Reasonable cause for delayed tax audit report filing defeats penalty for technical default where delay was not deliberate.

Penalty for delayed furnishing of a tax audit report was held unsustainable where the assessee established reasonable cause for the delay, including medical evidence of the accountant's ill-health. The report had been obtained well before the extended due date and was available before completion of assessment, so the delay was treated as a technical default rather than a deliberate failure. The view that delay automatically attracted penalty was rejected, and the penalty was set aside.

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Issues: Whether penalty under section 271B for delay in furnishing the tax audit report was sustainable when the assessee showed reasonable cause for the delay.

Analysis: The tax audit report had been obtained well before the extended due date, and the delay in uploading and filing was supported by medical material showing the accountant's ill-health. The report was also on record before completion of assessment proceedings. In these circumstances, the delay was not treated as deliberate, and the authorities' view that delay automatically resulted in penalty was rejected. Reasonable cause was found to exist for the failure to furnish the report within time.

Conclusion: The penalty under section 271B was not sustainable and was set aside in favour of the assessee.

Ratio Decidendi: Where the assessee establishes reasonable cause for delayed furnishing of a tax audit report, penalty for technical default cannot be sustained.

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