2024 (8) TMI 422

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....e in the appeal of the assessee is as regards to order of the Ld. CIT(A) confirming penalty levied by the Assessing Officer u/s. 271B of the Act for violation of the provisions of section 44AB of the Act for not filing the audit report. For this, the assessee has raised following the grounds:- "For that the order of the Ld. Commissioner of Income-Tax (Appeals), NFAC, Delhi [CIT (A)] under section 271B of the Income-Tax Act, 1961 (Act) is erroneous, bad in law, and was passed ignoring the facts and merits of the case and disregarding the evidences relied on by the appellant. 2.1 For that the Ld. CIT(A) ought to have seen that the major portion of appellant's time during the previous year relevant to the AY 2017-18 was spent in attending to litigations caused by loan default, running after funds to procure inputs for the company plant without which the company operations would have come to a standstill, which caused the appellant to miss out on filing the audit report u/s 44AB of the Act within the due date for such filing. 2.2 For that the Ld. CIT(A) failed to note that except the AY 2017-18, in none of the Assessment Years (AYs) between 2014-15 to 202....

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...., without which, all our activities would cease, we were unable to concentrate in filing of audit report u/s.44AB of the Act. Hence, requested to drop the penalty proceedings initiated u/s.274 rws 271 B of the Act." The Assessing Officer noted that the assessee has not filed audit report u/s.44AB of the Act, though the assessee's total turnover was amounting to Rs. 10,05,74,574/- during the financial year 2016-17 relevant to the assessment year 2017-18. As per the provisions of section 44AB of the Act, every person carrying on business shall, if its gross receipts in business exceeds Rs.1 crore in any previous year, is liable to get his accounts audited by an Accountant and should furnish such report in the prescribed form duly signed and verified before due date of filing of return of income. In this case, due date for filing of return of income was 31.10.2017. As no audit report was filed, the Assessing Officer levied penalty of Rs.1.5 lakhs i.e., minimum penalty imposable u/s.271B of the Act. Aggrieved, the assessee preferred an appeal before the CIT(A). 4. The CIT(A) confirmed the action of the Assessing Officer, after considering the submissions of the assessee by observ....

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....udit report in time. But, in this assessment year 2017-18 only, the assessee has not filed the audit report and no plausible reason was adduced. 7. Heard rival contentions and gone through records of this case. First of all, the assessee has not furnished any evidence to show that the assessee was attending to litigations and he was long defaulter running after the funds to procure company inputs. Secondly, the assessee knows the legal provisions for filing of audit report which is evident from the fact that for all the years he has filed audit report from the assessment years from 2014-15 to 2022-23 except AY 2017-18. It means that he did not want to get his audit completed or he knowingly he has not filed audit report for the relevant assessment year. However, the learned counsel for the assessee relied on co-ordinate decision in the case of Shri Ramunaicker Raja Vs. ACIT in ITA No .603/chny/2022 dated 15.02.2023, wherein the Tribunal following another co-ordinate Bench decision in the case of M/s. Balaji Logistics Vs. ACIT in ITA No. 2248/Chny/2019 dated 07.09.2022 deleted the penalty, wherein the Tribunal observed in para 6.1 & 6.2 as under:- "6.1 Similar issue on a....

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....t ad thus, penalty cannot be levied. We find merits in the submission of the assessee for the simple reason that non-filing of audit report within the due date is a venial technical breach without any mala fide intention on the part of the assessee. Because, completion of audit of books of accounts of the society is under the control of Dept. of Cooperative Audit and thus, unless the Dept. of Cooperative Audit completes audit, the assessee cannot file return of income along with tax audit report. Therefore, we are of the considered view that reasons given by the assessee for not filing tax audit report prescribed u/s.44AB of the Act, is neither intention nor any mala fide intention, but it is venial technical breach and for this reason, penalty u/s. 271B of the Act, cannot be levied. This principle is supported by the decision of the Hon'ble jurisdictional High Court in the case of P. Senthil Kumar v. PCIT reported in 416 ITR 336, where an identical issue had been considered by the Court and held that for venial technical breach without any mala fide intention, penalty cannot be levied. The ITAT Cochin Bench in ITA No.411/Cochin/2018 vide order dated 05.02.2019 had held th....