Section 271B of the Income Tax Act – Penalty for Failure to Get Accounts Audited
Section 271B of the Income Tax Act provides for a penalty when a taxpayer who is required to get their accounts audited fails to do so within the prescribed time limit under the Act.
This penalty is commonly levied in cases involving tax audit under Section 44AB and can arise even when income is otherwise correctly reported.
At N D Savla & Associates, we assist taxpayers in handling Section 271B penalty notices, including drafting replies, establishing reasonable cause, and seeking waiver or relief where permissible.
When Does Section 271B Apply?
Section 271B applies when a taxpayer:
Is liable for tax audit under Section 44AB
Fails to get accounts audited, or
Fails to furnish the audit report within the due date
This applies to businesses, professionals, firms, companies, and eligible assessees required to undergo tax audit.
Penalty Amount Under Section 271B
The penalty under Section 271B is:
0.5% of total turnover or gross receipts,
Subject to a maximum limit of ₹1,50,000
The penalty is calculated irrespective of whether tax is payable or not.
Common Reasons for Section 271B Penalty Notices
Penalty notices are often issued due to:
Delay in completion of tax audit
Late uploading of audit report on the income tax portal
Non-appointment of auditor within time
Technical issues or incorrect filing of audit forms
Misunderstanding of audit applicability
Many such cases are eligible for relief if properly explained.
Reasonable Cause & Relief from Penalty
Under Section 273B, penalty under Section 271B shall not be imposed if the taxpayer proves there was a reasonable cause for failure.
Accepted reasonable causes may include:
Genuine hardship or unavoidable circumstances
Delay due to auditor resignation or illness
Natural calamities or system failures
Bona fide belief supported by facts
Each case depends on documentation and presentation.
How to Respond to a Section 271B Penalty Notice?
Review audit applicability and timelines
Examine reasons for delay or failure
Compile supporting documents and explanations
Draft a clear, fact-based reply
Submit response within prescribed time
Seek waiver or drop of penalty under Section 273B
Our Section 271B Services
Review of penalty notice and audit applicability
Advisory on reasonable cause defence
Drafting and filing replies
Representation before tax authorities
Appeal support where penalty is wrongly levied
Why Choose N D Savla & Associates?
Strong experience in tax audit and penalty matters
Practical approach focused on penalty mitigation
Clear advice on exposure and remedies
Timely handling of notices
Trusted CA firm serving clients across Mumbai and India
We help you defend the penalty before it becomes final.
Act Early on Penalty Notices
Penalties under Section 271B can be avoided or reduced if handled correctly and on time.
If you’ve received a Section 271B penalty notice, get professional guidance before responding.
Speak to our tax compliance team today.
