Delay caused without Malafide intention do not attract Penalty under the Income Tax Act, says ITAT Jaipur.
The Jaipur bench, Income Tax Appellate Tribunal, in a recent ruling held that dispute with the statutory auditor is a reasonable cause for delay within the meaning of section 273B of the Income Tax Act, 1961. The Tribunal, while quashing the penalty order, the Tribunal considered the fact that the default was not caused with a mala fide intention and therefore, levy of penalty is not justified.
The grievance of the assessee was that the Assessing Officer levied penalty u/s 271B for not getting accounts audited and submitting audit report within the prescribed time. While admitting the default, the assessee challenged the penalty order by maintaining that there was reasonable cause for delay and this is the first time the assessee made such a fault. The assessee submitted that the delay was caused due to the reason that there was a dispute with the auditor over the issue of audit fees.
However, the CIT(A) rejected the above contentions of the assessee by confirming the order impugned. Aggrieved by the above orders, the assessee approached the Income Tax Appellate Tribunal on second appeal.
The Tribunal noted the fact that there was a delay of 8 months, which is according to the assessee, is happened for the first time. The Tribunal observed that “the delay made by the assessee firm in filing the return of income is for the first time i.e. in A.Y. 2008-09 which was on account of dispute of audit fee between the assessee and the auditor. Hence, it appears that the dispute with the statutory auditor is a reasonable cause within the meaning of Section 273B”
The above finding was supported by the decision of the Pune Bench, in the case of Kripa Industries (I) Ltd. vs. JCIT by ITAT that there is no mala fide reason for not obtaining the accounts audited in time and penalty u/s 271B should not be imposed.
In view of the above findings, the Tribunal reversed the orders of the lower authorities.
Read the full text of the order below.
