AA310 PATTALUR PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY,ERODE vs. THE INCOME TAX OFFICER, WARD 2(1), ERODE

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 11.02.2026 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2015-16.

ITA No.2282/CHNY/2026 - 2 - AA310 Pattalur PACCS 2. Brief facts of the case are as follows: The assessee is a Primary Agricultural Co-operative Society. For AY 2015-16, the assessee did not file its return of income within the prescribed time. Based on information that the assessee had deposited cash of Rs.50,96,085/- in its bank account maintained with The Erode District Co-operative Bank Ltd. (EDCC), the AO had reason to believe that income had escaped assessment and accordingly issued notice u/s.148 of the Act on 07.04.2022. In response, the assessee filed its return of income on 04.06.2022 declaring nil income after claiming deduction u/s.80P of Rs.15,88,436/-. Thereafter, the assessment was completed u/s.147 r.w.s.144B of the Act on 05.03.2024, accepting the returned income. During the reassessment proceedings, the AO noticed that the assessee had failed to furnish the audit report as prescribed u/s.44AB within the stipulated time. Accordingly, penalty proceedings u/s.271B were initiated and notice was issued on 05.03.2024. Since the assessee failed to respond to the notices, the AO, vide order dated 06.09.2024, levied penalty of Rs.75,212/- u/s.271B of the Act.

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ITA No.2282/CHNY/2026 - 4 - AA310 Pattalur PACCS 5. The Ld.DR supported the orders of the AO and the FAA. 6. We have heard rival submissions and perused the material on record. We find that the issue arising in the present appeal is squarely covered by the decision of the Chennai Bench of the Tribunal in the case of Shri Annakodiraj v. ITO in ITA No. 4122/CHNY/2025 (order dated 04.03.2026), wherein, on identical facts, the Tribunal deleted the penalty levied u/s.271B of the Act. The Tribunal held that where the tax audit report was already available on record at the time of completion of the reassessment and the AO had completed the reassessment after taking note of the said audit report, the belated furnishing of the audit report constituted only a technical or venial breach. Since the facts of the present case are identical, the ratio laid down in the said decision squarely applies. The relevant findings of the Tribunal read as under:– 7. We have heard rival submissions and perused the material on record. The objection filed by the assessee in response to notice issued u/s.274 r.w.s.271D of the Act for the proposed penalty are as follows:- “I am uneducated farmer. Nature of my business is milk sales on commission basis. I procured milk from the farmers and sold the same to M/s.Jaya Milk Products on commission basis. I am ignorant about the income tax procedures therefore the return of income for the assessment year 2017-18 was not filed within due date. In response to Notice u/s.148, I filed my return of income for the AY 2017-18 on 27-12-2024 and filed the audit report on 26-12-2024. Copy of the audit report acknowledgement attached for your kind consideration. Delay in filing of audit report is not intentional.”

ITA No.2282/CHNY/2026 - 5 - AA310 Pattalur PACCS on 31.01.2025. Therefore, it is clear that while completing the reassessment, the AO has taken note of the audit report and accordingly completed the reassessment order. Non-filing of audit report had not resulted in loss to exchequer but it is only a technical and venial breach, as the audit report was available to the AO before the completion of assessment proceedings. The Chennai Bench of the Tribunal in the case of Ramunaicker Raja vs. ACIT in ITA No.603/CHNY/2022 (order dated 15.02.2023) by following judicial pronouncement had held that when audit report was available at the time of assessment and AO has completed the assessment after taking note of the same, belated filing of audit report is only technical venial breach which does not call for the imposition of penalty. The relevant finding of the Chennai Bench of the Tribunal read as follows:- “6.1 Similar issue on an identical fact was subject matter in appeal before this Tribunal in the case of Balaji Logistics v. ACIT in I.T.A. No. 2248/Chny/2019 dated 07.09.2022 for the assessment year 2015-16, wherein, the Tribunal has observed as under:

“6. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. It is an admitted fact that although the assessee has filed Tax Audit Report in Form 3CB as required u/s.44AB of the Act, beyond due date specified u/s.139(1) of the Act, but such Tax Audit Report was made available to the AO before completion of assessment proceedings u/s.143(3) of the Act, on 22.11.2017. It is evident from the fact that the assessee has obtained Tax Audit Report from an Accountant on 28.03.2016 and furnished before the AO during the course of assessment proceedings. Therefore, we are of the considered view that when the Tax Audit Report was made available to the AO before completion of assessment proceedings, then for venial technical breach without any mala fide intention, penalty cannot be levied u/s.271B of the Act. Further, a similar issue has been considered by the co-ordinate Bench of the Tribunal in the case of M/s. T P D 101 Uthangarai Milk Producers Co-operative Society Ltd.(supra), where on identical set of facts, penalty levied u/s.271B of the Act, has been deleted. The relevant findings of the Tribunal are as under:

“…7. We have heard both the parties and perused the materials available on record and gone through the orders of the authorities below. The assessee supposed to have been filed audit report as required u/s.44AB of the Act, on or before 31.10.2015. However, such audit report has been filed on 05.03.2016, which is before the date of completion of assessment proceedings u/s.143(3) of the Act. In other words, although the assessee has filed tax audit

ITA No.2282/CHNY/2026 - 6 - AA310 Pattalur PACCS report beyond the stipulated period, but such tax audit report was made available to the AO before he completes assessment proceedings. The assessee has given reasons for delay in filing tax audit report. As per which, the audit of accounts of society done by the Dept. of Cooperative Audit, could not be completed on or before 31.10.2015 and said delay was not in the hands of the assessee. Therefore, there is a reasonable cause for not filing the tax audit report within prescribed time limit ad thus, penalty cannot be levied. We find merits in the submission of the assessee for the simple reason that non-filing of audit report within the due date is a venial technical breach without any mala fide intention on the part of the assessee. Because, completion of audit of books of accounts of the society is under the control of Dept. of Cooperative Audit and thus, unless the Dept. of Cooperative Audit completes audit, the assessee cannot file return of income along with tax audit report. Therefore, we are of the considered view that reasons given by the assessee for not filing tax audit report prescribed u/s.44AB of the Act, is neither intention nor any mala fide intention, but it is venial technical breach and for this reason, penalty u/s.271B of the Act, cannot be levied. This principle is supported by the decision of the Hon’ble jurisdictional High Court in the case of P.Senthil Kumar v. PCIT reported in 416 ITR 336, where an identical issue had been considered by the Court and held that for venial technical breach without any mala fide intention, penalty cannot be levied. The ITAT Cochin Bench in ITA No.411/Cochin/2018 vide order dated 05.02.2019 had held that once audit report has been made available before the AO, when the assessment proceedings were completed, then, there is no reason for levy of penalty. 8. In this view of the matter and considering the facts and circumstances of the case, we are of the considered view that reasons given by the assessee for not filing tax audit report within due date comes under reasonable cause as provided u/s.271B of the Act, and thus, the AO is erred in levying penalty u/s.271B of the Act. Hence, we direct the AO to delete penalty levied u/s.271B of Act.”

6.2 Respectfully following the above decision of the Coordinate Benches of the Tribunal in the case of Balaji Logistics v. ACIT (supra) for the assessment year 2015-16, we are of the considered opinion that it is not a fit case for the

ITA No.2282/CHNY/2026 - 7 - AA310 Pattalur PACCS levy of penalty under section 271B of the Act and accordingly, the penalty levied stands deleted.”

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Order pronounced in the open court on 27th August,2026 at Chennai.

Sd/- Sd/- (गगन गोयल) (जॉज� जॉज� के) (GAGAN GOYAL) (GEORGE GEORGE K) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 27th August, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Coimbatore 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order

Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.08.28 17:44:17 +05'30'