Penalty u/s 271B must be removed if a tax audit is delayed due to an ongoing assessment under another Act.
The assessee filed a return of income on January 6, 2016, which was inspected under Section 143. (3). Because the assessee’s total turnover/gross receipts surpassed the Rs.1 crore threshold, he was required to have his accounts audited under Section 44AB of the Act and submit the Audit report before the deadline, which in this case was October 31, 2015. Because the accounts were not audited within the time limit, Ld. AO imposed a penalty of Rs.1,12,715/- under section 271B.
The sentence was upheld by CIT(A) on appeal. Assessee preferred an appeal to the tribunal after being aggrieved by the order.
The ld. AR argued before the tribunal that there was adequate cause for the audit to be delayed because the assessee was a cooperative society governed by the Tamil Nadu Cooperative Societies Act, 1983 and its rules. The society’s finances could not be audited for the relevant AY until the assessment was completed. Because the assessee society was not in charge of the matters connected to the appointment and completion of the audit under the aforementioned Act and Rules, the delay in the completion of the audit was not due to any fault on their part. As a result, this qualifies as fair cause, and the penalty was eliminated.
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On the other hand, the Ld. DR justified the sentence by claiming that it was imposed in conformity with the law. After hearing both parties, the ITAT determined that there was adequate cause for the late filing of the income tax return and audit. The assessee was audited under the Tamil Nadu Cooperative Societies Act, 1983, and its implementing rules.
The assessee had no control over the appointment of an auditor or the execution of the audit. It should also be highlighted that the audit was eventually finished on December 31, 2015, and the assessee promptly filed a return. As a result, ITAT removed the penalty.
The post DELAY IN TAX AUDIT DUE TO ONGOING ASSESSMENT IN SOME OTHER ACT. PENALTY U/S 271B TO BE DELETED appeared first on Certicom.
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