Timely audit report compliance under section 44AB prevented penalty under section 271B despite belated furnishing with return.

Penalty under section 271B was held not leviable where the audit report required under section 44AB had been obtained before the due date, even though it was furnished later along with a belated return under section 139(4). The governing view applied was that timely obtaining of the audit report satisfied the statutory requirement for the relevant period, and delayed filing of the report with the return did not by itself attract penalty. The cancellation of penalty was therefore sustained in favour of the assessee.

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Issues: Whether penalty under section 271B of the Income-tax Act, 1961 was leviable where the audit report required under section 44AB had been obtained before the due date but was furnished along with a belated return filed under section 139(4).

Analysis: The audit report was admittedly obtained before the due date and was subsequently filed with the return submitted under section 139(4). The governing view applied was that, for the relevant period, obtaining the report within time satisfied the statutory requirement, and mere delayed furnishing with the belated return did not justify penalty.

Conclusion: The penalty under section 271B was not leviable and was liable to be cancelled, in favour of the assessee.

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