VIRUDHUNAGAR DISTRICT CO-OPERATIVE CONSUMERS CO-OP STORES LTD.,VIRUDHUNAGAR vs. ITO WARD 5, VIRUDHUNAGAR

This appeal filed by the assessee is directed against the order of the learned CIT(A)-1, Madurai dated 04.03.2019 and pertain to assessment year 2013-14.

The assessee has raised the following grounds of appeal:

Brief facts of the case are that assessee has filed its return of income for assessment year 2013-14 on 05.06.2014 admitting Nil taxable income and such return was filed belatedly u/s.139(4) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) . The assessee has filed tax audit report as required to be furnished u/s.44AB of the Act electronically on 14.05.2014. The assessment for the impugned assessment year has been completed u/s.143(3) of the Act on 09.03.2016 and determined total income of ` 36,493/- after making additions towards disallowance of expenditure. Thereafter, the Assessing Officer has initiated penalty proceedings u/s.271B of the Act for failure to file tax audit report as required u/s.44AB of the Act for the impugned assessment year within the due date specified under the Act and hence, called upon the assessee to file necessary evidences as to why penalty shall not be levied for non-filing of tax audit report. In response, the assessee submitted that although there was delay in filing of tax audit report u/s.44AB of the Act, but said return has been filed before completion of assessment and further, filing of compulsory e-audit report was introduced for first time from assessment year 2013-14 and because of this there was technical glitch in e-portal provided for uploading tax audit report, which resulted in delay, but said delay is neither intentional nor to derive any benefit and hence, there was no need to levy penalty u/s.271B of the Act. The Assessing Officer, however, not convinced with explanation furnished by the assesse and according to him, although assessee claims that there was difficulty in filing electronic tax audit report, but such claim has not been substantiated with any evidences accordingly, levied a sum of `1,50,000/- penalty u/s.271B of the Act.

Being aggrieved by the assessment order, assessee preferred an appeal before learned CIT(A). Before learned CIT(A), assessee has reiterated its submissions made before Assessing Officer for not filing tax audit report within the time allowed under the Act along with certain judicial precedents and argued that assessee neither have any deliberate intention not to file tax audit report within the time allowed nor derived any undue benefit by not filing the return as required under the Act and hence, for delay in filing tax audit report penalty u/s. 271B of the Act cannot be fastened on the assesse, when assessee has explained reasons for not filing tax audit report within due date allowed under the Act.

The learned CIT(A), after considering submissions of the assessee observed that reasons given for not filing tax audit report in time does not come under reasonable cause as provided u/s.273B of the Act and hence, there is no error in the findings recorded by Assessing Officer to levy penalty u/s.271B of the Act for not filing tax audit report within the due date specified under the Act. Being aggrieved by the learned CIT(A) order, assessee is in appeal before us.

The learned AR for the assesse submitted that learned CIT(A) has erred in confirming penalty levied u/s.271B of the Act without appreciating the fact that delay in filing of tax audit report was due to delay in audit of accounts of the society under Tamil Nadu Co- operative Societies Act, 1983, which was beyond the control of the assesse. The learned AR further submitted that although, there is a delay in filing tax audit report, but such return was filed before completion of assessment and further requirement of e-filing of tax audit report was introduced for the first time, from assessment year 2013-14 which has its own difficulties and during this transition period a lenient view needs to be taken, when it comes to levy of penalty for failure to file tax audit report as required u/s. 44AB of the Act.

The learned DR, on the other hand, supporting order of learned CIT(A) submitted that reasons given by the assessee that Accounts Manager was forget to inform the computer operator to upload the tax audit report in e-portal of the Department which leads to delay does not come under the purview of reasonable cause as provided u/s.273B of the Act and hence, learned CIT(A) was right in confirming penalty levied u/s.271B of the Act.

We have heard both parties, perused the materials available on record and gone through orders of authorities below. Admittedly, there is a delay in filing audit report as required u/s.44AB of the Act electronically in e-portal provided for this purpose. However, the said audit report has been filed on 14.05.2014 much before completion of assessment order on 09.03.2016. The assessee has given reasons for not filing audit report electronically before the due date specified under the Act and according to the assesse, scheme of e-filing was introduced for the first time from assessment year 2013-14 and due to this assessee has faced difficulty in uploading audit report. We have gone through reasons given by assessee for not filing audit report electronically within time allowed under the Act for impugned assessment year and find that since scheme of e-filing audit report was introduced for the first time from assessment year 2013-14 and e-portal provided by the Department for this purpose is having its own difficulties, while levying penalty for belated filing of audit report, a lenient view must be taken by the authorities considering initial transition period, more particularly, when assessee has filed such audit report electronically before completion of assessment proceedings. In this case, on perusal of details filed by the assesse, we find that although there is a delay in filing of audit report as required u/s.44AB of the Act electronically, but such return has been filed much before the date of completion of assessment proceedings. Moreover, audit report as required to be obtained u/s.44AB was obtained from auditors on 23.09.2013. Therefore, when audit report was obtained within due date, merely for delay in filing audit report in e-portal of the Department cannot be considered as deliberate attempt made by assessee for not filing audit report so as to impose penalty u/s.271B of the Act . This view is supported by the decision of ITAT., Ahmedabad in the case of Harishbhai Babubhai Patel in where the Tribunal, after considering relevant facts has deleted penalty levied by the Assessing Officer for non-submission of electronic audit report within the due date allowed under the Act. Hence, we direct the Assessing Officer to delete penalty levied under section 271B of the Act for non-submission of audit report within due date allowed under the Act.

In the result, appeal filed by assessee is allowed.