NAZIRPUR LAMPS LIMITED,KARDAHA, SOUTH DINAJPUR vs. I.T.O., WARD - 3(4), BALURGHAT

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No 1254/KOL/2026 Assessment Year- 2016-17 Nazirpur Lamps Limited...........................................................................................Appellant Kardaha, Nazirpur, B.O, Kardaha, District South Danajpur, Pin- 77142m West Bengal [PAN No. AAAAN7255P] Vs. The Ld. Income Tax Officer.........................................,..……………....……….Respondent Ward 3(4), Balurghat Appearances by: P.K. Roy, and Himangshu K. Ray, and Trideep Nayak, AR, Advocate, appeared on behalf of the Appellant. Dheeraj,Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing: August 11, 2026 Date of pronouncing the order: August 25 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee is directed against the order dated 06.02.2026 of the Office Of the National Faceless Appeal Centre (NFAC), Delhi passed under Section 271B of the Assessment Year 2016-17 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 2. The brief facts of the case of the assessee is that the assessee Nazirpur Lamps Limited has not filed its Return of Income for A.Y 2016-17 under the provisions of section 139 of the Income-tax Act. 1961. As per information available with the department the assessee has made cash deposit of Rs.62.30,975/- in bank account maintained with Bangiya Vikash Office during the period 01.04.2015 to 31.03.2016. Accordingly, the case of the assessee was

ITA No.980/Kol/2026 re-opened vide notice issued u/s.148 of the Act on the above mentioned issue. In response to the said notice the assessee has filed return of income showing total income of Rs. Nil. Accordingly, notices u/s. 142(1) was issued from time to time. Subsequently assessment was finalized on 25.02.2025 vide order 147 r.w.s read with section 144B of the Income-tax Act after accepting the return income of the assessee at Rs. Nil/-. The penalty proceedings u/s. 271B was initiated for its default for non filing of his audit report u/s 44ABof the I.T Act on or before due date as per the provisions of the Income tax Act, 1961. Aggrieved by the said order assessee preferred appeal before the CIT(A) wherein appeal of the assessee been dismissed. Being aggrieved by and dissatisfied the assessee preferred appeal before us. 3. The Ld. AR challenges the very impugned order by taking following grounds:- 1. General Ground: That the order passed by the Learned Commissioner of Income Tax (Appeals) [CIT(A)] confirming the penalty under Section 271B is arbitrary, contrary to the facts of the case, and against the principles of law 2. Erroneous Confirmation of Penalty: That the Learned CIT(A) erred in confirming the penalty of Rs. 85,110/- levied by the Assessing Officer under Section 271B for the alleged failure to furnish an audit report under Section 44AB. 3. Presence of Reasonable Cause under Section 273B: That the Learned CIT(A) failed to appreciate that the appellant had "reasonable cause" for not furnishing the audit report under Section 44AB within the meaning of Section 273B of the Income Tax Act The appellant is a Cooperative Society formed by Tribal members, registered under the West Bengal Cooperative Societies Act, 1983, and its books of accounts were already audited by a Departmental Auditor engaged by the Government of West Bengal. 4. Bonafide Belief: That the appellant was under a bonafide belief that since its income is exempt under Section 10(27) and/or Section 80P of the Income Tax Act, and since its accounts were already audited by government-appointed auditors, it was not required to file a separate tax audit report or return of income. 5. No Revenue Loss/Technical Breach: That the Learned CIT(A) failed to consider that the assessment for AY 2016-17 was finalized on 25.02.2025, under section 147 r.w.s. 144B of the Act, at Nil income/demand. Since there was no tax evasion or revenue loss, the failure to 2

ITA No.980/Kol/2026 furnish the audit report was a mere technical or venial breach for which penalty may not be imposed. The Ld. AR also placed decision passed by Hon’ble High Court of Uttarakhand in CIT VS Iqbalpur Cooperative Cane Development Union Ltd. Order passed by ITA Kol in ITA No. 804 & 805 No. 3 ITAT Kol Bench in ITA No. 910/2023. Contrary to that Ld. DR supports the impugned order. 4. Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order we find that assessee is a society formed by tribal members and it is registered under the West Bengal Cooperative Societies Act, 1983. It is pertinent to mention here that books of accounts of the assessee has been audited by the auditor engaged by the Government of West Bengal and income is exempted u/s 80B. The assessing officers find that turnover the assessee during year under consideration was amounting to Rs. 170,22,105/- and the assessee was required to compulsory got audited its books of accounts as per the provisions of Section 44AB of the Act on or before the specified date but the assessee has violated the provisions, as a result of which 0.5% of the gross turnover on admitted works out to Rs 85,110/-has been levied. The Ld. AR submits that since the income of the assessee was exempted u/s 80B, this was the bona fide reasons assessee not required to file the income tax return. We further find that in response to the notice issued u/s 148A (b) reply submitted by the assessee and assessee submitted return with audited balancesheet as audited by the Government engaged audit as per Government rules. Section 273B of the IT Act has held that no penalty can be imposed on an assessee u/s 271B for breach of the trust if he proves that there was reasonable cause for the said failure. In the present case we find that

ITA No.980/Kol/2026 books of accounts audited by the auditor, assessee thought that his income is exempted u/s 10(27) of the Act, so the assessee would not require to file IT return with balancesheet audited by the chartered account. We have gone through the citation filed by the assessee and find that Hon’ble Uttarakhand High Court in the decision passed in CIT VS Iqbalpur Cooperative Cane Development Union Ltd. held thus:-

In the instant case, the turnover of the respondent exceeded Rs. 1 crore for the relevant previous years. By virtue of the proviso as above, respondent was not required to have one more audit to be conducted in addition to the audit to be conducted by the Registrar in terms of the U.P. Co-operative Societies Act. However, by reason of the mandate contained in Section 44AB, such auditing was required to be conducted before the specified date and the auditor was required to sign and verify the audit report on or before the specified date. The same was not done. It was done, however, after the specified date. In that view of the matter, penalty proceeding under section 2718 was initiated and the respondent was penalized by imposition of penalty of Rs. 1 lac. Respondent lost before the Commissioner of Appeals, but succeeded before the Tribunal. Relief was given by the Tribunal to the respondent under section 273B of the Income Tax Act holding that, in that matter of delaying in completing the audit and signing the audit report, respondent has been able to establish that there was reasonable cause therefore, inasmuch as, neither appointment of the auditor was within its domain and, at the same, time, it was also not within his domain to have the auditor to be appointed by the Registrar or such other person to be appointed by the State Government to complete the same within the time as provided for in the Income-tax Act. 3. That being the situation, we find no scope of interference with the Appeal. The Appeal fails and the same is dismissed. We have gone through the order passed by the ITAT Kolkata Tribunal and find that in ITA No. – 910/2023. The Tribunal member has held thus:-

Having looked into all these facts and circumstances of the case, we thus hold that there exists a reasonable cause within the meaning of section 273B for the delay in obtaining and furnishing the tax audit report required u/s. 44AB and thus, no penalty u/s. 271B is imposable. Accordingly, the penalty so imposed of Rs. 1,48,093/- is deleted. 5. In view of the discussions made above and considering the facts of the case we do not find any hesitation to hold that penalty imposed by the Assessing Officers confirmed by the CIT(A) are erroneous and accordingly the same is hereby deleted.

The appeal of the assessee is hereby allowed. 4

ITA No.980/Kol/2026

Kolkata, the 25th August , 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member DC Dated: 25 .08.2026. Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Deputy Registrar, Kolkata Benches

ITA No.980/Kol/2026