Penalty for non-filing of Tax Audit Report- Section 271B
As per the provisions of Income Tax Act, 1961, a taxpayer who has an annual sales or turnover exceeding Rs. 1 crore during any financial year is required to get his accounts audited and furnish it before the due date i.e. 30th September every year. This is known as “Tax Audit”.
There are also some exceptions to this threshold limit. For example, in case of the taxpayer who has an annual turnover of not more than Rs. 10 crores and his cash receipts/ payments are not more than 5% of total receipts/ payments can file income tax return directly without getting his accounts audited. Similarly, a taxpayer who opts for presumptive taxation scheme is not required to go for tax audit up to a turnover of Rs. 2 crores.
Read this for more info. about presumptive taxation scheme: https://www.taxwink.com/blog/section-44ad-44ada-presumptive-tax-scheme
Penalty under section 271B
Non filing of tax audit report on the income tax portal comes with serious repercussions. Penalties for non-filing of tax audit report has been prescribed under section 271B of the Income Tax Act. Section 271B of the Act empowers the Assessing Officer to levy penalty lower of the following from the defaulting taxpayer:
- 0.5% of total sales or turnover or gross receipts or
- Rs. 1,50,000
Thus, if a taxpayer fails to get tax audit done or makes delayed filing of tax audit report may be asked by the A.O. to pay a penalty which is equal to 0.5% of his annual turnover or Rs. 1,50,000 whichever is lower. Please note that the due date of filing tax audit report on the Income Tax portal is 30th September.
Can penalty under section 271B be waived?
Levying penalty under section 271B is under discretion of the A.O. and he may waive the penalty where the taxpayer shows a reasonable cause for delay or non-filing of tax audit report. Some examples of the reasonable causes are:
- Delay due to resignation of the tax auditor
- Death or physical inability of the partner or proprietor who is responsible for accounts
- Natural calamities
- Emergency situations like curfew
- Delays which are beyond the control of the assessee like loss of accounts due to theft or fire etc.
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