Penalty u/s 271B for belated tax audit report deleted where accountant suddenly left the job

Penalty u/s 271B deleted where accountant handling accounts suddenly left the job but assessee furnished audit report before completion of assessment.

ABCAUS Case Law Citation:
ABCAUS 3768 (2023) (06) ITAT

In the instant case, the assessee had challenged the order passed by the The National Faceless Appeal Centre (NFAC)/[CIT(A)] confirming order of the Assessing Officer (AO) imposing penalty u/s 271B of the Income Tax Act, 1961 (the Act) for delay in furnishing Tax Audit  Report u/s 44AB of the Act.

The Tribunal observed that the assessee was required to get their accounts audited and liable to file the tax audit report as required under section 44AB of the Act before the due date. Since the assessee has not filed the tax audit report within specified due date and in view of the provisions of section 271B of the Act, the Assessing Officer levied the penalty.

It was noted that during the appellate proceedings, the assessee had attributed the delay to the fact that the accountant who was handling the accounts suddenly left / resigned from the job which led to the delay. 

The Tribunal observed that the assessee had filed its return of income (ITR) for the relevant assessment year belatedly u/s 139(4) of the Act and the Tax Audit Report in Form 3CB and Form 3CD was filed along with the return of income.

The Tribunal observed that on similar facts, the Co-ordinate Bench had held that it was not a fit case for levy of penalty u/s 271B.

Following the same, the ITAT delete the impugned penalty.

Accordingly, the appeal was allowed.

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• Merely ex-parte rectifying computation without amending assessment order not make it nullity- ITAT
• Once assessee discharges primary onus, it shifts to AO to bring evidence to contrary – ITAT