Recently the Income Tax Appellate Tribunal (ITAT) Chennai dismissed an appeal made for the deletion of penalty imposed under section 271 of the Income Tax Act 1961 (ITA), as ordered by the Commissioner of Income Tax (Appeals) [CIT (A) ]
The appellant, Goodwill Team Papers Limited, did not file the Income tax return as given under section 139(1) of ITA for the assessment year 2017-18 .Nor was the tax audit report as required under Section 44AB filed.
As per the provisions of section 44AB of ITA, every person carrying on business shall, if its gross receipts in business exceeds Rs.1 crore in any previous year, is liable to get his accounts audited by an Accountant and should furnish such report in the prescribed form duly signed and verified before due date of filing of return of income. The company’s turnover for that year exceeded Rs. 10 crore, which means the audit report’s submission was necessary.
The appellant claimed that they couldn’t file the audit report within the stipulated due to a number reasons like litigation, financial struggles and disruptions in production. However the Assessing Officer (AO) found the reasoning behind non compliance insufficient and proceeded with the penality, levying a penalty of Rs.1.5 lakhs i.e., the minimum penalty imposable u/s.271B.
Aggrieved, the assessee preferred an appeal before the CIT (A) but the AO’s order was confirmed by the CIT(A).
Aggrieved, the appellant further appealed the case before ITAT Chennai.
The bench comprising Mr Mahavir Singh and Mr SR Raghunatha heard the appellant’s arguments. The bench observed that the company failed to provide sufficient evidence for the delay, highlighting that the company had been compliant in filing audit reports for other years. It was also observed that the appellant’s side had no other contentions besides that they are a law abiding citizen who couldn’t file the income tax return on time due to litigation and the financial struggles that followed. The tribunal didn’t find any merit in the issues raised by the appellant. Consequently, the appeal was dismissed and the penalty imposed was upheld.
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