Monday, December 8, 2014

No penalty for inadvertently filling 'no' response in column seeking info about tax audit

Where assessee-company at time of filing its e-return had inadvertently filled column regarding details of audit under section 44AB wrongly as 'No', penalty could not be levied under section 271B.


a) The assessee-company e-filed its return of income. In the said return of income, the assessee was required to answer whether it was liable for audit under section 44AB and if yes, it was required to furnish certain information regarding same.

b) The Assessing Officer noticed that the assessee had answered the said question as 'No' and, consequently, it did not furnish the details relating to auditor. Hence, he took the view that the assessee did not get its accounts audited under section 44AB and, accordingly, he initiated penalty proceedings under section 271B.
c) On appeal, the CIT(A) also confirmed said penalty. The aggrieved assessee filed the instant appeal.

The ITAT held in favour of assessee as under :

1) The assessee had filed the return of income under e-filing procedure. 'Part A-01' of the return of income requires the assessees who would be liable for audit under section 44AB to furnish certain information. The same is optional for the assessees who are not liable for audit under section 44AB.

2) The information to be given in 'Part A-01' contains the details to be furnished in Form No. 3CD. It was seen from the copy of e-return filed by the assessee that the assessee had duly furnished all the details under 'Part A-01' of the return of income, meaning thereby, there appeared to be some truth in the submission of the assessee that it had obtained the tax audit report before the due date for filing return of income.

3) Hence, it was viewed that the assessee could have obtained the audit report under section 44AB before filing the return of income and it had inadvertently filled the relevant column wrongly as 'No'. Since the assessee could have obtained the tax audit report before the due date for filing return of income, there was no justification for levying penalty under section 271B. Accordingly, the order of CIT(A) was to be set aside and he was to be directed to delete the penalty levied in the hands of the assessee under section 271B. - Sujata Trading (P.) Ltd. v. Income-tax Officer, [2014] 50 397 (Mumbai - Trib.)