UDALA REGIONAL COOPERATIVE MARKETING SOCITY LIMITED,MAYURBHYANJ vs. ITO,WARD-BBN-W-(9)(91), BHUBANESWAR

It was submitted by the ld. AR that the assessee is a Semi Govt. Organization (AOP), whose accounts are audited by CAG. It was the submission that as the CAG could not complete the audit of the books of accounts of the assessee in time, the assessee could not file its return of income in the prescribed time limit. It was the submission that the AO levied penalty u/s.271F of the Act on the failure of the assessee to file its return of income u/s.139(1) of the Act. It was the submission that as the accounts of the assessee have not been audited, the return filed by the assessee itself would have been an invalid return. It was the submission that the audit was not yet completed and the assessee is yet to file its return and the assessment had also been completed. The audit report has been sent to CAG for signature as early as in 2020 but till date it has not been received by the assessee and the return has not been filed till date. It was the submission that on account of reasonable cause, the penalty as levied by the AO and as confirmed by the ld.CIT(A) may be deleted.

In reply, ld. DR vehemently supported the order of the AO and ld. CIT(A).

We have considered the rival submissions. A perusal of the facts of the present case clearly shows that non-filing of the return u/s.139(1) of the Act was on account of non-completion of audit of the books of accounts by the CAG. The assessee has no control over the CAG and admittedly the delay is attributable to an auditor appointed by the CAG. This admittedly is a reasonable cause. This being so, the reasonable cause given by the assessee is accepted and the penalty as levied by the AO and confirmed by the ld. CIT(A) is hereby deleted.