Penalty Not Imposable for Non-Submission of Audit Report due to Reasonable Cause u/s 273B of IT Act: ITAT [Read Order]

The New Delhi bench of the Income Tax Appellate Tribunal(ITAT) held that no penalty shall be imposed for non-submission of audit reports due to reasonable cause under section 273B of the Income Tax Act, 1961.

Mohammad Daud, the appellant assessee was an individual engaged in retail trading of Amul Dairy Products like milk, paneer, ghee, curd, etc. on day to day basis. The assessee appealed against the order passed by the National Faceless Appeal Centre, Delhi confirming the penalty levied under section 271B of the Income Tax Act, 1961.

Shri G.S. Kohli, the counsel for the assessee contended that the documents filed before the assessing officer during the course of proceedings evidently proved that the assessee provided the services only as a courier and was not liable under section 44AB of the Income Tax Act, 1961. It was also submitted that the certification filed by the appellant for the services rendered on behalf of the principal concern has not been considered by the lower authorities.

Shri Sumit Kumar Verma, the counsel for the department strongly supported the decisions of lower authority and submitted that the penalty imposed under section 273B of the Income Tax Act,1961 was according to the provision of law.

The Bench observed that no penalty shall be imposable on the person if he proves that there was reasonable cause for the failure to submit the audit report as provided under section 273B of the Income Tax Act,1961.

The two-member bench comprising of Ms Astha Chandra( Judicial) and Shri Shamim Yahya(Accountant) held that the penalty imposed under section 273B of the Income Tax Act, 1961 was not sustained and was liable to be deleted while allowing the appeal filed by the assessee.

To Read the full text of the Order CLICK HERE

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