The penalty for late filing of audit reports due to the assessee’s accountant’s hospitalisation has been removed by the Income Tax Appellate Tribunal (ITAT) Pune Bench.
The two-member bench, led by R. S. Syal (Vice President) and Partha Sarathi Chaudhury (Judicial Member), came to the conclusion that the assessee had provided documentary evidence to support the reasonable cause. The Tribunal overruled the CIT (A) decision’s and ordered the AO to remove the penalty from the assessee’s possession.
Under the name and style “Swaminath Nilkanth Patil” in Akkalkot, the assessee/applicant operates in wholesale trade of food grains as a proprietary concern. The assessee has filed an appeal against the imposition of a penalty under section 271B of the Income Tax Act of 1961. The assessee had e-filed a whole income return. The case was chosen for CASS review, and the total income assessment was completed under section 143(3) of the Income Tax Act.
The AO further found that the assessee had missed the deadline for filing an audit report and had just amended the audit report on January 22, 2015. For non-compliance with the provisions of section 44AB of the Income Tax Act, the AO assessed a penalty under section 271B of the Income Tax Act.The assessee had explained the reasons for the delay in filing the audit report during the appellate proceedings before the CIT (A). The accountant who was going into the accounts records was admitted to the hospital, and the doctor’s certificate was also contained and presented as proof.
It was also explained that in a place like Akkalkot, Dist. Solapur, finding an experienced accountant in a short period was difficult. He was helpless due to circumstances beyond his control, and as a result, there was a delay, which was never planned or intentional. The CIT (A) rejected the assessee’s arguments and supported the AO’s decision to levy a penalty under section 271B of the Income Tax Act.
The ITAT found that the assessee had clearly addressed the reasons for the delay in filing the tax audit report and non-compliance with Section 44AB of the Income Tax Act before the CIT (A). The grounds were beyond the assessee’s control, and because the Income-tax Act is a welfare law, the taxpayer assessee’s practical difficulties and the bonafide nature must be taken into account.