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TMI Blog2016 (12) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... f the I.T. Act, 1961 and to upload the same electronically on e-filing portal on or before 31-10-2013. The AO while going through the e-filed return of the assessee observed that the assessee was liable for audit u/s 44AB of the Act and as per information available on e-return, she got her accounts audited on 12-06-2013 as per following information furnished. (a) Name of the auditor signing the tax audit report : MukeshAgarwal (b) Membership No. of the auditor : 74805 (c) Permanent A/c (PAN) of the proprietorship/firm : AAIFM 6783 G (d) Date of audit report : 12-06-2013 The AO observed that in this case an information was received from the Commissioner of Income (CPC), Bangalore vide letter F.No. CIT (CPC)/Audit Report/2014-15 dated 15-07-2014 addressed to Chief Commissioner of Income-tax Jaipur which was subsequently communicated to his office vide Addl. CIT Ajmer's endorsement No. 434 dated 28-07-2014 and the contents of the same are as under:- ''As you kindly be aware, in terms of Notification No. 34 dated 01-05-2013 issued by CBDT, effective from 1 April 2013, where as assessee is required to furnish a report of audit u/s 44AB or 92E of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g audit report from 30-09-2013 to 31-10-2013 after considering the genuine difficulty of the assessee in uploading the audit report in electronic form. The AO thus observed that the assessee could not prove the reasonable cause for failure to furnish the audit report in electronic form as her audit was completed by her CA on 12-06-2013 as mentioned in e-filed return. The AO thus observed that it was a deliberate defiance of law and no cogent reasons for compliance of statutory provisions of law could be proved in this case. In view of above facts and circumstances of the case the AO imposed a penalty of Rs. 1.50 lacs vide his order dated 17-03-2015. 2.2 Being aggrieved, the assessee carried the matter before the ld. CIT(A) who had confirmed the action of the AO by observing as under:- ''4.3 I have gone through the penalty order, statement of facts, grounds of appeal and written submission carefully. It is seen that the assessee did not file the audit report u/s 44AB. The appellant has justified this non-compliance on the ground that it was due to mistake of the auditor and it was the first year for uploading the audit report. I am of the considered view that none of the reason gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Chartered Accountants who audited her books of accunts. 5. That while e-filing the return appellant through her A/R mentioned all facts of auditing of accounts of her business with all required particulars as required to be filled in relevant part of Audit Information in Part A-GEN and "Part A-O1" of the return itself being optional in case of non audit case ,as mentioned in the penalty order too. (Page 30 ) 6. That hard copy of the Audit Report duly signed by the auditor has also been furnsined to the ld. AO which he never admitted and mentioned in his order. 7. That such audit report could not be furnished with the return due to limitation in filing of the same with the return. However full details thereof was furnished in the return itself in relevant query "Part A-O1" of the return itself being optional in case of non audit case. 8. Initially, there was a faulty system of uploading the Tax Audit Report and the said utility/software was not functioning properly so the audit reports could not be uploaded. There was a constant change in the utility by the Income Tax Department (12 times). Actually, the department had changed the utility every week and sometimes even two or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty. The bonafide explanation of the assessee can also be proved on perusal of the return of income filed on 21.6..2013 as there is no change in figures of profit and loss account and balance sheet of tax audit report. This clearly proves that Audit report was obtained on 12.06.2013 and the same was not uploaded due to technical error. 13. As such e-filing of the audit report might be omitted in following circumstances and misimpressions- 1).Notification for such requirement or obligation came in public after or simultaneously the appellant got her accounts audited. 2). As explained by the auditor, he/his office team tried to submit the same on online system and he was in the misimpression that the same has been submitted/filed. 3).Such report was omitted to be uploaded for inadvertence on part of the auditor. An affidavit duly executed by him was also furnished to the ld. CIT(A). (Page 34 ) 14. That the ld. AO imposed penalty of Rs. 150000/- u/s. 271B for not uploading of audit report on internet which the ld. CIT(A) confirmed. 15. In view of following judgements of Hon'ble High Courts and decisions of Hon'ble Tribunals audit report furnished with return filed belatedly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Audit in the system electronically may also furnish the same manually before the jurisdictional Assessing Officer within the prescribed due date. (b) The said Report of Audit should however be furnished electronically on or before 31.10.2013. But Auditor, appellant and his AR were in the impression that audit report has been filed/uploaded and hence he could not stepped out to file the same manully. 19. Further the same is technical breach taken place first time in the circumstances mentioned above. Non submission or unploading of report renders the return deficitive u/s. 139(9)(bb) which should have first been got rectified by the ld. AO. Further the appellant did not receive any notice from the ld. AO for making correction in the return or to remove deficiency. In view of following judgment of jurisdictional High Court such penalty is not imposable. BAJRANG OIL MILLS vs. ITO (2007) 207 CTR (Raj) 1 : (2007) 295 ITR 314 (Raj) Penalty under s. 271B-Failure to get accounts audited-Reasonable cause-Not annexing the required audit report with the return would make the return defective-In such event the AO is under an obligation to issue notice calling upon the assessee to furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to that no such reports were being furnished. And she was in the impression like that. In view of following judgements and decisions of Hon'ble High Courts and Tribunals penalty should not be levied for such default committed first time- ACIT & ANR. vs. DR. K. SATISH SHETTY (2009) 310 ITR 366 (Kar) : 21. That in view of following judgements of Hon'ble High Courts and decisions of Hon'ble Tribunals that penalty is not imposable in the case when appellant was in bonafide belief that he was not required to furnish the audit report as it was introduced first time during the year under appeal- CIT & ANR. vs. IQBALPUR CO-OPERATIVE CANE DEVELOPMENT UNION LTD. (2009) 23 DTR (Uttarakhand) 60 : (2009) 179 TAXMAN 27 22. That in view of following judgements of Hon'ble High Courts and decisions of Hon'ble Tribunals that penalty is not imposable in the case when default in furnishing the audit report is mere accidental rather than willful attempt- JCIT vs. DAINIK ASSAM (P) LTD. (2004) 3 SOT 542 (Gau) SUJATA TRADING (P.) LTD. vs. INCOME TAX OFFICER (2015) 170 TTJ 0396 (Mum) Penalty-Failure to get accounts audited-Assessee company filed its return of income through E-filing process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the audit report because of technical problem in the server/ site of the Department. The assessee was under bona fide belief that the report is already uploaded. However, the assessee had filed the tax audit report dated 12-06-2013 before the AO. It is also noticed that the assessee being low educated and she was not aware of the e-filing system particularly uploading of audit report on internet as it was first time introduced by the Department to upload the same. It appears that it is a technical breach on the part of the assessee as the audit report could not upload on account of site/ server problem of the system. The ld. AR of the assessee relied on various case laws which have been taken into consideration. The ld. AR of the assessee taking the support of the Hon'ble Kerala High Court in the case of ACIT & Anr vs. Dr. K. Satish Shetty (2009) 310 ITR 366 submitted that that this is first time when assessee was required to e-file the audit report and prior to that no such reports were being furnished. Hence, the penalty should not be levied. In view of the above facts and circumstances of the case, I am of the considered view that the penalty imposed by the lower authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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