ITAT Pune Removes Tax Penalty U/S 44B Due to Medical Issues

An Income Tax Appellate Tribunal (ITAT) bench in Pune has granted relief to an assessee for non-compliance with section 44B of the file income tax act, 1961 due to the ill health of his wife. A penalty imposed under section 274B of the Income Tax Act has therefore been deleted by the ITAT.

Assessment is being conducted by Reliable Enterprises, a company that provides labour work contracts. As a result of the assessee failing to submit the audited accounts under section 44AB and furnish their report, the income tax department imposed a penalty under section 273B.

In allowing the assessee's second appeal, a bench comprising Shri R.S. Syal, Vice President and Shri Partha Sarathi Chaudhury, Judicial Member held that, since the assessee failed to obtain an audit of the accounts and submit the necessary report within the stipulated period, there appears to have been an infringement of income tax section 44AB. A reasonable cause for not performing the audit was asserted by the assessee before the AO because his wife was sick, further complicating family matters. In case of a reasonable cause, a penalty under section 271B need not be imposed under section 273, which states that the relevant section must not be violated.

The facts and circumstances make it clear that the assessee had a reasonable reason to be unable to comply with the requirements of getting the accounts audited and submitting the audit report to the AO before the deadline. In order to remove the penalty, we order it to be erased.