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Facts
The assessee, a co-operative society, filed its return of income in response to a Section 148 notice, not under Section 139. During reassessment proceedings, a penalty of Rs. 1,50,000 was imposed under Section 271B for failure to furnish the audit report within the due date prescribed under Section 139(1). The assessee contended that the delay was due to mandatory audit by state-appointed statutory auditors, which was beyond its control.
Held
The Tribunal condoned a 15-day delay in filing the appeal. It found that the assessee had a reasonable cause under Section 273B for the delayed submission of the audit report, as the audit was conducted by state-appointed authorities and was beyond the assessee's control. Relying on a precedent from a coordinate bench, the Tribunal deleted the penalty imposed under Section 271B.
Key Issues
Whether the assessee had a reasonable cause under Section 273B for the delay in filing the audit report, thereby justifying the deletion of the penalty imposed under Section 271B for non-compliance with Section 139(1).
Sections Cited
271B, 273B, 139, 148, 143(3), 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAOAND SHRI SONJOY SARMA
Assessment Year: 2012-13 Avinissery Service Co-Operative Bank Ltd.……………..…..….……….Appellant Anakallu, P.O Avinissery Thrissur – 680306. [PAN:AACAA0093Q] vs. ITO, Ward-2(1), Thrissur………….....................……........……...…..…..Respondent Appearances by: Shri Alan Dev, Advocate, appeared on behalf of the assessee. Smt. Leena Lal, SNR AR, appeared on behalf of the Revenue. Date of concluding the hearing :June 04, 2025 Date of pronouncing the order :July 22, 2025
ORDER
Per Sonjoy Sarma, Judicial Member:
This appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals), NFAC, dated 06.03.2025], confirming the penalty of Rs.1,50,000 imposed under section 271B of the Income-tax Act, 1961, for the assessment year 2012-13.
At the outset, the ld. AR submitted that there is a delay of 15 days in filing the instant appeal. The assessee has filed application for condonation of delay citing valid and proper reasons. After considering the averments made in the application, we condone the delay in the appeal.
Brief Facts of the Case are that the assessee is a co-operative society engaged in providing credit facilities to its members. It did not file its return of income under section 139 of the Act but filed the same in response to notice issued under section 148 on 16.05.2019, declaring income after claiming deduction under Chapter VI-A. The return was Avinissery Service Co-Operative Bank Ltd accompanied by audited financials filed manually in July 2019. The Assessing Officer completed the reassessment under section 143(3) read with section 147 of the Act on 31.12.2019, determining a total income of Rs.1,56,08,560. During the proceedings, it was observed that the assessee failed to furnish the audit report within the due date as prescribed under section 139(1), without any reasonable cause. Accordingly, penalty of Rs.1,50,000 was imposed under section 271B of the Act vide order Dated 05.02.2021.
Aggrieved by the penalty order dated 05.02.2021, the assessee preferred an appeal before the CIT(A), which was dismissed.
The assessee has now approached the Tribunal challenging the order of ld. CIT(A). The primary contention raised by the assessee is that the assessee, being a co-operative society registered under the Kerala Co-operative Societies Act, is mandatorily audited by the statutory auditors appointed by the Registrar of Co- operative Societies, Kerala. The delay in furnishing the audit report was solely due to the delayed audit by the said statutory authorities, over which the assessee had no control. The audit report was received by the assessee belatedly.The assessee submitted that the delay was neither deliberate nor due to negligence, and was supported by reasonable cause, as required under section 273B of the Act. It was also brought to our attention that the audit report was submitted before the completion of the reassessment proceedings under section 147. The ld AR placed reliance on the decision of the Cochin Bench of the Tribunal in the case of Adat Farmers Service Co-operative Bank Ltd. vs. ITO in wherein under similar circumstances, the Tribunal had deleted the penalty leviedunder section 271B of the Act accepting the explanation that the audit was delayed due to the State co-operative audit process and was beyond the control of the assessee.
We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessee is a co- operative society subject to mandatory audit under the Kerala Co- operative Societies Act. The audit is conducted by statutory auditors appointed by the Registrar of Co-operative Societies and the assessee does not have any authority to independently appoint external auditors for the same. In the present case, the audit report was eventually received and submitted manually before the reassessment was completed, and there is no dispute regarding its authenticity of the same.We, after considering the facts of the case, find that the explanation provided by the assessee constitutes a reasonable cause under section 273B of the Act for such delay in filing the audit report in time and following the decision of the Coordinate Bench in Adat Farmers Service Co-operative Bank Ltd. (supra), we find no justification in sustaining the penalty under section 271B.Accordingly, we set aside the orders of the lower authorities and direct the Assessing Officer to delete the penalty of Rs.1,50,000 imposed under section 271B.
In the result, the appeal of the assessee is allowed.