The Income Tax Appellate Tribunal (ITAT) Delhi bench held that no penalty should be levied under Section 271B of Income Tax Act, 1961 on account of delay in filing the audit report due to proceedings under Insolvency and Bankruptcy Code (IBC).
Assessee , Bhushan Aviation Limited’s return was filed on 29.03.2019 during the course of assessment proceedings declaring total income as NIL along with claiming losses. Thereafter the assessee’s case was selected for scrutiny.
During the course of assessment proceedings the Assessing Officer initiated penalty proceedings on account of non-filing of the Audit Report within time. Before the AO, assessee substantiated the reasonable cause of delay. However, the contention of the assessee was not accepted by the AO. He imposed a penalty of INR 1,50,000/- under Section 271B of the Income Tax Act to the assessee.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeal){ CIT(A)}, who dismissed the Appeal filed by the assessee. Thereafter, the assessee filed an appeal before the tribunal.
During the proceedings, Ashwani Kumar, counsel for the assessee submitted that the Audit Report assessee company was delayed because of the fact that the holding company was undergoing proceedings under Insolvency and Bankruptcy Code. Thus it resulted in delay in collating the evidence and compiling the data.
Om Parkash, Counsel for the revenue, submitted that the assessee and its holding company are two independent entities. Moreover, the assessee was not subjected to IBC proceedings.
The tribunal, after hearing the both sides observed that delay was caused due to reasonable cause as it is stated that evidence from the holding company could not be collected due to proceedings under IBC.
After considering the facts submitted by both parties, the single member bench of Kul Bharat, (Judicial Member) directed to delete the penalty imposed by the assessing officer.
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