06 February 2020
the case of one of my client was under scrutiny for A.Y 2017-18 and in that year the assessee failed to get his accounts audited due to huge losses in the business and the turnover was around 15 cr during the year now A.O has issued the penalty notice u/s 271 B can you give any suggestion or any case law of similar circumstances so that penalty can be saved as my assessee is in huge losses and has shut down his business and has also sold his shop.
06 February 2020
It has been held in various decisions that mere failure to file Audit report in time will not justify levy of penalty as power. The section 271B is discretionary (Hon'ble Madras High Court in the case of Thanjavur Silk Handloom Weavers Co-operative Production and Sales Society Ltd. Vs. Union of India reported in 263 ITR 334). Similar view has been taken by the Hon'ble Calcutta High Court in the case of CIT Vs. Capital Electronics (Gariahat) reported in 261 ITR 4. Since in the instant case, there is no absolute default and the assessee has filed Audit report although belatedly, we are of the considered opinion that there was bonafide reasons for not getting the accounts audited before the statutory due date and therefore this is not a fit case for levy of penalty u/s.271B of the I.T. Act.
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