Section 271B penalty order set aside as passed beyond statutory time limit under Section 275(1)(c)

ITAT Cochin allowed the assessee's appeal against a penalty order under Section 271B for failure to furnish tax audit report within prescribed time. The AO imposed penalty of Rs. 1,50,000/- and CIT(A) dismissed the appeal. The Tribunal found that penalty notice was issued on 25.12.2019 but penalty order was passed on 30.07.2021, beyond the statutory time limit of 30.06.2020 under Section 275(1)(c). The Tribunal held the penalty order was barred by limitation, void ab initio, and passed without jurisdiction. The penalty order was set aside due to legal infirmity.

---

---

The Appellate Tribunal (ITAT Cochin) heard an appeal by the assessee against the penalty order dated 30.07.2021 under Section 271B of the Income-tax Act for AY 2017-18, relating to failure to furnish the tax audit report within the prescribed due date under Section 44AB. The Assessing Officer (AO) had initiated penalty proceedings and levied a penalty of Rs. 1,50,000/-. The CIT(A) dismissed the assessee's appeal.The Tribunal noted that the penalty notice was issued on 25.12.2019, and under Section 275(1)(c), the penalty order should have been passed on or before 30.06.2020. However, the penalty order was passed on 30.07.2021, beyond the statutory time limit. The Tribunal held that the penalty order is "barred by limitation and void ab initio," having been passed "without jurisdiction and beyond the time limit prescribed under the provisions of the I.T. Act." Consequently, the penalty order suffers from a "legal infirmity and cannot be sustained in the eyes of law."The appeal was allowed, and the impugned penalty order was set aside.

---