2023 (7) TMI 332 - AT - Income Tax

Penalty under Section 271B vacated for tax audit report delay due to technical glitches.

Sushila Devi Versus ACIT, Circle, Sikar

Sushila Devi Versus ACIT, Circle, Sikar - TMI Issues Involved:1. Confirmation of Penalty under Section 271B of the Income Tax Act, 1961 for delayed filing of the tax audit report.Summary:1. Facts of the Case:The assessee, engaged in the retail sale of petrol and diesel, filed the return of income for AY 2017-18 on 20.01.2018 with an income of Rs. 22,11,260/-. The assessment was completed u/s 143(3) with an assessed income of Rs. 23,11,260/-. The total turnover was Rs. 20,88,24,297/-, necessitating an audit under Section 44AB. The audit report was furnished on 08.11.2018, one day after the due date, leading to the issuance of a notice u/s 271B and subsequent imposition of a penalty of Rs. 1,50,000/- by the National Faceless Assessment Center.2. Appeal to CIT(A):The assessee appealed to the CIT(A), arguing that the tax audit was completed on 07.11.2017 but was submitted online on 08.11.2017 due to technical glitches. The CIT(A) upheld the penalty, stating the audit was not completed by the due date.3. Arguments by Assessee:The assessee contended that the audit report was signed on 07.11.2017 and the delay in submission was due to technical issues, constituting a reasonable cause under Section 273B. The assessee cited several judicial precedents, including Hindustan Steel Ltd. Vs. State of Orissa and Staywell Hotels (P) Ltd. Vs. CIT, arguing that penalties should not be imposed for technical or venial breaches without contumacious conduct.4. Revenue's Argument:The Revenue argued that the delay was inexcusable and the penalty was justified as the assessee failed to comply with the statutory provisions.5. Tribunal's Findings:The Tribunal noted the delay of only one day and considered it a technical glitch. It emphasized the discretionary nature of penalty imposition under Section 271B, referencing the Madhya Pradesh High Court's decision in Staywell Hotels Private Limited Vs. CIT, which condoned a two-month delay. The Tribunal concluded that the delay did not indicate deliberate defiance or contumacious conduct by the assessee.6. Conclusion:The Tribunal held that the penalty levied u/s 271B was not justified due to the reasonable cause of technical glitches and the minor nature of the delay. The penalty was vacated, and the appeal of the assessee was allowed.Order Pronouncement:The order was pronounced in the open Court on 03/05/2023.