The Chennai Bench of Income Tax Appellate Tribunal (ITAT) held 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 and for venial technical breach without any mala fide intention, penalty cannot be levied. Thus, deleted penalty under Section 271B of Income Tax Act, 1961.
The assessee in this case Vellakovil Primary Agricultural Cooperative Bank Limited, had made cash deposits into its bank account during the Assessment Year (AY) 2013-14 and the assessee has not filed the return of income. The case was reopened and notice under section 148 of the Income Tax Act was issued AY 2013-14, 2014-15, 2015-16 and 2016-17.
The assessee was required to file his ITR within 30 days from receipt of the said notice but he filed after the expiry of 30 days. The penalty proceedings have been initiated under Section 271B of the Income Tax Act for delayed filing of audit report under Section 44AB of the Income Tax Act.
The Assessing Officer levied penalty of ₹.1,39,859/-, ₹.1,50,000/-, ₹.1,39,543/- and ₹.1,37,202/- for the assessment years 2013-14, 2014-15, 2015-16 & 2016-17 respectively under section 271B of the Income Tax Act.Aggrieved by the order assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], which confirmed the penalty levied under Section 271B of the Income Tax Act.
The Counsel for the assessee A. Vijayalakshmi , submitted that due to Covid pandemic lock down and income tax portal was under maintenance, the assessee was unable to file the return of income along with tax audit report under Section 44AB of the Income Tax Act within the due date as mentioned in the notice under Section 148 of the Income Tax Act.
The Departmental Representative P. Sajit Kumar, supported the orders of authorities below.
The Bench comprising of V. Durga Rao, Judicial Member and Arun Khodpia, Accountant Member, observed that Tax Audit Report was made available to the Assessing Officer before completion of assessment proceedings, then for venial technical breach without any mala fide intention of the assessee, the penalty cannot be levied under Section 271B of the Income Tax Act.
Further, the tribunal relied on the case of Balaji Logistics v. ACIT where it was decided 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 and held that for venial technical breach without any mala fide intention, penalty cannot be levied” Hence, the penalty levied under Section 271B of the Income Tax Act was deleted for the assessment years 2013-14, 2014-15, 2015-16 and 2016-17.
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