The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the penalty under section 271B of the Income Tax Act, 1961 is not leviable if there are bona fide reasons on the part of the assessee for the delay in furnishing the tax audit report.
Facts of the case:
The assessee, an individual, was required to get his accounts audited under section 44AB of the Act and furnish the audit report electronically before the due date of return of income as per section 139(1) of the Act. However, the assessee has failed to do so within the prescribed time. Consequently, the Assessing Officer initiated penalty proceedings against him under section 271B of the Act for non-furnishing the audit report.
Interpretation and Conclusion:
The Tribunal accepted the contentions of the assessee that since the rule was implemented for the first time and the assessees were facing difficulty in filing the tax audit report electronically, the Board again clarified that assessees may file such tax audit report manually.
“In the facts of the present case, undisputedly, the assessee has obtained the tax audit report on 10th September 2013, i.e., much before the due date of filing of return of income. However, as stated by the assessee, due to lack of clarity and misinterpretation of the Circular issued by the Board, the assessee did not file a tax audit report before the due date of return of income. In our view, the aforesaid explanation furnished by the assessee appears to be plausible, therefore, the benefit of the doubt can be given to the assessee. A reading of section 273B of the Act makes it clear that the imposition of penalty under section 271B of the Act is neither mandatory nor automatic. If the assessee satisfactorily explains the failure in complying with the statutory provisions, no penalty is to be imposed. In the present case, we are of the view that the failure on the part of the assessee in filing the tax audit report within the due date is due to bona fide reasons. Therefore, we are inclined to delete the penalty imposed of Rs.1,50,000 under section 271B of the Act,”.