2023 (3) TMI 661 - AT - Income Tax

Tribunal cancels penalty under Income Tax Act citing reasonable cause for delay

The Tribunal allowed the appeal, directing the Assessing Officer to delete the penalty levied under section 271B of the Income Tax Act, 1961. The decision ... Penalty u/s 271B - assessee has not filed the tax audit report u/s 44AB before the due date - HELD THAT:- Respectfully following the case of Balaji Logistics v. ACIT [2022 (9) TMI 1432 - ITAT CHENNAI] for the assessment year 2015-16 when the Tax Audit Report was made available to the AO before completion of assessment proceedings, then for venial technical breach without any mala fide intention, penalty cannot be levied u/s.271B , thus we are of the considered opinion that it is not a fit case for the levy of penalty under section 271B of the Act and accordingly, the penalty levied stands deleted. As decided in P.Senthil Kumar v. PCIT [2019 (1) TMI 222 - MADRAS HIGH COURT] for venial technical breach without any mala fide intention, penalty cannot be levied. Decided in favour of assessee. Issues:Late filing of tax audit report under section 44AB of the Income Tax Act, 1961 leading to penalty under section 271B.Analysis:The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the penalty under section 271B for late filing of the tax audit report. The assessee had not filed the return of income for the assessment year 2011-12 within the specified time under section 139(1) of the Act. The Assessing Officer issued a notice under section 148 of the Act as there was reason to believe that incomes chargeable to tax had escaped assessment. The assessment was completed under section 143(3) r.w.s. 147 of the Act, determining the total income of the assessee. Subsequently, penalty proceedings were initiated under section 271B for late filing of the tax audit report under section 44AB of the Act. The Assessing Officer levied a penalty, which was confirmed by the Commissioner of Income Tax (Appeals) (NFAC).The assessee contended that the delay in getting the accounts audited was due to the auditing of accounts of the earlier two assessment years. The audit report under section 44AB of the Act was furnished along with the return of income before the completion of assessment. The assessee relied on a previous Tribunal decision in a similar case to support the request for deleting the penalty under section 271B of the Act. The Tribunal considered the submissions and the orders of the authorities below. It noted that the tax audit report was made available to the Assessing Officer before the completion of assessment proceedings, similar to a previous case where the penalty under section 271B was deleted. Following the decision of the Coordinate Benches of the Tribunal, the penalty under section 271B was deleted in the present case as well.In conclusion, the Tribunal allowed the appeal, directing the Assessing Officer to delete the penalty levied under section 271B of the Act. The decision was based on the reasoning that the delay in filing the tax audit report was due to reasonable causes and did not involve any mala fide intention on the part of the assessee. The Tribunal's decision aligned with previous judgments on similar issues, emphasizing that technical breaches without malicious intent should not attract penalties under section 271B of the Act.