SUBRAMANIAN KAVITHRA,CHENNAI vs. DCIT, NCC-19(1), CHENNAI

The Assessee raised the following grounds of appeal : “1 The order of the Commissioner of Income Tax (Appeals) ["CIT (A)"] is against the law, the facts and circumstances of the case and the principles of equity and natural justice.

Briefly the facts of the case are that appellant is an Individual and derives income from salary from Karpaga Vinayaga Educational Trust, Income from House Property, Income from Petrol Pump in the name of Karpaga Vinayaga Agencies and Lease Income from Kalyana Mandapam. The appellant trust filed Return of Income for the Assessment Year 2017-18 on 14.03.2018 disclosing Rs.63,60,400/- as income from Business and Other Sources.

The Assessing Officer issued a notices u/s.143(2) and u/s.142(1) of the Act, and thereupon an order dated 16.12.2019 was passed u/s.143(3) of the Act assessing total income at Rs.70,87,652/-. Based on the assessment record, the Assessing Officer found that the appellant filed its Form 3CD on 10.041.2018 which was after the extended due date i.e.07.11.2017. In the circumstances, the Assessing Officer had initiated the penalty proceedings u/s.271B of the Income Tax Act, 1961 by levying penalty of Rs.1,50,000/- u/s.271B of the Act.

Being aggrieved, an appeal was filed before the ld.CIT(A) who vide impugned order confirmed the action of the Assessing Officer.

Being aggrieved, the appellant is in appeal before us in the present appeal.

The issue that arises for our consideration is whether the Assessing Officer was justified in levying penalty proceedings u/s.271B of the Act while processing the Return of Income u/s.143(1) of the Act solely for the reason that the prescribed report in Form 3CD was filed belatedly.

We heard the rival submissions and perused the material available on record. The issue that arises for our determination is whether the AO was justified in the facts of the case in levying penalty of Rs.1,50,000 u/s.271B of the Act for failure of the assessee to submit the prescribed audit report u/s.44AB of the Act, within the due date mandated u/s.139(1) of the Act. From the material on record, it transpires that the assessee had filed the belated return of income as well as the audit report as prescribed u/s.44AB of the Act. But, the Audit Report was very much available at the time of making the assessment. Therefore, it cannot be said that any prejudice is caused to the department on account of belated submission of the audit report as prescribed u/s.44AB of the Act. Further, the issue is squarely covered by the judgment of the Hon'ble jurisdictional High Court in the case of Chavakkad Service Co-operative Bank Limited (2024) 169 taxmann.com 45 (Ker.), wherein the Hon'ble High Court observed as under:- "Where assessee co-operative societies did not file audit report as mandated under section 44AB within time limit specified thereunder, however, audit reports were made available before Assessing Authority at time of finalization of assessments, since delay in obtaining audit reports from statutory auditors under Kerala Co-operative Societies Act and Rules could be seen as a reasonable cause for delayed submission of audit reports, no penalty under section 271B was to be imposed on assessee.” 9. We are of the considered view that the ratio of the above judgment is squarely applicable to the facts of the present case, and therefore, the Assessing Officer is not justified in levying penalty u/s.271B of the Act. Accordingly, we direct the Assessing Officer to delete the penalty.

In the result, appeal filed by the assessee stands allowed. Order pronounced in the open Court on 29th May, 2026.