The Delhi Bench of Income Tax Appellate Tribunal ( ITAT )has deleted the penalty under Section 271B of the Income Tax Act 1961 as the completion of the audit and furnishing of the tax audit report was before the conclusion of assessment proceedings.
The Assessee Sanjiv Dutta filed a return which was subsequently revised admitting the same income. The case of the Assessee was selected for scrutiny through CASS and, the Assessing Officer observed that the Assessee was running a proprietary concern in his own name and also derived income from other sources.
The Assessee failed to produce the books of account and therefore it was held by the AO that Assessee had no supporting vouchers for the expenses and purchases debited by it. The AO finally made the disallowance @ 10% of the purchases and an amount which was debited as a donation in the P&L A/c and another amount as disallowance @ 50% of the expenses, as claimed in his P&L A/c by the Assessee.
The Assessee was selected for scrutiny under CASS on the ground that the Auditor mentioned in the original return had denied having conducted an audit for the Assessee, though Assessee had claimed so.
Now the Assessee submitted that the actual auditor was V.K. Gupta of M.K. Goswami & Co. The revised return was filed through V.K. Gupta of M.K. Goswami & Co. Since the revised return was filed after the due date of filing of the return, it was held that the Assessee had got his books of account audited after the stipulated period of time. Accordingly, penalty proceedings u/s 271B of the Act are also being initiated for not getting his accounts audited within the prescribed period.
Section 271 B of the Income Tax Act 1961 deals with the imposition of penalty If any person fails, without reasonable cause, to get his accounts audited in respect of any previous year or years relevant to an assessment year or obtain a report of such audit as required under section 44AB.
The AO imposed the penalty under Section 271B of the Income Tax Act 1961.
B.M. Singh on behalf of the revenue submitted that,
The Division Bench of Anil Chaturvedi, (Accountant Member) and Narender Kumar Choudhry, (Judicial Member) allowed the appeal and deleted the penalty imposed observing that,
“Even it is not the case of the Revenue Department that the Assessee has failed to get his accounts audited for the year under consideration and/or failed to furnish a report of such audit as required u/s 44AB of the Act before the finalisation of the assessment order, as mandated u/s 271B of the Act.”
“Due to inadvertent or otherwise mistake in the name of Auditor, the Assessee failed to file correct audited books of account, along with the original return of income, but it is a fact that audited books of account which are not in dispute, have duly been filed along with the revised return of income. The facts and figures of the original return and the revised return are exactly the same and there is nothing contrary” the Bench further observed.
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