TaxTMI 
TaxTMI 
2026 (3) TMI 1734
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....A)-NFAC arises out of the order of the AO imposing penalty u/s. 271B of the Act amounting to Rs.1,31,904/-. The relevant Assessment Year is 2017-18. 2. The grounds raised read as follows:- 1. 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) dated 16.10.2025 is erroneous, bad in law, and was passed ignoring the facts and merits of the case. 2. For that the Ld. CIT(A) erred in confirming the levy of penalty u/s 271B of the Act of Rs. 1,31,894/-. 3. For that the Ld. CIT(A) failed to appreciate that the Assessing Officer had the audit report before him, at the time of passing the reassessment order and had a clear picture ....
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....he objections raised by the assessee to the proposed penalty u/s.271B of the Act was rejected and AO passed order dated 24.06.2025 imposing penalty u/s.271B of the Act amounting to Rs.1,31,894/-. On appeal, the FAA confirmed the imposition of penalty and dismissed the appeal of the assessee. The relevant finding of the FAA reads as follows:- "5.11 I find that the object of requiring the appellant to get his books of account audited u/s 44AB is to get a clear picture of the appellant's accounts so as to enable the Income Tax Authorities to assess true and correct income of the appellant. The penalty u/s 271B is attracted for failure of the appellant to get the books of account audited. In the present case, the appellant did not ....
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....C) ii. John Biwheelers vs. ACIT (ITA No.411/Cochin/2018 dated 05.02.2019) (Cochin ITAT) iii. T.P.D 101 Uthangarai Milk Producers Co-operative Society Ltd. vs. ITO (ITA No.152/CHNY/2021, dated 29.06.2022) iv. Balaji Logistics vs. ACIT (147 taxmann.com 607)(Chennai ITAT) 6. The Ld. DR supported the order of the AO and the FAA. 7. We have heard rival submissions and perused the material on record. The objection filed by the assessee in response to notice issued u/s.274 r.w.s.271D of the Act for the proposed penalty are as follows:- "I am uneducated farmer. Nature of my business is milk sales on commission basis. I procured milk from the farmers and sold the same to M/s. Jaya Milk Products on commission....
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....atter in appeal before this Tribunal in the case of Balaji Logistics v. ACIT in I.T.A. No. 2248/Chny/2019 dated 07.09.2022 for the assessment year 2015-16, wherein, the Tribunal has observed as under: "6. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. It is an admitted fact that although the assessee has filed Tax Audit Report in Form 3CB as required u/s.44AB of the Act, beyond due date specified u/s.139(1) of the Act, but such Tax Audit Report was made available to the AO before completion of assessment proceedings u/s.143(3) of the Act, on 22.11.2017. It is evident from the fact that the assessee has obtained Tax Audit Report from an Accountant on 28.03.....
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....essee. Therefore, there is a reasonable cause for not filing the tax audit report within prescribed time limit 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,....
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....of the Coordinate Benches of the Tribunal in the case of Balaji Logistics v. ACIT (supra) for the assessment year 2015-16, we are of the considered opinion that it is not a fit case for the levy of penalty under section 271B of the Act and accordingly, the penalty levied stands deleted." 9. Similar view has been taken by the Cochin Bench of the Tribunal in the case of M/s. Johns Biwheelers (supra). The relevant finding of the Cochin Bench of the Tribunal reads as follows:- "7.1 From the material available on record, we are of the view that the assessee got his books of accounts audited on 28/03/2014 which was made available to the Assessing Officer and no prejudice has been caused to the Revenue. Now the short question that aris....