ITAT: No Tax Penalty U/S 271B If Audit Report & ITR Submitted Before Assessment


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Arpit Kulshrestha

Chennai ITAT's Order for Shri Ramunaicker Raja

The Chennai branch of the Income Tax Appellate Tribunal (ITAT) recently ruled that submitting the audit report required by section 44B of the Income Tax Act of 1961 together with the Income Tax Return will not result in a penalty.

The amount specified in subclause 2 of the aforementioned section shall be deemed to be the profit and gain of such business and calculated under the heads of profit and gain of business or profession in the case of an assessee who is a non-resident engaged in the business of operating ships, according to Section 44B of the Income Tax Act of 1961.

Assesee Ramunaicker Raja submitted his return of income on 03.04.2016 for the assessment year 2011-12. The assessee has not filed the return of income for the assessment year 2011-12 within the period specified under section 139(1) of the Act. Also, the assessee failed to submit the income tax return prior to the assessment year’s conclusion.

After then, the tax assessor had a good cause to think that there were earnings over rupees that were subject to tax. According to clause (b) of Explanation 2 of section 147 of the Income Tax Act of 1961, one lakh has avoided assessment. evaluating officer Provide notice to the assessee and the assessing officer, and begin penalty proceedings under section 271B of the Income Tax Act of 1961 for failure to timely file an audit report as required by section 44AB of that Act. Assessee filed an appeal with the ITAT in opposition to the ruling.

S. Sridhar lawyer for the assessee stated that audit reports under section 44AB of the Income Tax Act 1961 were given together with the return of income before the conclusion of the assessment.

The assessee’s attorney, AR V Sreenivasan, supported the assessing officer’s judgment.

The division bench of the ITAT, which was made up of V. Durga Rao, a member of the judiciary branch, and G. Manjunatha, a member of the accounting branch, granted the appeal filed by the assessee and noted that,

Read Also: 4 Issues May Occur After Increasing Tax Audit Limit U/S 44AB

According to Section 44AB of the Act, the Assessee was expected to have his accounts audited and lodged by the deadline. The Assessing Officer assessed a penalty of Rupees 83,680/- under Section 271B of the Income Tax Act 1961 because the Assessee failed to submit the tax audit report required by Section 44AB of the Act by the deadline.

However, in the present case, the audit report required by Section 44AB of the Income Tax Act 1961 was submitted with the return of income before the assessment was complete. As a result, it did not qualify as a case for the imposition of a fine under Section 271B of the Income Tax Act of 1961.

Case Title Shri Ramunaicker Raja Vs. The Assistant Commissioner of Income Tax
Citation I.T.A. No.603/Chny/2022
Date 15.02.2023
Appellant by Shri S. Sridhar, Advocate (Erode)
Respondent by Shri AR V Sreenivasan, Addl. CIT
Chennai ITAT Read Order

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