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TMI Blog2025 (1) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... g in invoking the provisions of section 271B of the Income Tax Act,1961 on the fallacy of presumption that the reply of the appellant was considered by the AO but not found acceptable to the AO, for which no reason was mentioned in the order. 4. The levy of penalty has been made on the basis of presumption. The Assessing officer while imposing penalty has not established that there is willful failure on the part of the assessee to get the accounts audited. 5. The assessee has audited the books even though late on the basis of which the Assessing officer has completed the assessment. There is no absolute failure on the part of the assessee. 6. The Assessing officer failed to understand that delay in getting the books audited within due date would not constitute sufficient ground for levy of penalty under section 271B. 7. There was reasonable cause which prevented the appellant in filing the Audit Report before the due date which the AO failed to appreciate and also failed to grant the immunity provided under section 273B. 8. Any other grounds that may be adduced at the time of hearing may also be considered. 3. Brief facts of the case are that for the A.Y. 2017-18, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act for the non compliance to provision of Sec. 44AB of the act. 4. Aggrieved by the penalty order passed by the AO u/s 271B of the Act, the assessee preferred an appeal before the ld. CIT(A) / NFAC. 5. The ld. CIT(A) / NFAC after considering the penalty order of the AO as well as the written submission of the Assessee held that it is not the case of the assessee that assessee was ignorant about audit as the same was done but late. Further, the learned CIT(A) observed that the reasons given are not sufficient to prevent from fulfilling the statutory obligations under law with such enormous delay. Further the learned CIT appeal / NFAC was also of the opinion that the liability cast upon the assessee is not because of any order or notice but because of the operation of the statue itself by virtue of failure to discharge the statutory obligation or requirement within the time prescribed. Accordingly held that the AO was reasonable in imposing a penalty of rupees 1,50,000/- and dismissed the appeal of the assessee. 6. Aggrieved by the order of the ld. CIT(A)/NFAC, the assessee has filed the present appeal before this Tribunal. The assessee has filed paper book comprising of 26 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they are not required to file return of Income U/s 139 of the Act along with the tax audit report couldn't filed the ROI & audit report within the due date. The Assessee also submitted that even the internal auditors from the co-operative department also not appraised the management about the matter. It is only after getting the notice u/s 142(1) of the Act, the assessee sought opinion from a professional who advised them to get their accounts audited and file return of income at the earliest. Acting upon immediately, they appointed a CA firm to carry out the tax audit and file their return of income which were ultimately filed on 13/03/2018. Further, it is also contended that as the AO completed the assessment based on the audited statement of accounts as well as audit report, there was no loss to the revenue on account of delay in filing the audit report. Accordingly, there was a reasonable cause within the meaning of section 273B of the Act in not getting the audit report within the prescribed time. 9.1 Before proceeding further, it is appropriate to take note of section 44AB, 271B and 273B of the Act for the purpose of this case, which reads as follows: 44AB. Audit of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be prescribed: Provided that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year: Provided [further] that this section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BBA, on and from the 1st day of April, 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later: Provided [also] that in a case where such person is required by or under any other law to get his accounts audited , it shall be sufficient compliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date and furnishes by that date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this section. Explanation.-For the purposes of this section,- (i)"accountant" shall have the same meaning as in the Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271GA] [Substituted 'section 271-FB, section 271-G' by Finance Act, 2015 (No. 20 of 2015), dated 14.5.2015.][, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272-A, sub-section (1) of section 272-AA or ] [Inserted by Act 46 of 1986, Section 26 (w.e.f. 10.9.1986).][section 272-B or] [ Inserted by Act 20 of 2002, Section 106 (w.e.f. 1.6.2002).] [sub-section (1) or sub-section (1-A) of ] [Substituted by Act 21 of 2006, Section 55, for " sub-section (1) of section 272-BB" (w.e.f. 1.6.2006).][section 272-BB] [ Substituted by Act 20 of 2002, Section 106, for " section 272-BB or" (w.e.f. 1.6.2002).][or sub-section (1) of section 272-BBB or] [Substituted by Act 21 of 2006, Section 55, for " sub-section (1) of section 272-BB" (w.e.f. 1.6.2006).] [clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.]". 9.2 An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause. 'Reasonable cause' as applied to human action is that which would constrain a person of average intelligence and ordinary prudence. It can be described as a probable cause. The cause shown has to be considered and only if it is found to be frivolous, without substance or foundation, the prescribed consequences will follow. 9.5 Taking into cumulative effect of the explanations offered by the assessee and from a reading of the relevant provisions of 273B of the Act read with Section 271B and read with Section 44AB of the Act, we are of the considered opinion that assessee demonstrated that there was a reasonable cause for the said failure as per the provisions contained in section 273B of the Act. We are also of the opinion that an honest belief founded upon reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinary prudent and cautious man, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do. Our above view finds support from the various decisions cited by the learned AR of the assessee. Further, from the conduct, behavior and attitude of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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