Reasonable cause for late audit report filing can defeat penalty where counsel's admitted omission caused the delay.

Penalty for failure to furnish an audit report within the specified date was cancelled where the report had been completed on time and handed to counsel, but counsel omitted to file it. The ITAT accepted that the lapse was attributable to counsel rather than any deliberate default by the assessee, and treated that admitted omission as reasonable cause for the delay in furnishing the report. On that basis, the assessee was found protected from penalty under section 271B.

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Issues: Whether penalty under section 271B of the Income-tax Act, 1961 was leviable when the audit report under section 44AB, though obtained in time, was not filed before the specified date because counsel omitted to file it.

Analysis: The audit was completed before the due date, and the assessee had handed over the report to his counsel. The counsel's omission to file the report was admitted and remained uncontroverted. Since the failure was attributable to the counsel and not to any deliberate default by the assessee, the circumstances constituted reasonable cause for the delay in furnishing the audit report.

Conclusion: The assessee was held to have been prevented by reasonable cause, and the penalty under section 271B was cancelled.

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