Income Tax: No Penalty for delay due to IT-Portal Technical glitches

The Income Tax Appellate Tribunal (ITAT) provided relief to the assessee by cancelling a penalty of Rs 1.5 lakh.

The present appeal has been filed by Konda Seenivasaiyer against the Deputy Commissioner of Income Tax, challenging the order dated October 24, 2025, passed by the CIT(A) for AY 2017-18.

Background of the case

The taxpayer filed his income tax return for AY 2017-18 on December 25, 2017, declaring an income of Rs 30,29,350. His case was selected for scrutiny to review cash deposits during the demonetization period.

Later, the AO noticed that the tax audit report was not filed within the due date, even though the taxpayer’s turnover exceeded Rs 16,29,81,133, making the audit mandatory. Penalty proceedings were initiated, and a fine of Rs 1.5 lakh was imposed under Section 271B.

The assessee then approached CIT(A); however, it dismissed the appeal solely due to a delay of about 300 days.

Tribunal’s Ruling

Being aggrieved by the above decision, the assessee further approached the Tribunal. During the hearing, the assessee stated that it completed the audit within the prescribed time; however, the delay was only in uploading the report.

The Tribunal accepted that the delay was unintentional and caused by a lack of proper communication about the penalty order. Since the audit was completed on time, the main requirement of the law was fulfilled.

The delay in uploading the report was considered procedural and due to technical issues. The audit report was filed before the assessment was completed, and the AO had already reviewed it.

The Tribunal held that there was a “reasonable cause” under the law and that the mistake was minor and technical. As a result, the Rs 1.5 lakh penalty was deleted. Lastly, the tribunal allowed the assessee’s appeal.