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penalty u/s 271 B TAX AUDIT

reena jain (CA ) (247 Points)

10 October 2009

DEAR FRIENDS

KINDLY LET ME KNOW ABOUT PENAL PROVISION FOR NON FURNISHING OF TAX AUDIT REPORT U/S 44 AB TILL 30 SEP .

AS PER RECENT AMENDMENT TAX AUDIT REPORT IS NOT REQUIRED TO BE FURNISHED. HOW WILL PENAL PROVISION BE ENFORCED.

(1/2 % OR 100000)

THANKS

REGARDS

REENA JAIN

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26 Replies

CA. Megha Topiwala (Job) (1534 Points)
Replied 10 October 2009

yeh.... u r correct while saying that now u r not required to file tax audit report u/s 44AB with the return of income..... but the details of aduit report are required to b submitted in the ITR form... along with the date on which the report is signed by a CA and also details of CA as their membership no. etc.... hence if the report is not prepared within due date thn u wont b able to file ur retrun of income... n hence penal provision can b applied

reena jain (CA ) (247 Points)
Replied 10 October 2009

Thanks a lot megha ,

but there is some doubt in my mind that return can be filed after due date with interest.

and assessee can take advantage with the help of CA to prepare audit report after due date and file it return belated .

in the above case whether he shall be charged with penalty of rs. 100000 ? kindly clear reena .

Anuraag Sharma (Sr Executive Finance) (845 Points)
Replied 10 October 2009

Originally posted by :reena jain
"	Thanks a lot megha , but there is some doubt in my mind that return can be filed after due date with interest. and assessee can take advantage with the help of CA to prepare audit report after due date and file it return belated . in the above case whether he shall be charged with penalty of rs. 100000 ? kindly clear reena .	"

check out your PM

Rajeev (www.rkmco.com) (985 Points)
Replied 10 October 2009

Tax audit report is not to be submitted to the IT dept , It has to be obtained before 30/9 and kept with the client . (refer circular no 5 of 2007 )

I think NO penalty can be levied u/s 271B for late filing of ITR if tax audit report is obtained before 30/9.

Although there are different views on this blog my view is penalty cannot be levied.

You are not in contravention of any provisions if tax audit report is obtained before 30/9.

Although 234A is attracted for late filing of return .

There was one view expressed by someone on this website in an article , that filing up the ITR ( particularly tax audit columns) is furnishing of the tax audit report and if that is not done before 30/9 , penalty can be levied .
My view is that circular asks the assessee to fill up the relevant tax audit columns in the ITR and file the return . It no where mentions that fill up the columns and file the ITR before 30/9 .

My view remains the same . 271B cannot be levied , as 271B is to be read with 44AB and not 139

Piyush Jain (CA) (283 Points)
Replied 11 October 2009

Reena, you have to provide the copy of the tax audit report to the concerned AO before due date. I have dealt with this type of case. make sure you post the same and also get it acknowledge physically as well.

Rajeev, i would like to contradict your view. if it has to be obtained by the assessee than whats the transparency with the deppartment. you can receive the same in the back date.

so if you can not subbmit a)ITR or b)tax report, you will face 271 B.

although there is scapegoat to this provision.

regards

piyush

CA Gaurav Jain (Charterted Accountant) (156 Points)
Replied 11 October 2009

In my office there is some cases we have faced this time for tax audit report to be submitted late.......

if the AO is agree abt the reson given by you abt the late submission of report he can be penalise the assessee only for interest payment but the reason should be logical ....

and it is right that if AO find that there is no reason behind the late submission of report that there will be the penalty for Rs.100000/- from this A.Y...

Regards

Gaurav

CA. Megha Topiwala (Job) (1534 Points)
Replied 11 October 2009

hello... i too agree with piyush n gaurav....

even i hv practically did this type of procedure....

v had filed the tax audit report 2 depart physically... n then filed return after due date i.e. after 30th sept.... n there is nothing wrong in doing so....

As income tax return is required 2 b filed on or b4 due date.. i.e. 30th sept... n if not filed then only interest u/s 234A can get attracted...

and hence there will b no penalty in this case... if u dont file ur return of income on due date on the basis that u hv not submitted tax audit report u/s 44AB....

CA. B.SRINIVASULU (CHARTERED ACCOUNTANT) (6096 Points)
Replied 11 October 2009

If the officer want to charge with penalty under 271B first he has to issue a notice to you and at that time you can represent to the authority why the delay was there. If the delay is due to the factors which is not in the hands of assessee or auditor then penalty need not be charged.

First you should jot out the reasons for delay, then each reason should be analysed if any thing could be avoided or could not be avoided , then you prepare yourself for facing the department in future.

Dont take decission in isolation.

Rajeev (www.rkmco.com) (985 Points)
Replied 11 October 2009

i am surprised u guys are still submitting tax audit reports to the income tax and they are accepting ??? i have done over 50 audits in my personal name over 3 years and not submitted a single tax audit report at the time of filing ...and no issues are raised . i am surprised , aint u guys aware of circular 5 of 2007 ???

1 Like

Anuraag Sharma (Sr Executive Finance) (845 Points)
Replied 11 October 2009

Originally posted by :Rajeev
"	i am surprised u guys are still submitting tax audit reports to the income tax and they are accepting ??? i have done over 50 audits in my personal name over 3 years and not submitted a single tax audit report at the time of filing ...and no issues are raised . i am surprised , aint u guys aware of circular 5 of 2007 ???	"

agreed with you!!

Anuraag Sharma (Sr Executive Finance) (845 Points)
Replied 11 October 2009

Audit report is needed to be submitted only in cases where the assesee is claiming exemption u/s 80IA-IE

or assessee in requirement of submitting ITR7

Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
Replied 11 October 2009

Dear Members,

I agree with Mr. Rajesh view.

In rule 12(2) it is specfied not to enclose any report/form along with return of Income. Also in para 7 of Circular 3 2009, it has mentioned not to file Tax Audit Report with ITR. I have also seen department circular whereby the officers are instructed not to reciept any forms/reports along with ITR and if asessee is enclosing with ITR, remove the enclosure and return same to the assessee.

Thanks

Anuraag Sharma (Sr Executive Finance) (845 Points)
Replied 11 October 2009

but the problem is different which is aksed in frst post

and there is an easy way to solve this but sorry members i cant disclose that publically ......

Rajeev (www.rkmco.com) (985 Points)
Replied 12 October 2009

anuraag , why dont u disclose your easy way , if its legally sustainable . we all will get to learn "how to avoid 271B when audit report is not obtained before due date " other than 273B ofcourse .

Pls go ahead and explain .