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Facts
The assessee, a cooperative society, filed its tax audit report late. The Assessing Officer levied a penalty under Section 271B for this delay, which was confirmed by the CIT(A). The assessee argued that the delay was due to the government's appointment of the auditor and subsequent processing, for which it had no control.
Held
The Tribunal held that the assessee had a reasonable cause for the delay in filing the tax audit report, as the process was dependent on the Cooperative Department. Therefore, the penalty levied under Section 271B was cancelled.
Key Issues
Whether the assessee had a reasonable cause for the delay in filing the tax audit report, thus warranting cancellation of penalty under Section 271B?
Sections Cited
271B, 273B, 44AB
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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: HON’BLE SHRI MANU KUMAR GIRI & HON’BLE SHRI AMITABH SHUKLA
Assessment Years: 2018-19 K677 The Tirupur Cooperative Primary Income Tax Officer, Agriculture and Rural Development Ward-1(2), Bank Limited(Rural Dev Bank Ltd). Tirupur. No.39, Nehru Street, Tiruppur, Tamil Nadu-641 601 [PAN: AAABR0204K] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Ms.A.Vijayalakshmi, C.A. प्रत्यर्थी की ओर से /Revenue by : Shri Veeramany K, IRS सुनवाई की तारीख/Date of Hearing : 25.08.2025 घोषणा की तारीख /Date of Pronouncement : 03.09.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M :
This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / NFAC / S / 250 / 2025-26 / 1077211522(1) dated 19.06.2025 of the Learned Commissioner of Income Tax [herein after “CIT(A), National Faceless Appeal Center [NFAC], Delhi, for the assessment year 2018-19. The reference to the word “Act” in this order hereinafter shall mean the Income Tax Act, 1961 as amended from time to time.
2.0 The only issue contested by the assessee in this appeal is the levy of penalty u/s 271B by the Ld.AO through order dated 13.05.2024 and its confirmation by the Ld.CIT(A) through his order dated 19.06.2025. The Ld.Counsel informed that the appellant assessee is Primary Agricultural Cooperative Society incorporated under Tamil Nadu Cooperative Society Act 1983 and that accordingly the Registrar of Cooperative Societies regulates and monitors all the activities of the assessee including compliance to financial regulations etc. It was submitted that the delay in filing of statutory audit report was primarily attributable to delayed appointment of statutory auditor by the government and consequent delay in filing of statutory audit report to the department. It was stated that the appellant assessee thus has reasonable cause stipulated u/s 273B of the Act. In support of its arguments, the Ld.Counsel drew our attention to the decision of a Coordinate Bench of this tribunal in the case of 3148 Kanakkampalayam PACC at / Chny / 2025 for AY-2018-19 dated 26.06.2025. It was stated that the facts of assessee’s case are identical to facts therein and hence penalty may be deleted. 3.0 Per contra the Ld.DR relied upon the lower authorities. 4.0 We have heard rival submissions in the light of material available on records. We have considered the decision of the Hon’ble Coordinate Bench of this tribunal in the case of 3148 Kanakkampalayam PACC Page - 2 - of 4 supra. The Revenue has not been able to point out any distinguished facts. We have noted that in the case of 3148 Kanakkampalayam PACC supra following has been observed: “…..3. Before us, the Ld. Authorized Representative (AR) of the assessee submitted that the statutory Auditor is appointed by the Tamil Nadu Co-operative Department, and the assessee has no authority to independently appoint an Auditor or expedite the process of obtaining the audit report. The Ld. A.R further stated that the statutory audit was conducted in October 2018, and after necessary approvals, the report was released by the Assistant Director of Cooperative Audit in February 2019. Upon receipt of the report, the :- 3 -:
3148 Kanakkampalaym PACCS assessee promptly filed the same. It was, therefore, submitted that there was a reasonable cause for the delay, and reliance was placed on the decision of the ITAT, Chennai in the case of Kanakkampalayam PACCS vs. ITO (ITA No. 3148/Chny/2022) dated 12.04.2023.
On the other hand, the Ld. Departmental Representative (DR), relied on the orders of lower authorities and submitted that penalty was rightly levied as the assessee failed to comply with statutory timelines 5. We have heard the rival submissions and perused the materials available on record. The A.O levied the penalty u/s. 271B of the Act for failure to get accounts audited within the time prescribed u/s. 44AB of the Act. However, assessee has offered explanation which appears bonafide, as the audit process and report issuance were dependent on the functioning and timeline of the statutory Auditor appointed by the Co-operative Department in which assessee had no control. Considering the facts and circumstances of the case, and in light of the decision of the coordinate bench, in the cases relied upon by the assessee, supra, we are of the considered view that there was :- 4 -: 3148 Kanakkampalaym PACCS reasonable Page - 3 - of 4 cause for the delay in obtaining the audit report. Hence, the penalty levied u/s. 271B of the Act is hereby cancelled. ….” 5.0 As the facts of the present case are identical to the decision extracted hereinabove, in respectful compliance thereof as well as for the purposes of consistency, we are of the considered view that the appellant assessee had reasonable cause u/s 273B for filing delayed tax audit report. Hence, we set aside the order of lower authorities and delete the penalty levied u/s 271B dated 13.05.2024. Accordingly all the grounds of appeal raised by the assessee are therefore allowed. 6.0 In the result, the appeal of the assessee is allowed. Order pronounced on 3rd , Sept-2025 at Chennai. Sd/- Sd/- (मनु कुमार धिरर) (अधमताभ शुक्ला) (MANU KUMAR GIRI) (AMITABH SHUKLA) न्याधयक सदस्य / Judicial Member लेखा सदस्य /Accountant Member चेन्नई/Chennai, धदनांक/Dated: 3rd , Sept-2025. KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Chennai/Coimbatore/Madurai/Salem. 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF
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