The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has recently upheld a penalty under Section 271B of the Income Tax Act, 1961 as the assessee had failed to file the audit report through a qualified Chartered Accountant (CA) within the stipulated time limit.
As per penalty order, the assessee had not filed return of income for AY 2017-18. During the assessment proceedings, the assessee filed a copy of the profit and loss account.
As per the said profit and loss account, total turnover of the assessee was of Rs. 2,59,83,830/-. The AO issued notice to the assessee under Section 271B as the assessee had not filed an audit report.
The AO had held that the assessee had defaulted by not filing an audit report within the stipulated time limit. The reason given by the assessee was not sufficient and valid, therefore, the AO levied a penalty of Rs.1,29,919/- under Section 271B of the Income Tax Act.
In appeal, the CIT(A) rejected the appeal of the assessee ex-parte. Aggrieved assessee filed the present appeal before the Income Tax Appellate Tribunal bench at Pune.
In the written submissions, assessee pleaded that all books were given to CA, who failed to audit the books and file the audit report. In the affidavit, Mahesh Ashok Kadam has accepted that books were given to CA but due to some reasons, he could not complete the accounting and could not file the audit report within the statutory time limit.
The Department representative M.G. Jasnani relied on the orders of the lower authorities.
It was an admitted fact by the assessee that Assessee had maintained books of accounts for the year under consideration. The assessee pleaded that the books were given to the Accountant. In support of the same he filed copy of affidavit of Mr. Mahesh Kadam. It was claimed by Mr.Mahesh Kadam that he is an accountant, he collected the books but could not complete accounting. This affidavit was prepared on 25/01/2022.
Thus, the assessee had not filed the said affidavit before the AO. The assessee has claimed that he had given books to Mr.Mahesh Kadam-Accountant.
As per the affidavit of the accountant, he is not a Chartered Accountant, as he has mentioned in the affidavit that he had not given data to the Chartered Accountant. As per the Income Tax Act, the Audit can be done only by a qualified Chartered Accountant.
The bench noted that the assessee had not given books to a qualified CA. It was further noted by the Judicial Member S S Godara and the Accountant Member Dr. Deepak P Ripote that “We do not know, the exact qualification of Mr.Kadam, who calls himself Accountant. However, as per Section 288 “Explanation.—In this section, “accountant” means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 who holds a valid certificate of practice under sub-section (1) of section 6 of that Act”.”
The tribunal bench observed that, Only a qualified CA is permitted to Audit books of account.
In the affidavit it is claimed by Mr.Kadam, that he had not given data to CA. Thus, in the affidavit he is not referring to books. However, for Audit, books of account are required. Therefore, the claims made in the affidavit are contradictory and hence not reliable.
In these facts and circumstances, the bench expressed the opinion that there was no valid reason for not filing the Audit report.
Hence, upholding the Penalty under Section 271B of the Income Tax Act, the bench dismissed the appeal of the assessee.To Read the full text of the Order CLICK HERE
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Santosh Swarupchand Bhandari vs ITO
CITATION: 2023 TAXSCAN (ITAT) 1129
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