ITAT Deletes ₹1.5 Lakh Penalty for Delay in Tax Audit Caused by Managing Partner’s Death

The Income Tax Appellate Tribunal (ITAT), Cochin Bench, set aside a penalty of ₹1.5 lakh imposed under Section 271B of the Income Tax Act for a delayed filing of a tax audit report.

The assessee firm explained that the delay occurred due to the death of its 84-year-old managing partner, which caused significant disruption to its operations and resulted in the late submission of the audit report for the relevant assessment year.

Taking a compassionate view, the Tribunal accepted the explanation as a "reasonable cause" under Section 273B and noted that the delay was neither intentional nor due to negligence.

Accordingly, the penalty order was set aside and allowed the appeal.