Appeal allowed due to reasonable cause for audit report delay under Income Tax Act

The Tribunal allowed the appeal, finding a reasonable cause for the delay in filing the audit report under section 44AB of the Income Tax Act, 1961. Consequently, the penalty imposed under section 271B was directed to be deleted. The Tribunal upheld the grounds raised by the assessee, resulting in the appeal being allowed.

---

---

Issues involved: Challenge to penalty order u/s 271B of the Income Tax Act, 1961.

Summary:

Issue 1: Treatment of case as non-filing of Tax Audit Report
- The Assessing Officer (AO) treated the case as non-filing of Tax Audit Report.
- Assessee's response regarding delay due to glitches in the Income Tax Portal was not considered.
- AO should have considered communication received in response to initial Show Cause Notice.
- Failure to consider relevant case law and observations.
- No adverse inference warranted as returned loss was accepted by the department.

Issue 2: Levy of penalty under section 271B
- Assessee filed return declaring total loss, which was accepted by the AO.
- Penalty initiated for failure to furnish audit report under section 44AB.
- Assessee cited delay due to director's death for late filing of audit report.
- CIT(A) dismissed appeal citing lack of sufficient basis for delay.
- AR argued that director's death caused delay in filing reports.
- Tribunal found reasonable cause for delay, directing deletion of penalty.

Conclusion:
The Tribunal allowed the appeal, finding reasonable cause for delay in filing the audit report under section 44AB of the Act, thus directing deletion of the penalty levied under section 271B. The grounds raised by the assessee were upheld, and the appeal was allowed.

---