Tribunal Cancels Penalty for Late Tax Audit Report; Deems Delay Beyond Assessee's Control

The Tribunal overturned the penalty imposed under section 271B for failure to furnish a Tax Audit Report by the specified date, considering the delay beyond the assessee's control due to statutory audit requirements. The Tribunal deemed the delay technical and not deliberate, as the report was eventually filed with the income return. Consequently, the penalty was cancelled, and the appeal of the assessee was allowed.

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Issues:
Penalty under section 271B for failure to furnish Tax Audit Report by specified date.

Analysis:
The appeal was filed against the penalty imposed by the Assessing Officer under section 271B of the Income Tax Act, 1961. The assessee, a Cooperative Society, filed the Tax Audit Report after the specified date of 30.09.2009, leading to penalty proceedings. The assessee explained that the delay was due to the completion of statutory audit by auditors appointed by the Cooperative Department. The Assessing Officer rejected this explanation and imposed a penalty of Rs. 1,00,000 under section 271B.

Before the ld. CIT(Appeals), the assessee reiterated its explanation, but the penalty was confirmed. The ld. CIT(Appeals) noted the lack of evidence showing efforts to ensure timely audit completion and highlighted the delay in obtaining Form No. 3CB & 3CD from a Chartered Accountant. Displeased with this decision, the assessee appealed to the Tribunal.

The Tribunal considered that the delay in obtaining the tax audit report was beyond the assessee's control due to the statutory audit process under the Cooperative Act. The delay was deemed a sufficient cause for non-compliance with the requirement of section 44AB. The Tribunal found the delay to be technical and not deliberate, as the tax audit report was eventually filed with the return of income. Consequently, the Tribunal concluded that it was not appropriate to impose a penalty under section 271B, overturning the decisions of the Assessing Officer and the ld. CIT(Appeals).

In the final judgment, the Tribunal allowed the appeal of the assessee, cancelling the penalty under section 271B. The order was pronounced in the open court on June 03, 2016.

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