INCOME TAX ACT, 1961

Section 271B

Penalty under section 271B - Failure to furnish Tax Audit Report - Requirement to submit physical copy of audit report before assessment year 2013-14 -

Subsequent to filing of return of income, assessment proceedings were commenced. During assessment proceedings, assessee filed a copy of Tax Audit Report signed by CA. Assessee was required to audit its books of accounts from CA in terms of section 44AB. According to AO, assessee was required to furnish Tax Audit Report before specified date, i.e., 30-9-2010 and therefore, imposed penalty under section 271B. Before CIT(A) assessee contended that in view of Circular No. 3/2009, dated 21-5-2009 issued by the CBDT, the assessee was not required to furnish physical copy of audit report with the Income Tax Department and was only required to fill out the relevant columns in the form of return of income on the basis of such report. Held: From various provisions of Rules along with CBDT circulars, it was evident that during the relevant assessment year, i.e., assessment year 2010-11, assessee was not required to furnish the Tax Audit Report along with the return of income and it was to be produced only on being asked by the Income Tax Authorities. Mandatory uploading of audit report electronically was made effective only from assessment year 2013-14. AO failed in his duty in verifying whether books of account were audited before the specified date and only emphasized on the fact of furnishing the audit before the specified date, there was no reason for confirming the penalty levied under section 271B.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2010-11

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