BALASORE REGIONAL CO-OPERATIVE MARKETING SOCIETY,BALASORE vs. THE INCOME TAX OFFICER, WARD-1, BALASORE, BALASORE

ITA 169/CTK/2026Status: DisposedITAT Cuttack02 June 2026AY 2017-184 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the appeal of the assessee and cancelled the penalty levied under Section 271B. The Tribunal considered the rival submissions and noted the decision of the Allahabad High Court in CIT vs. District Co-Operative Bank, which held that cooperative societies cannot get their accounts audited through private chartered accountants and that the audit by the Registrar of Cooperative Societies is appropriate. The Tribunal also noted that the assessee had obtained a Section 44AB audit report which was available with the Assessing Officer during the assessment proceedings. While acknowledging the CIT(A)'s reliance on the Kerala High Court decision in Perookkada Service Cooperative Bank Ltd. (holding that audit by Registrar is not valid under Section 44AB), the Tribunal also referred to a subsequent Kerala High Court decision in Chavakkad Service Co-operative Bank Ltd. which stated that if the audit report is available with the Assessing Officer during assessment, Section 271B should not normally be levied. Faced with conflicting High Court decisions, the Tribunal followed the principle laid down by the Supreme Court in CIT vs. Vegetables Products Ltd. that a decision in favour of the assessee should be preferred. The Tribunal also emphasized that the Section 44AB audit report was available with the AO during assessment and no prejudice was caused to the revenue due to the delay. Therefore, the penalty was cancelled.

What were the facts?

The assessee, Balasore Regional Co-operative Marketing Society, filed an appeal against the order of the CIT(A), NFAC, Delhi, for Assessment Year 2017-18. The assessee, a cooperative marketing society, had its books audited by the Registrar of Cooperative Societies. It also obtained an audit report under Section 44AB, which was filed during the assessment proceedings. The Assessing Officer held that the assessee had not obtained its accounts audited within the prescribed time under Section 139(1) and levied a penalty under Section 271B. The assessee contended that the audit by the Registrar of Cooperative Societies was valid and that the Section 44AB audit, though belated, was available to the Assessing Officer. The revenue argued that the penalty under Section 271B should be upheld due to the delayed filing of the return.

What were the issues?

1. Whether the penalty levied under Section 271B is sustainable when the assessee, a cooperative society, got its accounts audited by the Registrar of Cooperative Societies and also filed a Section 44AB audit report belatedly during the assessment proceedings? (Question of law and fact, turning on Section 271B and Section 139(1)). Assessee's contentions: The assessee argued that it is a cooperative marketing society and its accounts were audited by the Registrar of Cooperative Societies. It also filed a Section 44AB audit report during the assessment proceedings. The assessee relied on the Allahabad High Court decision in CIT vs. District Co-Operative Bank, which held that cooperative societies cannot get their accounts audited through private chartered accountants. The assessee submitted that the penalty under Section 271B may be deleted. Revenue's contentions: The revenue contended that the assessee did not file its return within the time prescribed under Section 139(1) and therefore, the penalty levied under Section 271B is liable to be upheld.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 139(1),Section 271B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK

Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR

PerBench:

This is an appeal filed by the assessee against the order of CIT(A), National Faceless Appeal Centre (NFAC), Delhi in Appeal No.NFAC/2016-17/10079631 order dated22/12/2025 for the assessment year 2017-18. 2. Shri P. K. Mishra, AR appeared on behalf of the assessee and Shri

Vijay Singh, Sr. DR represented on behalf of the revenue.

3.

It was submitted by the Id. AR that the assessee is a cooperative marketing society. It had got its books audited by the statutory auditor of

The order continues below.

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