Delay in filing of Tax Audit Report due to computer data crash- Penalty u/s 271B quashed
ABCAUS Case Law Citation:
ABCAUS 3673 (2023) (02) ITAT
In the instant case, the assessee had challenged the order passed by the National Faceless Appeal Centre [NFAC/CIT(A)] in confirming income tax penalty u/s 271B of the Income Tax Act, 1961 (the Act).
The case of the assessee was selected for scrutiny assessment and later the assessment order was passed u/s 143(3) of the Act accepting the return of income.
However, the Assessing Officer (AO) initiated the penalty proceeding u/s 271B of the Act for failure to file audit report on due date.
Replying to the notice u/s 274 of the Act, the assessee stated that his accounts were maintained in the tally accounting software and on the eleventh hour of the due date for filing tax audit report, due to unknown technical glitch, the entire data got corrupted taking time to recover the data & get the accounts finalized again.
The assessee also filed an affidavit affirming the above.
It was Further stated that in past the audit report have always been filed within prescribed time and that also no adverse finding was noticed by the AO during the assessment proceedings.
However, the AO for the want of any documentary evidences including third party evidence in respect of its claim that accounts got corrupted at the last time rejected the assessee’s plea and imposed the penalty u/s 271B of the Act for not filing tax audit report in Form 3CB.
The Tribunal observed that there was no dispute that the assessee had submitted that audit report after the delay of approx. three months without issue of any notice but it was delayed and filed after the due date of furnishing was expired.
The Tribunal further observed that the assessee voluntarily complied with the law and the revenue had not substantiated by placing anything on record that the explanation given by the assessee was not genuine. The assessee had filed the return, paid the taxes and the returned income was accepted by the revenue.
The Tribunal opined that based on the facts and voluntary compliance made by the assessee, the Revenue authorities should have exercised the discretion available in not penalizing the assessee as there was no direct or indirect loss of delay in submission of the audit report and there was no malafide intention.
The Tribunal opined that it may happen to anyone and the reason for delay caused by the technical bug in filling the audit report is a genuine reason. Therefore, the assessee had sufficient reason to file the audit report delayed.
The Tribunal stated that the penalty levied under section 271B of the Act cannot be levied for the reason that there was a failure on the part of the assessee to obtain tax audit report was on account of a bona fide reason of crashing the compute data and thus has to rewrite the same as the revenue could not show that the belief of the assessee was mala fide.
Accordingly, the Tribunal deleted the penalty and allowed the allowed the appeal in favour of the assessee.
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