The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) has deleted the penalty imposed under Section 271B of the Income Tax Act 1961, holding that the delay in submission of the audit report was a mere technical breach of law.
The appellant Sebastian Joseph is an individual engaged in the business of gold ornaments and jewellery carrying on business in the name and style of Kerala Fashion Jewellers. During the course of survey operations, the appellant had filed a return of income, which was not filed within the due date specified under Section 139(1) of the Income Tax Act 1961.
Accordingly, the appellant had filed the return of income on 30.03.2018. Against the said return of income, the assessment was completed on 14.12.2018 accepting the returned income. The appellant had filed a tax audit report as required under the provisions of section 44AB on 30.03.2018 along with the return of income.
The Assessing Officer held that the tax audit report was required to be filled on or before 30.09.2016, but the appellant had filed the tax audit report only on 30.03.2018. Accordingly, penalty under Section 271B of the Income Tax Act 1961 was levied by the Assessing Officer by order dated 28.06.2019.
Section 271B of the Income Tax Act 1961 deals with imposition of penalty on failure to get accounts audited.
M. G. Jasnani, on behalf of the revenue, supported the orders of the authorities below levying penalty under Section 271B of the Act.
The Division Bench of S. S. Godara, (Judicial Member) and Inturi Rama Rao, (Accountant Member) allowed the appeal deleting the penalty imposed and observed the, fact that the returned income was accepted by the Assessing Officer showed that no prejudice was caused to the Assessing Officer on account of delay in submission of tax audit report.
The Bench further observed that the delay in submission of the tax audit report was a mere technical breach of law, which did not warrant levy of penalty under Section 271B of the Act.
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