[aaykarbhavan] Penalty u/s. 271B not liable where Audit Report obtained before due date but return filed after due late

 M/s. B.D.Leasing & Finance Ltd vs ACIT (Mumbai ITAT)

Dated: 4^th Jan 2013

The return of income was filed by the assessee on 31/3/2008 through electronic media . The assessee had obtained the audit report in Form 3 CA on 1/8/2006. The AO invoked provisions of section 271B and 271F which was confirmed by CIT(A).

The assessee is aggrieved, hence in appeal before ITAT.

Whether penalty under section 271B leviable, as Assessee has obtained tax audit report by due date but return filed after due date.  

The ld. DR contended that assessee was under obligation to file the audit report within the due date of filing the return. The assessee did not submit the return within the due date and, therefore, AO was right in levying the penalty and Ld. CIT(A) has rightly confirmed the same.

The return has been filed by the assessee by electronic media on 31/3/2008. The return filed by the assessee is belated return. For late filing the return, the AO had also initiated penalty proceedings under section 271F of the Act. The assessee stated the reasonable cause as being under financial constrains. No penalty has been stated to be levied under section 271F of the Act. The penalty for failure to file audit report alongwith return of income is described in section 271B of the Act.

ITAT observed that as per CBDT Circular No.9/2006 dated 10/10/2006, wherein it has been stated that in a case where return is filed electronically, the assessee would not be required to file any document physically, (including tax audit report).

Held, In the aforementioned circular it has been clearly mentioned that in a case return is filed electronically the obligation of the assessee was limited to get the report of audit before the due date of filing the return and retain the said report with the assessee itself and such report in original could be filed during the course of assessment proceedings. The assessee in the present case has obtained the audit report before due date of filing the return. As the return was filed electronically even though the said return was belatedly filed, the assessee was not under an obligation to submit the audit report which can be submitted during the course of assessment proceedings. The assessee is supported by aforementioned circular. In any case, default of the assessee is only technical default and the assessee is saved by the provisions of section 273B of the Act as reliance on the aforementioned circular can be considered to be a reasonable cause for the alleged failure.

ITAT further held that, Penalty also cannot be considered to be justified as the default of the assessee of filing belated return is a separate default for which the penalty is leviable under section 271F and the AO did not levy penalty for the said default. If the action of the assessee for filing the belated return is saved by section 273B or no action has been taken by the department under that section then penalty cannot also be levied under section 271B of the Act.

Regards

Prarthana Jalan

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