Assessess business sales turnover rs:3 crores above f.y.23-24 account records maintained computer based tally software system tally data corrupted books of accounts rewritten some time tax audit filed
Question:
Assessess penalty provision applicable for tax audit late filed.
Relevant Provisions for Tax Audit Penalty (Section 271B):
Under Section 44AB of the Income Tax Act, 1961, a tax audit is mandatory if the turnover exceeds ₹1 crore for businesses (or ₹10 crores if cash transactions do not exceed 5% of total sales). Since the assessee’s turnover is over ₹3 crores, they are required to get their accounts audited.
Penalties for Non-Compliance with Tax Audit Requirements:
If the assessee fails to comply with the provisions of Section 44AB by not getting the accounts audited or by not filing the tax audit report on time, a penalty is levied under Section 271B.
The penalty under Section 271B is:
- 0.5% of the turnover or gross receipts, subject to a maximum penalty of ₹1,50,000.
Possible Waiver of Penalty:
The penalty may be waived under Section 273B if the assessee can prove that there was a reasonable cause for the delay in filing the tax audit report. In this case, the corruption of Tally data may qualify as a “reasonable cause” if adequately explained and documented.
However, the final discretion lies with the tax authorities, and they may or may not accept the reason for delay.
Conclusion:
- Penalty: If the tax audit report is filed late without a reasonable cause, a penalty of 0.5% of the turnover or ₹1,50,000, whichever is lower, will be applicable under Section 271B.
- Waiver Possibility: If the assessee can substantiate that the data corruption led to the delay and provide sufficient evidence, the penalty may be waived under Section 273B.
If the Tally software data got corrupted and as a result, the books of accounts had to be rewritten, causing a delay in filing the tax audit report, this could be considered a “reasonable cause.” However, you need to prepare the timeline along with related documents with proper explaination to claim this successfully.