While deleting a penalty order passed under Section 271B of the Income Tax Act, the Income Tax Appellate Tribunal ( ITAT ), Kolkata bench has held that the filing of form no. 3CB audit report with form no. 3CD is sufficient compliance.
The sole grievance of the assessee was that the Assessing Officer was erred in levying penalty u/s 271B of the Act on account of not filing the tax audit report.
The original assessment under section 143(3) against the assessee was completed on 21.03.2016 determining total income of Rs. 26,07,98,030/-. The Assessing Officer noted that during the year the assessee failed to carry out statutory Audit and did not file the Tax Audit report in prescribed forms. As per the AST module the assessee filed only report in form 3CB and 3CD but not 3CA, therefore, penalty proceedings u/s 271B was initiated by A.O and imposed a penalty of Rs. 1,50,000/- for not furnishing statutory audit report in proper form.
The Tribunal noted that it is clear from a combined reading of section 44AB of the Act and Rule 6G of the Rules that Form 3CA would be required to be filed for a previous year only when accounts for such previous year have been audited under any other law.
“We note that the assessee has filed form no. 3CD and 3CB and the same have not been disputed therefore the tax audit report was on record and hence the penalty should not be levied. However, the Assessing Officer disputed that instead of form no.3CB audit report should be in form no. 3CA. We note that the difference in form no. 3CA and form no. 3CB is that in form no. 3CA, the auditors are not required to give a separate audit report. But in form no. 3CB, since that deals with the case of an assessee whose accounts have not been audited, mandates of the comprehensive audit report. Therefore, when an assessee had furnished the tax audit report in form no. 3CB then it cannot be said that it has not complied with the provisions of section 44AB merely because the report is not in form no. 3CA. Thus, we are of the view that in the assessee’s case, form no. 3CB audit report with form no. 3CD is sufficient compliance and hence penalty should not be levied. Therefore, we delete the penalty of Rs. 1,50,000/-,” the Tribunal said.
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