Penalty for delayed audit report filing deleted where the breach was only technical and no prejudice to Revenue was shown.

Penalty under section 271B was deleted because the audit report and return were furnished before completion of assessment, and the delay caused no loss to the exchequer or prejudice to the Revenue. On those facts, the default was treated as a technical venial breach rather than a culpable failure, and reasonable cause within section 273B was accepted. The additional limitation objection was not examined after deletion of the penalty on merits.

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Issues: Whether penalty under section 271B of the Income-tax Act, 1961 was leviable for delay in obtaining and furnishing the audit report under section 44AB, and whether the assessee had shown reasonable cause within section 273B.

Analysis: The audit report and return were filed before completion of the assessment, and the material on record showed that the delay did not cause any loss to the exchequer or prejudice to the Revenue. On these facts, the default was treated as a technical venial breach rather than a culpable failure warranting penalty. The additional limitation ground was not adjudicated after the penalty was deleted on merits.

Conclusion: Penalty under section 271B was not sustainable and was deleted.

Final Conclusion: The assessee succeeded, and the penalty order was set aside.

Ratio Decidendi: Where the audit report is furnished before completion of assessment and the delay constitutes only a technical venial breach causing no prejudice to the Revenue, penalty for failure to comply with audit requirements is not leviable if reasonable cause is established.

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