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Facts
The assessee, a cooperative society, filed its return of income admitting Nil income and claimed deduction under Section 80P. The Assessing Officer (AO) accepted the return but levied a penalty of Rs. 1.50 lakhs under Section 271B for belated filing of the Tax Audit Report (TAR). The assessee's main grievance was against the confirmation of this penalty by the Ld.CIT(A).
Held
The Tribunal condoned the delay of 9 days in filing the appeal, finding reasonable cause. Citing the Hon'ble Madras High Court decision in Thanjavur Silk Handloom Weavers Co-op. Production & Sales Society Ltd. v. UoI, the Tribunal held that the delay in obtaining the statutory audit report from the State Government constituted a reasonable cause for the belated filing of the TAR. The penalty levied under Section 271B was therefore deleted.
Key Issues
Whether the penalty under Section 271B for belated filing of Tax Audit Report is warranted when the delay was due to reasons beyond the assessee's control, such as delayed receipt of a statutory report from a government department.
Sections Cited
271B, 80P
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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in short "the Ld.CIT(A)”), Delhi, dated 11.06.2024 for the Assessment Year (hereinafter in short "AY”) 2016-17.
At the outset, the Ld. Counsel for the assessee submitted that there is a delay of ‘9’ days in filing of this appeal and stated the reasons which prevented it from filing the appeal within the due-date. After hearing the Ld.AR and taking note of the reasons stated for delay in filing of appeal, we find that there is reasonable cause for delay in filing of appeal; so we are inclined to condone the delay of ‘9’ days and proceed to adjudicate the appeal on merits.
The main grievance of the assessee is against the action of the Ld.CIT(A) confirming the penalty u/s.271B of the Income Tax Act, 1961 (hereinafter in short "the Act”) [belated filing of Audit Report].
The brief facts are that the assessee is registered under the Tamil Nadu Cooperative Societies Act, which filed its return of income (RoI) on 23.03.2018 admitting ‘Nil’ income and claimed deduction u/s.80P of the Act to the tune of Rs.49,14,211/- which was accepted by the AO by passing assessment order on 28.12.2018. However, he levied penalty of Rs.1.50 lakhs u/s.271B of the Act for belated filing of Tax Audit Report (TAR).
Aggrieved, the assessee preferred an appeal before the Ld.CIT(A)
and brought to his notice that the accounts of the assessee society had to be statutorily audited by the Co-operative Department of the State Government and since, there was delayed in getting the ibid statutory report, the assessee couldn’t file the Tax Audit Report within the due date before the Income Tax Authorities. However, the Ld.CIT(A) didn’t agree and confirmed the penalty imposed by the AO.
Aggrieved, the assessee is before us and cited the decision of the Hon’ble Madras High Court in the case of Thanjavur Silk Handloom Weavers Co-op. Production & Sales Society Ltd. v. UoI, reported in [2003] 263 ITR 334 (Madras), wherein according to Ld AR on identical facts, Hon’ble Madras High Court has cancelled the penalty. It would be gainful to reproduce the operating portion of the ibid High Court order, which is as under:
In the light of the said pronouncement of the apex court, on the facts of the case, the discretion exercised by the third respondent and as affirmed by the second respondent is an arbitrary exercise of power and it is not a just or reasonable exercise of power. Taking into consideration the object of the provision, the status of the petitioner being a co-operative society, it is being controlled by the authorities under the Tamil Nadu Co-operative Societies Act and it has to satisfy the requirements stipulated under the said Act, in the absence of any deliberate or willful omission on the part of the society, and taking into consideration the past conduct as well as the past treatment of such delay, as if it was taking for granted on either side, the levy of penalty is not a reasonable exercise of power by the third respondent as affirmed by the second respondent. Had the second respondent considered the matter in the light of the above, or at least given direction in the future to be complied with, while dropping penalty, the approach would have been different. It is true there is no escape for the society but to file its audit report within time. But by mere failure alone, levy of penalty is not warranted nor justified.
We note that the Hon’ble High Court in similar case has deleted the penalty levied u/s.271B of the Act for belated filing of Tax Audit Report (TAR). Since no change in facts or law could be point out by the Ld DR, (AY 2016-17) M/s.The Namakkal Co-op. Housing Society Ltd. respectfully following the decision of the Hon’ble Madras High Court in the case of Thanjavur Silk Handloom Weavers Co-op. Production & Sales Society Ltd. (supra), we find that since there was delay in getting the statutory report from the State Government, the assessee could file TAR belatedly on 20.03.2017; and hence it cannot be said to a deliberate act on the part of assessee to belatedly file the TAR. Therefore we are of the view that, there was reasonable cause for non-levy of penalty and direct deletion of penalty.
In the result, appeal filed by the assessee is allowed.