Penalty 271B deleted as accountant had to look after business due to assessee neuro problem

Penalty 271B deleted as accountant had to look after business activities due to assessee neurological problem. Hence he failed to coordinate with Auditor’s office

ABCAUS Case Law Citation:
ABCAUS 3207 (2019) (12) ITAT

In the instant case the appeal was filed by the assessee against the order of the CIT(A) in sustaining the penalty u/s 271B r.w.s 250(6) of the Income Tax Act, 1961 (the Act).

The assessee was an individual engaged in trading. Pursuant to survey proceedings U/s. 133A of the Act, the assessee filed his return of income for the relevant A.Y. During the scrutiny proceedings, it was observed by the Assessing Officer (AO) that the assessee had not filed the Audit Report of the assessee’s firm in Form No.s 3CB and 3CD within the specified time limit.

Since there was delay in filing the Audit Report and in the absence of justifiable cogent reasons for delay, the A.O. levied penalty of Rs. 1,50,000/-invoking provisions of section 271B of the Act.

Aggrieved, assessee filed an appeal before the CIT(A). The CIT(A) passed ex-parte order based on the materials available on record and sustained the penalty levied by the A.O.

Before the Tribunal, it was submitted that the assessee had suffered from neurological problem and therefore, he was compelled to take assistance of his Manager and accountant to look after his business activities. However, they had failed to timely coordinate with the Auditor’s office and therefore, the Audit could not be completed within the stipulated time and thus there was delay in filing the Audit Report.

It was further submitted that subsequently the assessee filed the return of income and Audit Report U/s. 44AB of the Act for the relevant AY. However, without considering the explanation of the assessee the AO as well as the CIT(A) confirmed / sustained the penalty.

It was also pleaded that non-filing of the Audit Report within the stipulated time was beyond his control and moreover, he had filed the same before the assessment proceeding hence a lenient view may be taken and grant relief to the assessee.

Penalty 271B deleted as accountant had to look after business activities 

The Tribunal observed that the assessee had a reasonable cause for delay in filing the Audit Report. Moreover, he had filed the Audit Report before the assessment proceedings. Therefore, the Tribunal opined that penal action u/s 271B need not be initiated in the case of the assessee.

Hence, the Tribunal deleted the penalty levied on the assessee invoking the provisions of section 271B of the Act.

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