TMI Blog2019 (5) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... lated period. The assessee has further explained that there is a frequent change of Managing Director of the company and we find from the details as reproduced in the foregoing para that there are as many as 5 changes during the period from 01.04.2014 to 15.11.2014 which has caused the delay in convening the Board Meeting for adopting the financial statements of the assessee and consequent statutory audit to be completed by the auditors appointed by the CAG. The delay in getting the accounts audited as per the provisions of section 44AB was due to the reasons as explained by the assessee which were beyond the control of the assessee being a State Government Undertaking. The assessee has also filed a copy of resolution for seeking extensi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it report as per section 44AB of the IT Act on or before the due date of filing the return of income under section 139(1) of the IT Act, the AO levied a penalty under section 271B of the Act. The assessee challenged the action of the AO before the ld. CIT (A) but could not succeed. 3. Before us, the ld. A/R of the assessee has submitted that there is a reasonable cause for delay in getting the accounts audited u/s 44AB. The main reason for delay is that there were frequent change of the Managing Director of the company and for a considerable period there was no regular Managing Director. Therefore, the meeting of Board of Director for the adoption of audited financial statements could not be convened and conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t occasions in between. However, each time the same was postponed due to the transfers of incumbent Managing Director. Finally the Board Meeting was held on 12.12.2014 wherein the accounts of the company were adopted and submitted to statutory auditors for audit. It may also be noted that for the aforesaid reasons, the assessee vide Board Resolution No. 1/2014 dated 01.09.2014 resolved that an application for extension of time for holding the AGM by 3 months be made to the Registrar of Companies u/s 96(1) of the Companies Act, 2013. Accordingly, the statutory audit was conducted on 24.03.2015 and also the tax audit u/s 44AB and both the reports were filed online on the same date. These reports have been considered in framing the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has further explained that there is a frequent change of Managing Director of the company and we find from the details as reproduced in the foregoing para that there are as many as 5 changes during the period from 01.04.2014 to 15.11.2014 which has caused the delay in convening the Board Meeting for adopting the financial statements of the assessee and consequent statutory audit to be completed by the auditors appointed by the CAG. Therefore, the delay in getting the accounts audited as per the provisions of section 44AB was due to the reasons as explained by the assessee which were beyond the control of the assessee being a State Government Undertaking. The assessee has also filed a copy of resolution for seeking extension of time from RO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey have completed the statutory audit and submitted their audit report dated 27.03.2014. Thereafter, the tax audit has been completed on 15.07.2014 and the revised return was filed on 16.9.2014. The Hon'ble Punjab Haryana High Court in the case of CIT v. Punjab State Leather Development Corpn. Ltd. [2001] 119 Taxman 258 has held that delay in completion of statutory audit was a reasonable cause for non-compliance with section 44AB and it was held that the Tribunal was right in cancelling penalty levied under section 271B. Respectfully following the same, we are of the view that in the instant case, where there has been a delay in completion of statutory audit, there exist a reasonable cause for the delay in completion and submission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... got his books of accounts audited on 28/03/2014 which was made available to the Assessing Officer and no prejudice has been caused to the Revenue. Now the short question that arises is whether in this scenario, penalty u/s. 271B of the Act can be levied or not. In our considered opinion, the assessee had only committed technical venial breach which does not create any loss to the exchequer as the audit report was available to the Assessing Officer before the completion of the assessment proceedings. The Madras High Court in the case of CIT vs. A.N. Arunachalam (208 ITR 481) in the context of filing of audit report for claiming deduction u/s. 80J of the Act, observed that once audit report has been made available before the Ld. Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X
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