Is penalty for delay in filing Tax audit report compulsory? | 1.5 lakh penalty for delay in filing Tax Audit report

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Due date for filing Tax audit for FY 2022-23 ended on 30.09.2023, except for those assessee’s who have indulged in any transfer pricing transaction. For those assessee due date for Tax audit is 31.10.2023.

Now the question which arises is what will happen if someone file Tax audit report after 30.09.2023. Will they be liable for a late fees or penalty immediately as they file Tax audit report?

The amount prescribed for delay in filing Tax audit report is mentioned under Section 271B of the Income Tax Act and the amount prescribed in the provision of act is a penalty and not a late fees.

Hence, it is not required to be paid along with filing of Tax Audit Report and it shall be charged separately by the Income Tax Officer.

As per the provisions of section such amount “may be” charged by the Income Tax Officer. Hence, as per the provision of the Act, word “may” has been used which means that charging such penalty is not mandatory and it is at the discretion of the officer.

Till now, in majority of cases we have seen that penalty has been charged in very few cases. However, with increasing use and dependability of Income tax department on software and AI it can be seen in future that such penalty might be charged automatically by machine.

Hence, it is advisable to file Tax audit report within due time or else assessee might face huge penalty which could be lower of below:

0.5% of Turnover or receipts or

Rs. 1.5 lakh.

Also, such amount being a penalty under Income Tax Act won’t be allowed as deduction from the taxable income of assessee.

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