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Judgment
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
ITA No.6082 arises from order dated 06.04.2026, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by Ld. CIT(A), NFAC. ITA 6083 arises from order dated 06.04.2026, passed u/s 250 of the Act by NFAC.
This is a batch of two appeals pertaining to the same assessee for AY 2018-19. While ITA 6082 pertains to a penalty u/s 271B of the Act, ITA 6083 pertains to a penalty u/s 270A of the Act.
Right at the outset, the Ld. AR for the assessee mentioned that the quantum matter for AY 2016-17 and 2018-19 have both been remanded back to the file of ld. CIT(A) for fresh adjudication. It was pointed out by the Ld. AR that the penalty in ITA 6083 arises from this very same quantum which has been set aside by ITAT [ITA No.7203 & 7204/Del/2025, order dated 10.03.2026]. It was the submission that since the quantum matter has been remanded back then the penalty u/s 270A cannot survive.
We find that indeed this is the case and thus, the impugned penalty is set aside and remanded back to the file of Ld. CIT(A). We grant liberty to the Ld. CIT(A) for initiating the penalty afresh in case there is any addition on the quantum.
In the result, this appeal (ITA 6083) is allowed.
Regarding ITA 6082, it is seen that impugned penalty has been levied on account of the fact that while the return of income was filed on 31.12.2018, the audit report in Form 10B was filed on 02.01.2019. It was held that the said audit report was not filed on time and therefore the impugned penalty was levied. It is seen that the Ld. AO has discussed the fact of delayed filing of Form 10B in the body of his order and even the Ld. CIT(A) has dismissed the assessee’s contention that there was delay in filing Form 10B due to shifting of office. Needless to say, the Ld. CIT(A) confirmed the addition.
The assessee has now approached the ITAT with grounds challenging the levy of penalty on the ground that this penalty would be leviable in case there was any liability to file audit report prepared under the provisions of Section 44AB of the Act. It has been averred that the provisions of Section 44AB were held to be applicable by the authorities below since the relief u/s 11 & 12 of the Act were denied on account of delayed filing of Form 10B.
Before us the Ld. AR stated that the Form 10B was belatedly filed on account of shifting of office of the assessee. It was also submitted that the penalty u/s 271B of the Act has been levied because of a presumption that the relief u/s 11 & 12 of the Act was not available to the assessee since the audit report in Form 10B was belatedly filed. It was the submission that while filing of Form 10B in time was a directory provision and not mandatory, even otherwise any penalty u/s 271B of the Act was also subject to the provisions of Section 273B of the Act. It was the further submission that on both these grounds the impugned penalty was not worthy of being upheld.
The Ld. DR relied on the orders of the authorities below.
We have considered the rival submissions and have gone through the records before us. The impugned penalty is not leviable on both the grounds canvassed by the Ld. AR:
That there was reasonable cause which prevented the assessee from filing audit report on time (Section 273B of the Act); and
Filing of Form 10B in time is not a mandatory condition as would be evident from the following case laws which would serve to illustrate the judicial position in this regard:
FIIT Jee Foundation for Education Research and Training reported in 175 taxmann.com 260 (Del.), order dated 29.04.2025;
Laxmannarayan Dev Shrishan Seva Khendra reported in 167 taxmann.com 548 (Gujarat), dated 10.09.2024;
Sau Dwarkabai Tai Karwa Charitable Public Trust reported in 174 taxmann.com 245 (Bom.), order dated 25.03.2025.
As discussed above, for the reason mentioned, the impugned penalty is clearly untenable in the eyes of law, on two counts of “reasonable cause” and the untenability of rejection of claim due to any delay in filing Form 10B. Accordingly, the impugned penalty is directed to be deleted.
In the result, ITA 6082 is allowed and ITA 608 is partly allowed for statistical purposes.