Demise of Tax Auditor is reasonable cause in failure to upload Tax Audit Report on the Portal of Income Tax: ITAT [Read Order]

Demise of tax auditor is reasonable cause in failure to upload tax audit report on the portal of Income Tax, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held as above.

Abha Rajesh Kapoor, the assessee challenged the order dated 17.04.2022 passed by the National Faceless Appeal Centre, Delhi (the Ld. First Appellate Authority) about a penalty order for non-furnishing of audit reports which was required in terms of section 44AB of the Income Tax Act, 1961 (‘the Act’).

The assessee engaged in Future & Options transactions in the share market having a total turnover of ₹98.49 crores wherein filed a return of income in the year under consideration on 31.07.2014 declaring a total income of ₹50,000/-. During the assessment proceedings, the Assessing Officer observed that gross receipt on account of sales/turnover of the assessee was of ₹98,49,90,283/-and levied a penalty of ₹1,50,000/-.

It was stated by the assessee that the tax audit report for the assessment year 2014-15 was obtained from auditor M/s Manmohan Kalra & Associates, due to the demise of Sh. Manmohan Kalra, who was the proprietor of the firm subsequently, the report could not be uploaded. Commissioner of Income Tax(Appeals) rejected the contention of the assessee and upheld the penalty levied by the Assessing Officer. 

In terms of section 44AB of the income tax act, the assessee was required to audit and upload the audit report along with the return of income and penalty under section 271B of the income tax Act is leviable if the assessee fails in auditing its books of accounts if turnover is more than the prescribed limit or fails in uploading the said audit report.

A Coram of Shri Kuldip Singh (judicial member) and Shri Om Prakash Kant (accountant member)observed that the fact of the demise of the tax auditor has not been controverted by Mr Manoj Sinha appeared for the Revenue.

Failure on the part of the assessee to upload a tax audit report without the assistance of a Tax Auditor constitutes a reasonable cause as the assessee has already filed a copy of the tax audit report before the Commissioner of Income Tax(Appeals). The demise of the tax auditor constitutes a reasonable cause for not uploading the tax audit report on Income-tax Portal within the stipulated period.

The penalty upheld by the CIT(A) was deleted by the Tribunal given reasonable cause under section 273B of the Income tax Act and allowed the appeal filed by the assessee.  

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