Tax audit penalty

Hitesh,

Non Compliance of the provisions of this act shall attract Penalty under section 271B of the Income Tax Act. If any person required to get his audit done under section 44AB fails to do so before the specified date shall be liable for penalty of ½% of the turnover/gross receipts subject to a maximum penalty of Rs. 1,50,000

However, Section 273B states that no penalty shall be levied under section 271B if there is a reasonable cause for such failure. Some instances which have been accepted by the Tribunals/Courts as “Reasonable Cause” are:-

1. Resignation of the Tax Auditor and Consequent Delay
2. Death or physical inability of the partner in charge of the Accounts
3. Labour Problems such as strikes, lock-outs for a long period
4. Loss of Accounts because of Fire/Theft etc. beyond the control of the Assessee
5. Natural Calamities.