TMI Blog2017 (5) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... onse to proceedings u/s. 153C, AO should have treated the return as defective return. No such action was taken by the AO, which indicates that the return is complete in all respects. Since prior approval of the Addl. CIT u/s. 153D was also taken by the AO before completion of assessment, we are of the opinion that non enclosure of audit report to the return of income does not attract penalty proceedings u/s. 271B. Accordingly, penalty levied is cancelled. - Decided in favour of assessee. - ITA No. 856/Hyd/16, 857/Hyd/16, 858/Hyd/16, ITA No. 859/Hyd/16 - - - Dated:- 26-5-2017 - SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER, AND SHRI V. DURGA RAO, JUDICIAL MEMBER For The Assessee : Shri P. Murali Mohan Rao, AR For The Revenue : Smt Suman Malik, DR ORDER PER B. RAMAKOTAIAH, A.M. : These are appeals by two assessees for the AYs. 2007-08, 2008-09 2009-10 against the order(s) of the Commissioner of Income Tax (Appeals)-12, Hyderabad. Since common issues are involved on the issue of penalty u/s. 271B, these appeals are heard together and decided by this common order. For the sake of convenience, we are discussing the facts in ITA No. 856/Hyd/2016 for AY. 2008-09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1,71,31,100/-, for the year. 4. Before the Ld.CIT(A), assessee objected the said levy of penalty. After considering the explanation of assessee, CIT(A) dismissed the appeal of assessee by stating as under: 6.0 perused of submissions of the appellant and the observations of the AO, both in the assessment order as well as the penalty order. As could be seen from the facts of the case, the appellant shown to be engaged in the business of real estate and has recorded gross receipts of ₹ 1.17 crores for the year under reference, but no return of Income was furnished before the due date which is 31-10-2008. Return for the year was shown to have flied only on 25-03-2010 and in consequence of search proceedings in this group on 16-07-2008. As per the AO neither the audit report was furnished before the due date nor along with the return of Income filed on 25-03-2010 or during assessment proceedings, though it was obtained on 15-09-2008, but due to the fact that the said report was misplaced on account of absence of accountant. The AO had arrived the conclusion that as the said report was not furnished either before the due date or at the time of assessment, as such the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was furnished separately by that date i.e., 31-10-2008. Further, the said report was also established to have not been filed/furnished at the time of assessment proceedings, with no such report available before the AO at the time of penalty proceedings. In fact, the assessee was on record to show that such report was not available with them, due to misplacement of the said report by accountant. Part of the Statement of Facts (SOF) furnished along with appeal clearly indicates this factual position. For sake of clarity, the relevant position is reproduced runs as under: At the time of assessment of the assessee's case, the above tax audit report could not be furnished due to misplacement of the same due to non availability of the concerned accountant and hence could not produced/submitted which may please be considered and penalty may not be levied. 6.1 Thus, as could be seen from the facts of the case, the appellant could neither prove that the accounts were audited before the due date nor establish that copy of Audit Report was obtained, with such report neither filed by due date or even afterwards. Thus on the facts of the case, it clearly attracts the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 be attracted . (ii) 6.1. It was the submission that assessee has filed the return which was not treated as defective and AO has completed the assessment u/s. 153C and initiated the penalty only on the reason that audit report was not enclosed to the return of income, which was not required as per the Board Circular. He further submitted that there is no allegation by the AO that assessee-firm has not completed the audit and obtained report but the issue before the AO was only that assessee should have filed its audit report, which was not done. It was the submission that as there is no requirement to file the audit report, assessee has not filed the same along with the return though assessee obtained the audit report before the due date. 7. Ld. DR, however, submitted that assessee has not placed audit report on record and CIT(A) has given a finding on that and confirmed the penalty on the reason that the audit was not even conducted. 8. We have considered the rival contentions and perus ..... 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