Tribunal revokes penalty for late tax audit report submission

The Tribunal ruled in favor of the appellant, revoking the penalty imposed under section 271B for failure to get accounts audited and furnish audit report before the due date. The Tribunal considered the delay in statutory audit completion as a reasonable cause for the delay in submitting the tax audit report under section 44AB, leading to the deletion of the penalty. The decision was based on the precedent that delay in statutory audit completion can constitute a valid reason for non-compliance with section 44AB, resulting in the cancellation of the penalty.

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Issues:
Levy of penalty under section 271B for failure to get accounts audited and furnish audit report before due date.

Analysis:
The appellant, a State Government undertaking, filed its return of income based on unaudited books, later revised based on audited books showing a loss. Penalty under section 271B was imposed for delay in getting accounts audited and furnishing the audit report before the due date. The appellant claimed delay was due to statutory audit delay, demerger issues, and new Companies Act requirements. The Assessing Officer found the reasons unacceptable and imposed a penalty of Rs. 1.5 lakh.

On appeal, the CIT(A) upheld the penalty, stating the reasons for delay lacked evidence, and issues with auditors' fees were not valid excuses. The appellant argued delay was due to statutory audit delays in previous years, affecting the current year's tax audit. The appellant cited cases where delay in statutory audit was considered a reasonable cause for non-compliance with section 44AB.

The Tribunal found the delay in statutory audit completion was a reasonable cause for the delay in submitting the tax audit report under section 44AB. Citing precedent, the Tribunal held that delay in statutory audit completion constituted a reasonable cause for non-compliance with section 44AB, leading to the deletion of the penalty under section 271B. Consequently, the appeal was allowed, and the penalty was revoked.

In conclusion, the Tribunal ruled in favor of the appellant, deleting the penalty imposed under section 271B due to a reasonable cause for the delay in completing and submitting the tax audit report. The decision was based on the precedent that delay in statutory audit completion can be a valid reason for non-compliance with section 44AB, leading to the cancellation of the penalty.

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