2019 (11) TMI 1334 - AT - Income Tax

Tribunal upholds penalties for failure to audit accounts under Section 44AB, stresses timely compliance

The Tribunal upheld penalties of Rs. 42,151 and Rs. 100,000 imposed on the assessee for not getting accounts audited under Section 44AB for the assessment ... Penalty u/s 271B - assessee failed to get his account audited in respect of previous years or furnish report of such audit as required under section 44AB - case of the assessee that the assessee had demanded the documents seized by the authorities during the course of survey as they were not provided by the authorities,therefore there was reasonable cause for not filling the audited accounts - HELD THAT:- The assessee vide letter the date 30 September 2008 had asked for 3 months’ time for filing the audited reports/documents however the accounts were audited only on 25.3.2011. In view of above said facts if we look into the conduct of the assessee then it is clear that assessee had not filed the audited account within the 3 months as sought by the assessee after 30 September 2008 and the audited accounts were only filed on 25 March 2011. In view of the above are we do not find any reason much less plausible reason or cause for not filing the audited account within time. If the assessee had filed the audited accounts within the 3 months after 30 September 2008 then it would be a reasonable cause for not filing the audited accounts but the assessee had taken more than 3 years to file the audited accounts, which in our view, is not in accordance with law. We may point out that the judgements relied upon by the ld. AR for the assessee are not applicable to the facts of the present case as the facts in all these decisions were entirely different. In the result the appeal of the assessee is required to be failed and accordingly we dismiss both the appeals. Issues Involved:1. Confirmation of penalty under Section 271B for the assessment years 2008-2009 and 2009-10.2. Reasonable cause for failure to get accounts audited and furnish audit reports within the prescribed time.Issue-wise Detailed Analysis:1. Confirmation of Penalty under Section 271B:The appeals were filed by the assessee against the Commissioner’s order confirming penalties of Rs. 42,151 and Rs. 100,000 for the assessment years 2008-2009 and 2009-10, respectively, under Section 271B. The assessee, running a proprietorship concern, was penalized for not getting accounts audited as required under Section 44AB.2. Reasonable Cause for Failure to Get Accounts Audited:The assessee argued that the delay in obtaining the tax audit report was due to the impounding of books and documents during a survey conducted on 06.05.2008. Despite requesting copies of these documents on 22 September 2008, the assessee claimed that the authorities did not provide them in time, hindering the completion of the audit. Further, the assessee cited absconding due to criminal proceedings by the Food Department as a reason for the delay.The Assessing Officer (AO) and the Commissioner (Appeals) rejected these arguments, noting that the assessee had ample time to obtain the documents and complete the audit before the due date of 30.09.2008. The AO pointed out that the assessee did not make any substantial effort to collect the documents or file the audited accounts within the extended period requested.Detailed Analysis:Survey and Subsequent Actions:A survey under Section 133A was conducted on 06.05.2008, where the assessee surrendered Rs. 35,00,000 under various heads. Notices under Sections 148 and 142(1) were issued, and despite non-compliance, the assessee eventually filed the return of income on 28.07.2011. The AO completed the assessment under Section 143(3) with minor additions.Request for Documents:The assessee requested copies of the impounded documents on 22 September 2008. The AO responded on 25 September 2008, asking the assessee to arrange for photocopying the documents. The assessee requested an extension for filing audited accounts on 30 September 2008 but ultimately got the accounts audited only on 25.03.2011.Penalty Imposition:The AO imposed a penalty, stating that the assessee failed to get the accounts audited without reasonable cause. The Commissioner (Appeals) upheld this decision, emphasizing the ample time available to the assessee and the lack of effort to obtain the necessary documents and complete the audit.Arguments by the Assessee:The assessee argued that the authorities' actions were unjustified, as multiple requests for documents were made. The assessee cited precedents where penalties were waived due to reasonable causes, such as delays in obtaining tax audit reports for preceding years.Judgment:The Tribunal held that the assessee failed to provide a plausible reason for the delay in filing audited accounts. Despite requesting an extension, the accounts were audited only after more than three years. The Tribunal found no reasonable cause for the delay and dismissed the appeals, confirming the penalties imposed by the lower authorities.Conclusion:The appeals were dismissed, and the penalties under Section 271B were upheld, as the assessee failed to demonstrate a reasonable cause for not getting the accounts audited within the prescribed time. The Tribunal emphasized the importance of timely compliance with audit requirements and found the assessee’s conduct insufficient to warrant relief from penalties.