As per section 44AB of income tax act, 1961, an assessee is required to get his accounts audited and file tax audit report if his turnover or gross receipt, as the case may be, exceed prescribed limit.
In case, assessee fails to get his accounts audited or file tax audit report, then 271B of income tax will get attracted.
As per section 271B if an assessee fails to get his accounts audited or file tax audit report then penalty equal to 0.5% of previous yearr turnover/sales/gross receipt or Rs 1,50,000/- whichever is less would be levied.
However assessee can defend himself under section 273B, if he proves that delay was due to reasonable cause.
Some of the instances where Tribunals/Courts have accepted as "reasonable cause" are as follows :
a. Resignation of the tax auditor and consequent delay;
b. Bona fide interpretation of the term 'turnover' based on expert advice;
c. Death or physical inability of the partner in charge of the accounts;
d. Labour problems such as strike, lock out for a long period, etc;
e. Loss of accounts because of fire, theft, etc. beyond the control of the assessee;
f. Non-availability of accounts on account of seizure;
g. Natural calamities, commotion etc.
Posted 1 year, 10 months ago by Ankit Sharma
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