Everytime the deadlines approches, there seems to be a lot of confusion over if the penalty 271B for failure to "furnish" the Tax Audit Report u/s 44AB.
The confusion appears to have arisen due to fragmented reading of circular No 5.
The circular no 5 dated 26-07-2007 states the following:
" The report of audit under section 44AB is not to be attached with the return. It should not be furnished separately also before or after the due date. However, an assessee should get the report of audit from an accountant under said section before the due date of the furnishing of the return and should fill out the relevant columns of these forms on the basis of such report. The assessee should retain the report with himself. It may be furnished in original during the assessment proceedings. No penalty under section 271B shall be initiated or levied for not furnishing the tax audit report on or before the due date. However, if the audit report has not been obtained before the due date, provisions of section 271B shall be attracted. "
It is very much evident that the circular lays down in an Unequivocal manner that the assesses should fill out the relevant columns of these forms on the basis of audit report and No penalty under section 271B shall be initiated or levied for not furnishing the tax audit report
The non penalty clause can't be interpreted in isolation of the preceding lines. One can not segment it to suit to one's convenience.
In my opinion, "filling the out the relevant columns of ITRs on the basis of Audit Report" is 'furnishing" of Audit report as envisaged under section 44AB and 271B.
If for any reason ITR can't be filed before 3oth September, I strongly recommend that the assessee should fill out only Tax Audit Part (i.e., Part A-OI) in applicable ITR and file it (just like the ITR either manually or electronically as the case may be ) by due date (i. e. 30-09-2009). No doubt, it will require a revision of the ITR later (with all of its drawbacks) . However To me this seems the only pragmatic solution.
Please note that audit report is not required to be filed in paper form whatsoever.
CA Ashutosh Lohani