G873 AYYAPPANTHANGAL URBAN COOP CREDIT SOCIETY LTD.,KANCHIPURAM vs. ITO, WARD-8(2), CHENNAI

PDF · subscribers
ITA 2758/CHNY/2026Status: DisposedITAT Chennai05 August 2026AY 2018-196 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the condonation of delay in filing the return of income under Section 119(2)(b) does not condone the separate default of not furnishing the audit report within the prescribed time. The subsequent filing of the audit report after the penalty proceedings were initiated, following the condonation order, was not considered a reasonable cause for the initial default.

What were the facts?

The assessee, a cooperative society, failed to file its return of income and audit report for AY 2018-19. The Assessing Officer completed a best judgment assessment and levied a penalty under Section 271B for not furnishing the audit report.

What were the issues?

Whether the penalty under Section 271B for non-furnishing of the audit report is sustainable when the delay in filing the return of income was subsequently condoned under Section 119(2)(b).

Which sections of the Income-tax Act were involved?

Section 271B,Section 44AB,Section 119(2)(b),Section 80P,Section 147,Section 148,Section 250,Section 273B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI GEORGE GEORGE K & MS. PADMAVATHY.S

For Respondent: Ms. D.Nithya, Addl. CIT

आदेश / O R D E R

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 10.02.2026 for Assessment Year (AY) 2018-19. The order of the CIT(A) is emanating from the penalty order passed u/s. 271B of the Act.

ITA No.2758/Chny/2026 G873 Ayyppanthangal Urban Cooperative credit Society Ltd. :- 2 -: 2. The assessee is a cooperative society carrying on the business of cooperative bank. The assessee did not file the return of income for the year under consideration. The AO noticed that the assessee is having substantial financial transactions during the year under consideration. Since the assessee did not file the return of income, the A.O reopened the assessment by issue of notice u/s. 148 of the Act. The AO completed the assessment u/s. 147 of the Act determining the income at Rs.72,10,406/-. During the assessment proceedings, the AO also noticed that the assessee is having total utilization of funds to the tune of Rs. 20,40,44,536/-. Since the assessee did not furnish the audit report, the AO initiated penalty proceedings u/s. 271B of the Act. The assessee did not respond to the notices issued by the AO and therefore the AO levied a penalty u/s. 271B of the Act to the tune of Rs. 1,50,000/-. Aggrieved, the assessee filed further appeal before the CIT(A). The assessee submitted before the CIT(A) that the assessee has made application before the Chief Commissioner of Income-tax seeking condonation of delay in filing the return u/s.119(2)(b) of the Act so that the assessee would get the benefit of deduction u/s. 80P of the Act. The assessee also submitted that there was a dispute on the issue of appointment of Secretary of the Urban Cooperative Ltd. due to which the books of accounts could not be audited in time. The CIT(A) however held that the issues pertaining to appointment of Secretary was resolved in 2020 whereas the assessee has not filed the audit report even after the initiation of penalty proceedings u/s. 271B of the Act. The assessee is in appeal before the Tribunal against the order of the CIT(A).

3.

There is a delay of 11 days in filing the appeal by the assessee. The assessee has filed condonation petition/affidavit stating the reasons for delay in filing the appeal. Having heard both the parties and perused the material on record, we are of the view that there is a reasonable and sufficient cause

ITA No.2758/Chny/2026 G873 Ayyppanthangal Urban Cooperative credit Society Ltd. :- 3 -: for the delay in filing the appeal before the Tribunal. Therefore following the Hon’ble Supreme Court decision in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (167 ITR 471) (SC), we condone the delay in filing the appeal and admit the appeal for adjudication.

4.

The Ld. Authorized Representative (AR) of the assessee submitted that the CCIT, Chennai-1 vide order dated 09.01.2025 has allowed the petition filed u/s. 119(2)(b) of the Act. The Ld. AR further submitted that the assessee after obtaining the approval filed the return of income along with audit report on 31.01.2025. The Ld. AR also submitted that the assessee was waiting for the disposal of the petition made u/s. 119(2)(b) of the Act and hence the return and the audit report could be filed only after obtaining the approval. The Ld. AR accordingly submitted that there is a reasonable cause in not filing the audit before the conclusion of penalty proceedings u/s. 271B of the Act and prayed that the penalty levied may be deleted.

5.

The Ld. Departmental Representative (DR), on the other hand, vehemently argued that as per the petition u/s. 119(2)(b) of the Act, the audit for the year under consideration was completed on 08.01.2019 and the assessee did not file the audit report before either of the lower authorities. The Ld. DR further submitted that the petition u/s. 119(2)(b) of the Act was filed for condoning the delay in filing the return of income and therefore the same cannot be set to be the reason for delay in filing the audit report. The Ld. DR also drew our attention to the order of CCIT allowing the petition u/s. 119(2)(b) of the Act to submit that the petition was allowed for the limited purpose of claiming deduction u/s. 80P and therefore non filing of audit report which is an independent default by the assessee cannot get covered by the approval given CCIT.

ITA No.2758/Chny/2026 G873 Ayyppanthangal Urban Cooperative credit Society Ltd. :- 4 -: 6. We have heard the rival submissions and perused the material available on record. The issue for consideration is whether the penalty levied under section 271B of the Act is liable to be sustained. It is an admitted fact that the assessee did not furnish the audit report within the time prescribed under section 44AB of the Act. It is also not in dispute that the audit report was not produced before the Assessing Officer either during the assessment proceedings or during the penalty proceedings. The explanation initially offered by the assessee was that there was a dispute relating to the appointment of the Secretary of the Society, due to which the books of account could not be audited in time. However, the records reveal that the said dispute had already been resolved in the year 2020. Even thereafter, the assessee did not furnish the audit report before the Assessing Officer. Therefore, the explanation put forth by the assessee does not satisfactorily explain the continued default. Before us, the assessee has relied upon the order of the Chief Commissioner of Income-tax dated 09.01.2025 passed under section 119(2)(b) of the Act and submitted that the return of income along with the audit report was filed on 31.01.2025 pursuant to such order. We are unable to accept the said contention. A perusal of the order passed under section 119(2)(b) shows that the delay was condoned only for the limited purpose of enabling the assessee to file the return of income and claim deduction under section 80P of the Act. The said order does not condone the separate statutory default of not furnishing the audit report within the time prescribed under section 44AB of the Act.

7.

We further notice that, as pointed out by the Revenue, the petition filed under section 119(2)(b) itself discloses that the audit of the accounts for the relevant previous year had been completed on 08.01.2019. Thus, the audit report was already available with the assessee. In such circumstances, the

ITA No.2758/Chny/2026 G873 Ayyppanthangal Urban Cooperative credit Society Ltd. :- 5 -: pendency of the petition under section 119(2)(b) cannot be regarded as a valid reason for not furnishing the audit report before the Assessing Officer. The statutory obligation to furnish the audit report is independent of the filing of the return of income, and nothing has been brought on record to show that the assessee was prevented by any sufficient cause from complying with the said requirement. The existence of reasonable cause under section 273B has to be examined with reference to the period during which the default occurred. A subsequent order condoning the delay in filing the return of income cannot retrospectively validate the earlier failure to furnish the audit report nor can it constitute a reasonable cause for such failure. In the absence of any satisfactory explanation for the default committed by the assessee, we find no infirmity in the order of the CIT(A) confirming the penalty levied under section 271B of the Act. Accordingly, the order of the CIT(A) is upheld and the grounds raised by the assessee are dismissed.

8.

In the result, the appeal of the assessee is dismissed.

Order pronounced on 06th day of August, 2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (पदमावती यस) (Padmavathy.S) (George George K) उपा�� / Vice President लेखा सद�य सद�य /Accountant Member लेखा लेखा लेखा सद�य सद�य चे�नई/Chennai, �दनांक/Dated: 06th August, 2026. EDN, Sr. P.S EJTADA Digitally signed by EJTADA DURGA DURGA NARESH Date: 2026.08.10 NARESH 11:51:29 +05'30'

ITA No.2758/Chny/2026 G873 Ayyppanthangal Urban Cooperative credit Society Ltd. :- 6 -:

आदेश क� �ितिल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF

More judgments on Section 271B

All 1,993 judgments and leading authorities on Section 271B →

Recent GST High Court judgments

Search GST case law →