2023 (4) TMI 141 - AT - Income Tax

Appeal granted, penalty canceled for late audit report filing citing health issues as valid reason.

Mrs. Suryavathi Gandiboina Versus Asstt. C.I.T. Circle 1 Karimnagar

The Tribunal allowed the appeal, setting aside the penalty imposed for late filing of the audit report under section 271B of the Income Tax Act. The ... Levy of penalty u/s 271B - assessee had filed the audit report which is beyond the extended due date of filing of the return - HELD THAT:- A perusal of the various details filed by the assessee shows that the assessee was not keeping good health for which she was not in a position to obtain the Audit Report in time, and, therefore, could not file the same before the statutory due date. As per the provisions of section 273B, no penalty shall be imposable u/s. 271B on the person or the assessee as the case may be for any failure referred to in the said provision, if the assessee proves that there was a reasonable cause for the said failure. In the instant case, the submission of the assessee during the course of penalty proceedings that she was not keeping good health for which documentary evidences were filed are not disputed - there was a reasonable cause on the part of the assessee for not getting the accounts audited timely and file the same on or before the due date. We, therefore, set aside the order of the CIT (A), NFAC and direct the Assessing Officer to cancel the penalty. Appeal filed by the assessee is allowed. Issues:The appeal challenges the penalty imposed under section 271B of the Income Tax Act for late filing of audit report.Summary:The case involved an individual engaged in trading who filed a return of income declaring total income. The penalty proceedings were initiated due to the delayed filing of the audit report beyond the extended due date. The assessee explained the delay was due to health issues and argued that the audit report was available during scrutiny proceedings. Despite the explanations, the Assessing Officer imposed a penalty of Rs.1,50,000, which was upheld by the CIT (A).Upon appeal, the Tribunal considered the arguments presented. The assessee cited health reasons as a reasonable cause for the delay, supported by medical evidence. Citing Section 273B of the Income Tax Act, the Tribunal found merit in the assessee's argument, stating that no penalty should be imposed if a reasonable cause is proven. As the health issues were substantiated, the Tribunal concluded that there was a valid reason for the delay in obtaining and filing the audit report.Therefore, the Tribunal allowed the appeal, setting aside the penalty imposed by the Assessing Officer and confirmed by the CIT (A). The Tribunal directed the Assessing Officer to cancel the penalty, emphasizing the reasonable cause for the delay due to health issues.The judgment was pronounced in the Open Court on 24th March, 2023.