2019 (7) TMI 352 - AT - Income Tax

Appellate Tribunal: Form 3CB + 3CD = Compliance with 44AB. Penalty Deleted. Assessee's Appeal Allowed.

M/s PMC Rubber Chemicals India Pvt. Ltd. Versus ACIT, Circle-24, Hooghly

The Appellate Tribunal held that the filing of Form 3CB audit report with Form 3CD constituted sufficient compliance with the requirements of section ... Levying penalty u/s 271B - not filing the tax audit report - non furnishing statutory audit report in proper form - as per AO assessee failed to carry out statutory Audit and failed to file the Audit report in prescribed forms - HELD THAT:- Assessee has filed form no. 3CD and 3CB and the same has not been disputed therefore the tax audit report was on record and hence the penalty should not be levied. AO disputed that instead of form no.3CB audit report should be in form no. 3CA. We note that the difference in form no. 3CA and form no. 3CB is that in form no. 3CA, the auditors are not required to give separate audit report. But in form no. 3CB, since that deals with the case of an assessee whose accounts have not been audited, mandates of comprehensive audit report. Therefore, when an assessee had furnished the tax audit report in form no. 3CB then it cannot be said that it has not complied with the provisions of section 44AB merely because the report is not in form no. 3CA. Thus, we are of the view that in the assessee’s case, form no. 3CB audit report with form no. 3CD is a sufficient compliance and hence penalty should not be levied. Therefore, we delete the penalty levied - Decided in favour of assessee. Issues Involved:Assessment of penalty u/s 271B for non-filing of tax audit report in prescribed form.Detailed Analysis:1. Issue of Penalty u/s 271B:The appeal pertains to the imposition of a penalty under section 271B of the Income Tax Act, 1961, for not filing the tax audit report in the prescribed form. The original assessment determined the total income of the assessee, and it was noted that the assessee failed to carry out the statutory audit and did not file the tax audit report in the prescribed forms. The Assessing Officer initiated penalty proceedings under section 271B, which was upheld by the Commissioner of Income Tax (Appeals). The main contention of the assessee was that the penalty was wrongly imposed for not furnishing the statutory audit report in the proper form.2. Legal Interpretation and Precedents:The legal interpretation revolves around Section 44AB of the Act, which mandates every person carrying on a business to get their accounts audited and furnish the audit report by the prescribed due date. Rule 6G of the Income-tax Rules, 1962, specifies the forms required for audit reports based on different scenarios. In this case, the assessee had filed Form 3CB along with Form 3CD, which was considered a sufficient compliance with the provisions of section 44AB. The judgment of a Co-ordinate Bench of ITAT Delhi on similar facts supported the assessee's position, emphasizing substantial compliance with the law.3. Conclusion and Decision:After considering the arguments and legal provisions, the Appellate Tribunal held that the filing of Form 3CB audit report with Form 3CD constituted sufficient compliance with the requirements of section 44AB. Therefore, the penalty imposed by the Assessing Officer was deleted, and the appeal of the assessee was allowed. The Tribunal's decision was based on the understanding that the assessee had fulfilled the necessary audit report filing requirements, and hence, the penalty was unwarranted.This detailed analysis highlights the legal intricacies involved in the case, focusing on the interpretation of relevant sections and rules, as well as the application of precedents to arrive at a just decision regarding the penalty imposed under section 271B.