2024 (6) TMI 857 - AT - Income Tax

Appellate Tribunal Overturns Unwarranted Penalty of Rs. 1,50,000 Due to Timely Filing and Compliance with Tax Audit.

The appellate tribunal allowed the appeal, setting aside the penalty of Rs. 1,50,000/- imposed under section 271B of the Income Tax Act. The tribunal ... Levy of penalty u/s 271B - Default related to Tax Audit Report u/s 44AB - Despite obtaining audit report in time, inadvertent mistake in submitting information while filing ITR - HELD THAT:-Admittedly, the appellant assessee has obtained the tax audit report as required u/s 44AB of the Act on 28.09.2011 and e-filed its e-return of income before due date on 29.09.2011 wherein inadvertently he filled wrong information while filling the columns of audit report. Tax authorities have rejected the said explanation on the reasoning that no audit was made by the appellant as required u/s 44AB and no evidence or submissions are filed whereas such audit report, duly certified by the auditor with the support of an affidavit, has been filed on record. In the affidavit, the auditor has stated the fact that he has prepared the audit report on 28.09.2011 and a copy of said letter was also provided to the bank. Appellant contended that the required audit report as prescribed u/s 44AB was duly obtained by the appellant will within the prescribed time and filed before the authorities below. Thus, it was due to inadvertent mistake occurred in respect of selection of the proper column of the ITR while filing the return of income by the office of the auditor which has been interpreted by the authorities below as if no audit report was obtained by the appellant u/s 44AB of the Act. Meaning thereby that the penalty u/s 271B was levied on wrong premises by the AO. In the present case, on identical facts the appellant assessee at the time of filing of its e-return had inadvertently filled column regarding details of audit u/s 44AB wrongly as “No” and therefore, in our view, the penalty u/s 271B would not be leviable - we accept the grievance of the appellant as genuine and as such the penalty levied u/s 44AB of the Act is hereby deleted. Assessee appeal allowed. Issues:Levy of penalty under section 271B for non-compliance with section 44AB audit requirements.Analysis:The appellant challenged the penalty of Rs.1,50,000/- imposed under section 271B for not conducting the audit as required by section 44AB of the Income Tax Act. The appellant contended that the incorrect information in the ITR was due to a clerical error and that the audit report was indeed prepared and submitted within the prescribed time. The appellant argued that the penalty was unjustly levied based on an incorrect interpretation by the authorities. The appellant cited a similar case where the penalty was not levied for a similar inadvertent mistake in filling the audit details.The appellate tribunal noted that the appellant had obtained the tax audit report as required by section 44AB and filed the e-return before the due date. The tribunal observed that the rejection of the appellant's explanation by the tax authorities was based on the mistaken belief that no audit was conducted, despite the audit report being filed with supporting documentation. The tribunal found that the penalty was imposed on incorrect premises and that the inadvertent mistake in filling the audit details did not warrant the penalty under section 271B.Referring to a precedent case, the tribunal highlighted that when an assessee inadvertently filled the audit details incorrectly in the e-return, the penalty under section 271B was not justified. The tribunal held that in the present case, where the appellant similarly made an inadvertent error in the audit details, the penalty was not applicable. Therefore, the tribunal concluded that the penalty imposed under section 271B was unwarranted and ordered its deletion.In light of the above analysis, the tribunal found the appellate authority's decision to sustain the penalty to be incorrect and set it aside. Consequently, the tribunal allowed the appeal filed by the assessee and deleted the penalty of Rs.1,50,000/- imposed under section 271B of the Income Tax Act.