TMI Blog2020 (8) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... 09/2010). The assessee filed return of income for the first time on 06.11.2017 in response to notice under section 148 of the Act issued by the Assessing Officer. During reassessment proceeding, the assessee furnished the tax Audit Report dated 2/09/2010. Assessee was required to get his books of accounts audited on or before the due date of filing of the return of income. There was no relaxation in getting the books of account audited by a Chartered Accountant and relaxation was given only for furnishing the Tax Audit Report. The requirement of furnishing the audit report before the specified date has been dispensed with for the relevant assessment year. But AO emphasized only on the fact Audit Report was not furnished on or before the due date of filing of return of income. He did not examine whether the books of account were audited before the due date of return of Income. He has even not verified authenticity of the Audit Report from the Chartered Accountant, whose name is appearing on the Audit Report. AO has not verified the records of the Chartered Accountant like, register of dispatch of Audit Report or team member engaged in Audit, records on the basis of which re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht on record by the assessee . 4. (i) On the facts and circumstances of the case, the CIT(A) has erred both on facts and in law in imposing penalty of ₹ 100,000/- invoking the provisions of section 271B of the Act on account of not getting the books of accounts audited despite the fact books of account were duly audited prior to the due date of furnishing of return of income. 5. (i)On the facts and circumstances of the case, the CIT(A) has erred both on facts and in law in imposing the penalty ignoring the fact there was bonafide reasonable cause for not uploading the audit report electronically. (ii)That the assessee was prevented by reasonable cause to comply with the notice(s) so issued. 6. That the appellant craves leave to add, amend or alter any of the grounds of appeal. 2. The facts in brief of the case are that the assessee, a private limited company, was engaged in the business of providing gift items and other allied items to banks, financial institutions and LIC etc. For the year under consideration, the assessee was required to file its return of income on the due date prescribed for companies i.e. 30thSep., 2010, but the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that assessee had filed appeal against the quantum assessment order and, therefore, till disposal of the appeal, the penalty might be kept in abeyance. The Assessing Officer rejected the contention of the assessee and levied penalty of ₹ 1,00,000/- in terms of provision of section 271B of the Act. 2.2 The assessee filed appeal before the Learned CIT(A) and pleaded that in view of the Circular No. 3/2009 dated 21/05/2009 issued by the CBDT, the assessee was not required to furnish physical copy of Audit Report with the Income Tax Department and was only required to fill out the relevant columns in the form of return of income on the basis of such report. According to the assessee, though the Audit Report was obtained before the due date, but since no return of income was filed by the assessee, there was no occasion to fill the relevant column of the form of the return of income on the basis of Audit Report. According to the assessee, in view of the CBDT circular (Supra), no default has been committed by the assessee and therefore, penalty levied by the Assessing Officer under section 271B of the Act was invalid. The Ld. CIT(A), however, not accepted the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds are decided in negative to the appellant. 3. Before us, the Learned counsel of the assessee appeared through video conferencing facility and filed a paper-book containing copies of the Central Board of Direct Taxes (CBDT) circulars dated 21/05/2009 and dated 01/05/2013. The Learned counsel contended that in terms of CBDT circular dated 21/05/2019, the assessee was not required to furnish physical copy of the Tax Audit Report under section 44AB of the Act to the Income Tax Department along with the return of income on or before the due date of furnishing of the return of income and no penalty was to be initiated or levied for not furnishing the Tax Audit Report on the before the due date. She referred to another CBDT circular dated 01/05/2013, according to which requirement of furnishing the tax Audit Report on the before the due date of filing of the written was made mandatorily applicable with effect from the assessment year 2013-14. Thus, according to her in view of the CBDT circulars (supra), it is apparent that the assessee was not required to furnish Tax Audit Report on the before the due date with the Income Tax Department during relevant year and only requirem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see fails to get his books of account audited before the specified date, the penalty u/s 271B may be levied and also if the assessee after getting books of account audited, fails to furnish such audit report with the Income-tax Department before the specified date, the penalty u/s 271B may be levied. Further, Rule 12 of the Income-tax Rules has prescribed the form for filing the Tax Audit Report and other requirements. Further, Rule 12(2) of the Income Tax Rules, 1962 has prescribed filing of Audit Report along with the return of income. The relevant rule is reproduced as under: [ Return of income and return of fringe benefits . 12. (1) .. [(2) The return of income required to be furnished in Form SAHAJ (ITR-1) or Form No. ITR-2 or Form No. ITR-3 or 18 [ Form SUGAM (ITR-4) ] or Form No. ITR-5 or Form No. ITR-6 [or Form No. ITR-7] shall not be accompanied by a statement showing the computation of the tax payable on the basis of the return, or proof of the tax, if any, claimed to have been deducted or collected at source or the advance tax or tax on self-assessment, if any, claimed to have been paid or any document or copy of any account or form or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept in ITR-7) shall not be accompanied by any attachments/annexures. Thus, taxpayers should not enclose with these return forms any statement showing the computation of income or tax, copies of balance-sheet, profit and loss account, TDS/ TCS certificates, proof of payment of advance tax or self-assessment tax. However, these documents shall have to be produced before the Assessing Officer on demand by him. The Chief Commissioners of Income-tax/Commissioners of Income-tax must ensure that documents if any, annexed with these returns or Form ITR-V are detached at the time of receiving these returns/ ITR-V and are returned to the taxpayers immediately. 7. Following clarifications are also issued in respect of certain issues arising from furnishing the return; the above mentioned forms: (i) AN assessee should obtain the report of audit from an accountant under section 44AB of the Act on or before the due date of the furnishing of the return and should fill out the relevant columns of the return forms on the basis of such report. However, the report of audit should not be attached with the return or furnished separately any time before or after the due date. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. There was no relaxation in getting the books of account audited by a Chartered Accountant and relaxation was given only for furnishing the Tax Audit Report. The penalty u/s 271B can be levied for either not getting books of account audited before the specified date or for not furnishing the audit report before the specified date. The requirement of furnishing the audit report before the specified date has been dispensed with for the relevant assessment year. But, the Assessing Officer emphasized only on the fact Audit Report was not furnished on or before the due date of filing of return of income. He did not examine whether the books of account were audited before the due date of return of Income. He has even not verified authenticity of the Audit Report from the Chartered Accountant, whose name is appearing on the Audit Report. The AO has not verified the records of the Chartered Accountant like, register of dispatch of Audit Report or team member engaged in Audit, records on the basis of which report was prepared, correspondence or comment of the assessee on the deficiencies pointed out by the team etc. In the Audit Report in clause 28(a), detail of opening stock, clos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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