Audit report default penalty upheld where no reasonable cause was shown for failure to comply with statutory audit requirements.

Failure to furnish the audit report required under section 44AB attracted penalty under section 271B where the assessee's turnover crossed the statutory threshold and no report was filed. The explanation that there was no staff and that a part-time accountant had left without intimation was held not to amount to reasonable cause for the default. On the facts found by the lower authorities, the audit obligation remained unfulfilled and the penalty was therefore upheld.

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Issues: Whether the penalty levied under section 271B of the Income-tax Act, 1961 for failure to furnish the audit report could be sustained when the assessee claimed absence of staff and a part-time accountant leaving without intimation as the explanation for non-compliance.

Analysis: The assessee's turnover exceeded the statutory threshold requiring maintenance of books and audit under section 44AB, yet no audit report was furnished. The explanation offered for the default was held not to constitute a reasonable cause for the failure. On the facts found by the lower authorities, the statutory liability to comply with the audit requirement remained unmet and the penalty was justified.

Conclusion: The penalty under section 271B was rightly confirmed and the assessee's challenge failed.

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