ITAT sets aside IT department's penalty order

ITAT sets aside IT department's penalty order

The Judicial Member observed that the assessee had a reasonable cause for not getting the accounts audited before the statutory due date

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the penalty against Air India Air Transport Services Limited, a subsidiary of Air India under the Income Tax Act, 1961.

The assessee, a public sector company, had to submit its audit report in Form 3CA in which report u/s 44AB was required to be submitted under the IT Act. The auditor worked on the basis of the audited accounts together with the information required to be submitted in Form 3CD.

On completion of the statutory audit under the Companies Act, the assessee was required to obtain a report by the Comptroller and Auditor General (CAG). The assessees' accounts for the year ending on 31 March 2013 were not finalized and audited before the specified date i.e. 30 September 2013. It was completed on 23 January 2014 and the report from the CAG was obtained in March 2014.

Thereafter, the tax audit report was undertaken after April 2014 and the report was obtained on 17 September 2014. The assessee stated these facts before the assessing officer (AO) and the Commissioner of Income Tax (Appeals).

The Judicial Member Kavitha Rajagopal ruled in favor of the assessee observing that the assessee had a reasonable cause for not getting the accounts audited before the statutory due date.

The tribunal ruled, "In spite of the best effort of the assessee to get its accounts audited and obtain an audit report before the specified date, it could not happen because of the circumstances beyond its control. The assessee had shown reasonable cause for its failure to comply with the requirement before the specified date. Therefore, it is not a fit case for levy of penalty under the IT Act."