Relief to Taxpayers – No penalty on default in furnishing audit report

Every corporate and those assessees who are required to get their accounts audited are required to file their income tax return by September 30 every year. The due date of getting the books of accounts audited by companies under Income Tax Act is September 30 with duly filled up and signed form No. 3CD and 3CA by an independent Chartered Accountant. What is Penalty u/s 271(B)?

  • If a company liable to audit fails to get his accounts audited before the specified date or fails to furnish a tax audit report to the proper tax officer then penalty u/s 271B is attracted. The amount of penalty shall be one-half per cent of total sales / gross turnover or Rs.150000/- whichever is lower.
  • Earlier, the audit report was required to be submitted along with the tax returns in hard copy before the due date. But, now the company should get the audit report and retain it in original. It is neither required to be attached with the new scheme of online filing of tax returns nor to be furnished separately before or after the due date. It is to be furnished only on the request of the Assessing Officer. But the relevant columns of the Income Tax Return are filled on the basis of the particulars of the report so an assessee should obtain it before the due date of furnishing return.

Hence it is well understood that though the audit report is not to be submitted with the Return but it is to be compulsorily prepared within the due date for successful filing of Return of Income. When penalty is attracted? It is to be noted that the provisions of penalty u/s 271B is attracted only when audit report is not “obtained” within the stipulated date. The provisions are not attracted on late submission of Return of Income, however interest u/s 234A will be charged thereon. The provisions of penalty u/s 271B are correlated with provisions of Sec 44AB (compulsory audit of accounts) and it is not to be read with the provisions of Sec 139(1) (due date of filing return). So penalty u/s 271B is not attracted if the audit report is obtained from an independent CA before the due date even if the Return of Income is furnished after the due date. The team of provides comprehensive Business Maintenance  services including Tax Audit , Online Filing of Return and other related Income Tax Services to all businesses in India.

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