TaxTMI 
TaxTMI 
2024 (8) TMI 107
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....acts and in the circumstances of your appellant's case and in law, the Honorable CIT-Appeals (NFAC) has erred in confirming the action of the ld. AO of invoking provision of Section 271B, in our case after the six years by violating the provision of the Section 275(1) of the Act. 2. On the facts and in the circumstances of your appellant's case and in law, the Honorable CIT-Appeals (NFAC), has erred in confirming penalty of Rs. 1,50,000/- levied by the ld. AO u/s 271B for alleged failure of non-furnishing of tax audit report u/s 44AB on or before the due date u/s 139(1) of the Act." 3. Ground No.1 was not pressed before us; hence it is dismissed as not pressed. 4. Ground No.2 being raised on the merits of the case was argued before us. The fact that the Tax Audit Report filed by the assessee was delayed has been admitted to be true. This fact was never disputed before us. The only contention of the ld. Counsel for the assessee before us was that there was reasonable cause for the delay which was explained in detail to the authorities below, but both the Assessing Officer and the ld. CIT(A) found the cause to be not reasonable enough, giving no credible reasons at all....
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..... As a part of the VC Assistance Agreement, the same condition was also incorporated into the Articles of Association of the Company as item 21 under Article 82A. Thus, for finalisation of our accounts, declaration of dividends and change in accounting policies, we would need prior approval of GVFL - else they would be invalidated. Copies of the VC Assistance Agreement and Articles of Association of the Company are enclosed as Annexure A and Annexure C respectively with extracts of the relevant pages separately enclosed as Annexure B and Annexure D respectively. Over a period of time, the Biotech Activity of the Company for which funds were raised from GVFL did not generate any surpluses. However, our regular Active Pharmaceutical Ingredients (API) business was doing very well and generating healthy profitability. During FY 2015-16 since the Company has record high profitability, the Board of Directors decided to pay an Interim Dividend @ 25% totalling to Rs. 75,60,325 at its meeting held on 08.03.2016. Though GVFL had been sent the agenda in advance which included the proposal to pay Interim Dividend, it did no comment on the s....
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...., 2013, the Company was mandatorily required to approve accounts and hold its Annual General Meeting (AGM) by 30th September, 2016. Since, there was no sign of the deadlock ending before that, the Company held a Board Meeting on 29.09.2016 in which the Chairman explained the situation in detail and requested the Board to grant approval to seek extension of time-limit for approving the accounts and holding the Annual General Meeting so that the Company will not be considered as a defaulter. After due deliberations, the Board granted its permission to apply to the Registrar of Companies, Ahmedabad and seek extension of AGM by 3 months from 30.09.2016 to 31.12.2016. Minutes of the meeting held on 29.09.2016 are enclosed as Annexure G Accordingly, we applied for and were granted extension of 3 months for conducting our AGM. Copy of the approval letter of ROC - Ahmedabad is enclosed as Annexure H However, the discussions and debates continued during the month of October 2016 and spilled over into November, 2016. In the meantime, the extended due date for furnishing Tax Audit Report i.e. 17.10.2016 lapsed. However, in absence of approval of account by ....
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....ase, the above chain of events will clearly indicate that there was legitimate reason for delay which can certainly be treated as a reasonable cause It is therefore prayed that given the reasonable cause for delay as narrated above, the penal proposed penalty u/s 271B in our case may please be dropped." 7. As is evident from the above reasons for delay in filing tax audit report as noted by the Assessing Officer and the ld. CIT(A), the cause for the delay was attributed to the delay in finalization of the statutory audit of the assessee-company due to dispute between the Board of Directors with one of the nominee directors of the Government of Gujarat undertaking who refused to allow the payment of interim dividend declared by the Board during the year. Facts and circumstances, as revealed by the assessee, show that the assessee had raised a sum of Rs. 250 lakhs from a Venture Fund of the Government of Gujarat by the name of M/s. Gujarat Venture Finance Limited (GVFL) in January 2008. As a result, a nominee of this Government undertaking was appointed to the Board of the assessee-company. This nominee-director was to give his approval for the finalization of accounts, d....