Income Tax Penalty cannot be Levied If Tax Audit was not done for a Reasonable Cause but Filed before Completion of Assessment [Read Order]

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) recently held that the income tax penalty cannot be levied if tax audit was not done for a reasonable cause but filed before completion of assessment.

Haneefa Sahib Shajahan,theassessee has a jewelry business and heavy loss incurred in the fish net business, the assessee has submitted before the CIT(A) that his business was totally came to a standstill and matters went to a very critical level that her properties were put for auction by the bankers (M/s. KarurVysya Bank), due to her inability to repay the loan or the mounting interest liability and also filed notice for sale of immovable properties published by the bankers in the leading newspapers for recovery  plus interest till the date of settlement.

Considering the pathetic condition of the assessee as well as by various case law, the CIT(A) has observed that the books of accounts audited, though belatedly, but the audit report was produced before the Assessing Officer before completion of the assessment.

 Since the assessee was prevented by reasonable cause for not getting her books of accounts audited in time as required under the provisions of section 44AB of the Income Tax Act, 1961.But filed the tax audit report before completion of the assessment, the CIT(A) has held that it is not a fit case for the levy of penalty under section 271B of the Income Tax Act, 1961 and accordingly, the penalty levied was deleted. The appeal filed by the Revenue is dismissed.

To Read the full text of the Order CLICK HERE

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