Tax Audit Penalty · Panaji, Goa
Penalty notice for not getting accounts audited? Our Chartered Accountants in Goa contest Section 271B audit penalties — establishing reasonable cause, documenting your position, and filing a legally sound response to waive or substantially reduce the half-percent penalty levied for failure to comply with Section 44AB.
Overview
Section 271B imposes a penalty of 0.5% of total sales, turnover or gross receipts — subject to a maximum of ₹1.5 lakh — when a taxpayer required to get their accounts audited under Section 44AB fails to do so, or fails to furnish the audit report by the due date. However, the penalty is not automatic: if you can demonstrate a genuine reasonable cause for the delay or non-compliance, the penalty must be waived. The burden of proving reasonable cause rests on the taxpayer — and a well-documented, professionally argued response makes all the difference.
This service works closely with our Section 270A under-reporting penalty and Section 156 demand notice response services for complete income tax compliance and notice management.
What's covered
End-to-end notice management from receipt to resolution.
Get a fixed-fee quote →Analysing the show-cause notice to determine the exact period, turnover and computation of the proposed 271B penalty.
Identifying and documenting the genuine reason — illness, natural calamity, audit in progress, dispute with auditor — that prevented timely compliance.
Preparing a detailed written response to the show-cause notice with legal precedents and factual evidence supporting waiver.
Submitting the response on the income tax e-filing portal or before the AO within the stipulated deadline.
Appearing before the AO or Commissioner at the penalty hearing to argue your case for waiver or reduction.
Filing an appeal before CIT(A) if the penalty is confirmed and you have valid grounds to contest the order.
Our process
We analyse the 271B show-cause and identify the penalty basis.
We document reasonable cause with supporting evidence and precedents.
We prepare and file the response before the AO deadline.
We represent you at the hearing and pursue waiver or reduction.
Frequently asked questions
Section 271B imposes a penalty of 0.5% of total sales, turnover or gross receipts — maximum ₹1.5 lakh — when a taxpayer liable to have accounts audited under Section 44AB fails to get the audit done or fails to furnish the audit report (Form 3CA/3CB with 3CD) by the prescribed due date. It is levied by the Assessing Officer after issuing a show-cause notice.
Any business with total sales or turnover exceeding ₹1 crore (or ₹10 crore if digital transactions exceed the prescribed threshold), or any profession with gross receipts exceeding ₹50 lakh, is required to get accounts audited by a Chartered Accountant and furnish the audit report by the due date for filing returns.
Yes. Section 273B provides that no penalty under Section 271B shall be imposed if the assessee proves that there was reasonable cause for the failure. Courts and tribunals have accepted reasons such as: auditor's illness or sudden unavailability, natural disaster, serious illness of the taxpayer, bona fide dispute over applicability of audit, and delay caused by circumstances beyond the taxpayer's control.
Reasonable cause has been interpreted broadly by courts to include: death or serious illness of the taxpayer or their auditor; natural calamities; genuine confusion about the applicability of audit requirements; auditor's refusal or unavailability close to the deadline; and dependence on third-party data that was unavailable. Each case is evaluated on its specific facts.
The penalty is 0.5% of total sales, turnover or gross receipts, subject to a maximum of ₹1.5 lakh. For large businesses with high turnover, even 0.5% could approach or reach this cap quickly. Regardless of the amount, the penalty should be contested wherever a genuine defence exists.
Yes. Getting the audit completed and report furnished — even after the due date — demonstrates compliance and good faith. Combined with a documented reasonable cause explanation, a belated audit significantly strengthens the case for penalty waiver. We advise on completing the audit quickly alongside filing the penalty response.
If the AO confirms the penalty after considering your response, you can file an appeal before the Commissioner of Income Tax (Appeals) within 30 days. The CIT(A) has the power to delete or reduce the penalty. Income Tax Appellate Tribunal (ITAT) is the next level of appeal if required.
Contact N D Savla & Associates in Panaji, Goa as soon as the show-cause notice is received. We review the penalty basis, identify and document your reasonable cause defence, draft a comprehensive reply with supporting evidence and legal precedents, and file it before the deadline — giving you the best chance of a full waiver.
Related services
Book a free consultation with a qualified Chartered Accountant in Goa. We'll build your defence and file your response — no obligation.