Tribunal rules in favor of appellant, reduces penalty for non-filing of audit report.

The Tribunal ruled in favor of the appellant, deleting the penalty under section 271B for non-filing of the audit report and restricting the penalty under section 272A(1)(d) for non-compliance with notices to Rs. 10,000 for one default.

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Issues involved:
The judgment involves issues related to penalty under sections 271B and 272A(1)(d) of the Income Tax Act, 1961 for non-filing of audit report and non-compliance with notices respectively.

Issue 1 - Penalty under section 271B for non-filing of audit report:
The appellant challenged the penalty order under section 271B for late filing of audit report, citing reasons like technical glitch due to expired digital signature. The Assessing Officer had imposed a penalty of Rs. 1,50,000 for the violation. The appellant argued that the audit report was submitted before completion of assessment proceedings, and the delay was due to genuine reasons. The Tribunal noted that the Assessing Officer accepted the return of income subject to minor disallowance, indicating that the audit report was considered. Relying on precedents, the Tribunal held that the explanation provided by the appellant constituted reasonable cause for the delay, and thus, the penalty under section 271B was deleted.

Issue 2 - Penalty under section 272A(1)(d) for non-compliance with notices:
In the second appeal, the appellant contested the penalty imposed under section 272A(1)(d) for non-compliance with multiple notices issued under section 142(1) of the Act. The Assessing Officer levied penalties of Rs. 50,000 for each default, totaling Rs. 250,000. The appellant argued that penalties cannot be imposed for each default and cited a judgment supporting this stance. The Tribunal agreed with the appellant, stating that the penalty under section 272A(1)(d) is deterrent in nature and not meant for multiple impositions. Therefore, the penalty was restricted to Rs. 10,000 for one default instead of multiple defaults, in line with the purpose of the provision.

Conclusion:
The Tribunal ruled in favor of the appellant in both appeals, deleting the penalty under section 271B for non-filing of the audit report and restricting the penalty under section 272A(1)(d) for non-compliance with notices to Rs. 10,000 for one default. The judgments were pronounced on 09/06/2023.

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