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Smt. Raj Kumari Bafna, Prop. M/s. Kesharia Cotton Suppliers Versus The ITO, Ward- 1, Beawar

2016 (12) TMI 952 - ITAT JAIPUR

Penalty u/s 271B - failure on part of the auditor in uploading the audit report as introduced and required first time - Held that:- As noticed from the records that the assessee had filed the return of income for the assessment year 2013-14 on 21-06-2013 electronically and the assessee got her accounts audited on 12-06-2013. It is also noticed from the records that copy of ITR Forms, acknowledgement and tax audit report dated 12-06-2013 were furnished to the AO. The CA of the assessee could not .....

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technical breach on the part of the assessee as the audit report could not upload on account of site/ server problem of the system - As decided in the case of ACIT & Anr vs. Dr. K. Satish Shetty (2009 (2) TMI 207 - KARNATAKA HIGH COURT ) 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. - Decided in favour of assessee - ITA No. 837/JP/2016 - Dated:- 14-12-2016 - SHRI BHAGCH .....

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auditor or A.R. in uploading the audit report as introduced and required first time. 2.1 Brief facts of the case are that the return of income was filed by the assessee electronically on 21-06-2013 declaring total income of ₹ 5,45,030/-. During the assessment year under consideration, the assessee had shown total turnover of ₹ 5,31,88,064/- and thus the assessee was liable to get her accounts audited as per the provisions of Section 44AB of the I.T. Act, 1961 and to upload the same .....

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) 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 .....

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t based on the information provided by them in their returns electronically for A.Y. 2013-14. The All India chargewise summary of such cases as on 13th June 2014 is enclosed. In this connection a CD containing Assessing Officer wise list of cases pertaining to your charge is enclosed where the taxpayer have not uploaded the relevant audit report in this e-filing portal even though they may not be liable for audit u/s 44AB as per the returns of Income for assessment year 2013-14. The information .....

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etter dated 19-09-2014 and the same was served upon the assessee through Speed Post AD. The ld. AR of the assessee filed the detailed reply on 23-09-2014 which was not found convincing by the AO. However, in the interest of natural justice, one more opportunity was given to the assessee by the AO vide notice dated 13-02-2015 with direction to appear personally or through his authorized representative or to furnish a written reply on 19-02-2015. In response to said notice, the assessee furnished .....

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ate of uploading 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 pro .....

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he 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 given by the appellant can be accepted as reasonable cause for not filing the audit report. If such type of excuses are acceptable as reasonable cause for not furnishing the audit report then no penalty u/s 271B could be levied in any case because the audit reports has to be uploaded by .....

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iscussed above, I am of the opinion that there was reasonable cause for not furnishing the audit report u/s 44AB in respect of A.Y. 2013-14. Hence, the penalty of ₹ 1,50,000/- levied by the AO u/s 271B is hereby confirmed. 5.0. In the result, the appeal is dismissed. 2.3 During the course of hearing, the ld. AR of the assessee prayed that the lower authorities have erred in imposing the penalty of ₹ 1.50 lacs u/s 271B of the Act for which the assessee of the assessee filed the follow .....

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ed by her on 21/6/2013 as required by law for e-filing of audited return. (Page 1) 3. That the appellant being low educated say IXth standard does not know about the efiling system particularly uploading of audit report on internet as introduced and required first time. Such notifications bearing nos. 34 dated 1.5.2013 specifying in rules and subsequently procedural notifications bearing nos. 36 dated 23/5/2013 and 44 dated 19/6/2013 came simultaneously that time when her accounts were being aud .....

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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 .....

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rice, once in the Tax Audit utility and then again in the Word format to enable Print outs and submissions at various forums and then again input into the ITRs for return filing. Further whenever the new utility was updated , there were instances that the old data vanished by itself and the CA had to start his data entry from scratch. 9. The problem being faced by the assessees as well as tax professionals in not being able to file the income tax return and the audit report electronically was fu .....

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19(2)(a) r.w.s. 139 and Rule 12, CBDT vide order dated 26.09.2013 extended the due date for obtaining and furnishing of Tax Audit Report under section 44AB of the Act for Assessment Year 2013-14 from 30th September, 2013 to 31st October, 2013 subject to certain conditions. 11. In the instant case, Audit report was obtained on 16.09.2013 and was attempted to be furnished along with ITR on 21.6.2013 however the same was not uploaded due to technical reason beyond the control of the assessee. The c .....

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013 before the assessing officer. 12. In the case of R. Wadiwala & Co. vs. ACIT 72 TTJ 0034(Ahd.Trib) it has been held in the context of sec. 271B r.w.s sec. 44AB that bonafide belief is a reasonable cause for avoiding penalty. 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 .....

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ploaded 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 ₹ 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 is a valid report as the appellant got the same in time. CIT vs. K.K. SPUN PIPE .....

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e-ITO vs. Kaysons India (2000) 163 CTR (P&H) 75 : (2000) 246 ITR 489 (P&H) and CIT vs. Ashoka Dairy (IT Ref. No. 61 of 1995) followed 16. In view of following judgements and decisions of Hon ble High Courts and Tribunals penalty should not be levied for mistake committed by other person like A/R or chartered Accountant- ACIT & ANR. vs. DR. K. SATISH SHETTY (2009) 310 ITR 366 (Kar) : ITO vs. GULABDASS STORES (2000) 69 TTJ (Jd) 472 17. As explained in CBDT's circular No 3 of 2009 & .....

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r after the due date. The assessee should retain the report with himself. If called for by any income-tax authority during any proceeding under the Act, it shall be incumbent upon the assessee to furnish/produce the same in original. No penalty under section 271B shall be initiated or levied for not furnishing the tax audit report on or before the due date. However, if the audit report has not been obtained before the due date, provisions of section 271B shall continue to be attracted." 18. .....

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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 th .....

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calling upon the assessee to furnish the report within 15 days- Where an objection is raised by the assessee that he is not under an obligation to get his accounts audited under s. 44AB, AO has to decide such objection before taking any decision about validity of the return-In case the AO accepts the objection, he would proceed with the assessment on the basis of return already submitted before him-However, in case the objection is overruled, the AO is required to call upon the assessee to compl .....

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of s. 44AB is a substantial question of law prima facie suggests that the interpretation of s. 44AB was not self-evident and it needed an examination of provisions-Further, failure to comply with such procedural provisions under a bona fide belief that the assessee is not required to act in a particular manner under the statute amounts to a venial and technical breach for which penalty is not leviable IMRAN-UR-REHMAN KIDWAI vs. ITO (1997) 58 TTJ (Del) 537 : 62 ITD 33 Penalty under s. 271B-Reason .....

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only due to bona fide belief that it was duly furnished with the return-There was reasonable cause-There could be no guilty intention in not annexing the said report-Law does not provide for levy of penalty for such a technical and innocent mistake- Assessee has submitted copies of report along with reply to show-cause notice-Penalty cannot be sustained 20. This is first time when assessee or she was required to e-file the audit report and prior to that no such reports were being furnished. And .....

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ntroduced 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 .....

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A) confirmed penalty-Held, assessee filed return of income under E filing procedure-"Part A-O1" of return of income requires assessees liable for audit under Section 44AB to furnish certain information-Same is optional for assessees who not liable for audit under section 44AB-Information to be given in "Part A-O1" contains details to be furnished in Form No.3CD-Assessee duly furnished all details under "Part A-O1" of return of income-Audit under Companies Act and un .....

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Appeal dismissed. THEREFORE we pray your honour that the ld. lower authorities were not justified in law and on facts of the case in imposing penalty on the low educated and innocent female appellant for failure on part of the auditor or AR in uploading the audit report as introduced and required first time. 2.4 The ld. DR relied on the orders of the authorities below. 2.5 I have heard the rival contentions and perused the materials available on record. It is noted from the records that the ass .....

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