Delay in Appointment of Auditor and Finalization of Annual Accounts, not valid ground for imposing Penalty: ITAT [Read Order]
![Delay in Appointment of Auditor and Finalization of Annual Accounts, not valid ground for imposing Penalty: ITAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2022/11/Delay-Appointment-Auditor-Finalization-Annual-Accounts-Penalty-ITAT-TAXSCAN.jpg "Delay in Appointment of Auditor and Finalization of Annual Accounts, not valid ground for imposing Penalty: ITAT [Read Order]")
The Income Tax Appellate Tribunal ( ITAT ), held that Delay in appointment of Auditor and finalization of annual accounts are not valid ground for imposing penalty. The assessee, M/s. Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Limited has challenged the penalty to the tune of Rs.1,50,000 levied under Section 271B of the Act. The assessee, a Government company, wherein appointment...
The Income Tax Appellate Tribunal ( ITAT ), held that Delay in appointment of Auditor and finalization of annual accounts are not valid ground for imposing penalty.
The assessee, M/s. Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Limited has challenged the penalty to the tune of Rs.1,50,000 levied under Section 271B of the Act. The assessee, a Government company, wherein appointment of Auditor in the case of the appellant was governed by the provision of section 619(2) of the Companies Act, 1956 for the year under consideration. In short, the Auditor, in the case of the appellant was to be appointed by the Comptroller and Auditor-General of India.
The Auditor completed the audit and finalized their reports only on 19.12.2012 whereas the due date for furnishing of tax audit report in terms of provision of Section 44B of the Act for the year under consideration was 30.09.2012. As the finalization of the statutory audit was made only on 19.12.2012, tax audit report could not be filed within the prescribed date.
The crux of the submission made by the assessee is this that the delay in completion of statutory audit constitutes a reasonable cause for the delay in completion and submission of tax audit report under section 44AB of the Act. Such delay is not attributable to the appellant since neither the appointment of the statutory auditor nor the completion of statutory audit was within the control and domain of the appellant.
A Bench consisting of Madhumita Roy, Judicial Member and Bhagirath Mal Biyani, Accountant Member held that “In this particular case, the penalty was deleted on the ground that delay in appointment of Auditor and consequent delay in finalization of annual accounts cannot be attributable to the assessee. The impugned penalty, in our considered opinion, is not sustainable in the eye of law and thus, the same is hereby deleted.”
To Read the full text of the Order CLICK HERE
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