ITAT deleted penalty as Tax Audit Report was filed before completion of assessment

Penalty u/s 271B can not be levied in a case where tax audit report was furnished before completion of the assessment

In a recent judgment, ITAT Cochin has held that penalty u/s 271B can not be levied for non furnishing of tax audit report within due date as the report was filed before completion of assessment.

ABCAUS Case Law Citation:
4606 (2025) (06) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) upholding the levy of penalty u/s 271B of the Income Tax Act, 1961 (the Act) for non furnishing of tax audit report u/s 44AB of the Act within prescribed due date.

The solitary issue involved in the appeal was levy of penalty u/s 271B of the Act for the Assessment Year 2018-19. The Assessing Officer (the AO) had levied a penalty of Rs.1,50,000 on the ground that the assessee had failed to submit the audit report within the time prescribed by the Act.

The case of the assessee was that there was a reasonable cause for the delay in filing the audit report and also that the audit report was filed before the completion of assessment and hence no penalty was leviable. It was also the contention of the assessee that the penalty levied was barred by limitation, if the limitation period would be reckoned from the date of assessment order.

The Tribunal opined that in this case audit report had been submitted before the completion of assessment and hence the penalty cannot be levied in such cases. The second aspect of the matter was that the assessee was not able to file the audit report as he was busy with the illness of his son, which constituted a reasonable cause and hence no penalty was leviable on this count also.

The Tribunal observed that the bench on the same set of facts held that ill health of a partner was a reasonable cause within the meaning of sec.273B of the Act.

Therefore, the ITAT deleted the penalty and allowed the appeal of the assessee. 

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