Penalty u/s 271B for unfilled column 40 in Tax Audit Report Form 3CD deleted by ITAT

Penalty u/s 271B for unfilled column 40 in Form 3CD related to details regarding turnover, gross profit etc. for previous and preceding year deleted by ITAT

In a recent judgment, ITAT has held that unfilled column 40 in Form 3CD related to details regarding turnover, gross profit etc. for previous and preceding year would not attract penalty u/s 271B of the Income Tax Act, 1961.

ABCAUS Case Law Citation:
5187 (2026) (07) abacus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the penalty u/s 271B of the Income Tax Act, 1961 (the Act).

During assessment proceedings the Assessing Officer (AO) noticed that the tax audit report filed by the assessee had an unfilled column 40 in Form 3CD which was related to details regarding turnover, gross profit etc. for the previous year and preceding previous year.

The AO inferred these unfilled column 40 as missing critical information pertaining to gross turnover, net profit, stock-in trade, etc. and held that the statutory requirement u/s 44AB of the Act was not fulfilled. 

Thereafter, the AO levied the impugned penalty u/s 271B for non compliance with the provisions of section 44AB of the Act which was confirmed by the CIT(A)/NFAC.

Before the Tribunal the assessee filed an e affidavit from the Chartered Accountant who prepared the said audit report, indicating that the details were inadvertently left out to be filled and that there was no malafide intention in doing so.

The assessee further stated that due to a software error the details could not be filled out. It was the submission that even otherwise this kind of penalty is duly covered under “reasonable cause” as envisaged u/s 273B of the Act.

On the other hand, the Revenue contended that an incomplete audit report deserved to be equated with a violation of Section 44AB of the Act.

The Tribunal observed that the dictionary meaning of “sufficient cause” would imply no negligence or in action or want of bonafides on the part of an assessee. After considering various judicial precedents, facts and circumstances of the case, and the provisions of Section 273B of the Act, the ITAT opined that the assessee’s case would fall within the definition of “reasonable cause” as envisaged u/s 273B of the Act and therefore the impugned penalty would certainly not be sustainable in the eyes of law.

As a result, the appeal of the assessee was allowed.

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