / suggestions given in the same book at two places. Any provision or circular has not been referred to in para 52.2 in which it is stated that TAR need not be filed and penalty will not be levied.   

Circular about annexure less returns:

 In CIRCULAR NO. 6/2008  DATED 18-7-2008 it is stated that the returns should be annexure less ( except ITR-7) and annexure should not be accepted by the receiving departments. However, there is no mention that it is not necessary to make compliance of S. 44AB by furnishing TAR.

Suggestion:

To avoid initiation of penalty or at least to seek non levy of penalty it is suggested that the TAR should be filed immediately. In case of delay, a COD petition can be submitted. A voluntary compliance, though belatedly will provide reasonable ground for the A.O. not to initiate penalty proceedings u/s 271B or to take a lenient view and drop penalty proceeding or levy lower amount of penalty. In case the A.O. levies such penalty, there will be good ground to seek relief from the appellate authorities. A draft letter is appended below, which can be modified suitably in given circumstances:

                                            From: assessee  - use letter head

To,

The Assessing Officer,

……

PAN  Assessment Year 2008-09- filing of Tax Audit Report u/s 44AB

I /  We have filed on line return on September, 2008 vide acknowledgment no……

                Or I / we filed annexure less return in prescribed form and enclosures were not accepted by the department at the time of receiving the return.

I / we had obtained Tax Audit Report dated….. before the due date (30.09.08).

I am / we are  filing Tax Audit Report as required u/s 44AB of the income Tax Act, 1961, kindly acknowledge receipt of the same.

Circular about annexure less returns:

 In CIRCULAR NO. 6/2008  DATED 18-7-2008 it is stated that the returns should be annexure less ( except ITR-7) and annexure should not be accepted by the receiving departments. Therefore, we were under impression that TAR is also not required to be filed.

Similar circular was issued in earlier year also.

We relied on  Taxmann's Ready Reckoner ,31^st Edition at page A-119 in para 52.2 in note no. 2 it is interalia mentioned that

            " The report of audit under section 44AB is not to be attached with new return forms. It should not be furnished separately also before or after the due date -----no penalty under section 271B shall be initiated or levied for not furnishing the tax audit report on or before the due date."

Condonation of delay: ( in case TAR is filed after 30.09.08)

I /we have filed return online,/ annexure less return in  prescribed form in such return, most of  information as given in TAR and also information about having obtained a  TAR  is already given.  I / we had understanding  that in view of e-return having been filed, TAR is  required to be filed only when the A.O. call for the same. Some tax consultants have expressed such view, whereas some other have, later on expressed a contrary view that TAR should be filed before due date, even when a e-return is filed.

I am / We are simple business person and do not know intricate tax laws and procedural requirement and  I / we have to depend on tax consultants.

As the legal position is not very clear about this aspect and different views are prevailing. Therefore, with a view of abundant caution and playing safe  I am / we are  filing TAR. There has been delay of few days due to the following reasons:

a. confusion about requirement of filing of TAR. Particularly due to boards circular for not filing/ accepting any document with the return and also commentary in a very popular ready reckoner, as pointed out above.

b. excessive   work load for filing of return, which further increased due to some technical problems and slow working of  internet connections, computer and websites  of I.T. Department etc.

c. holidays and festive mood caused absence of many people and less working.

In view of above  facts and circumstances and  considering the fact that I am  / We are filing TAR voluntarily, and as soon as possible after the requirement came to our knowledge, that relevant information is already provided in e-return of  income,  and that the revenue has not suffered any damages due to delay in filing of TAR and the default if at all is of a technical nature caused due to reasonable causes,  we request you to kindly condone the delay of few days in filing of TAR and please do not initiate penalty proceedings u/s 271B.

Thanking you,

Yours faithfully,

Assessee **       For  and on behalf of Assessee         

** Preferably should be signed by assessee, in case assessee is not available then A/R can file the same mentioning for and on behalf of assessee.