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Facts
The assessee, a primary agricultural credit society, filed its return claiming deduction under Section 80P. The AO levied a penalty under Section 271B because the assessee's turnover exceeded the Section 44AB limit and it failed to get its accounts audited. The assessee argued that the delay was due to procedural issues by the Registrar under the Kerala Co-operative Societies Act.
Held
The Tribunal acknowledged that a bona fide reason for belated audit could prevent a penalty under Section 271B. However, as the exact date of the audit by the prescribed authority was unclear, the case was remanded to the Assessing Officer to ascertain this fact and provide the assessee a fresh opportunity of being heard.
Key Issues
Whether a penalty under Section 271B is leviable for delayed audit when the delay is attributed to procedural issues by a prescribed authority under a state co-operative societies act, and if this constitutes "sufficient cause".
Sections Cited
271B, 80P, 44AB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Inturi Rama Rao & Shri Prakash Chand Yadav
: Asst.Year 2022-2023 Puduppadi Service Co-operative The Income Tax Officer Bank Limited No.F-1830 Ward 2 (3) v. Nooramthode, Kodencheri Kozhikode. Kozhikode – 673 586 PAN : AACAP4392H. (Appellant) (Respondent) Appellant by : Sri.Raghunathan P, Advocate Respondent by : Smt.Leena Lal, Sr.AR Date of Pronouncement : 20.05.2025 Date of Hearing : 19.05.2025. O R D E R Per Prakash Chand Yadav, JM : Both these appeals of the assessee are arising from the order of the National Faceless Appeal Centre / learned Commissioner of Income-tax (Appeals) [“CIT(A)” for short] dated 29th October, 2024, and relates to the assessment years 2017- 2018 and 2022-2023.
In both these cases, the assessee has aggrieved by the order of the AO levying penalty u/s.271B of the Act.
The brief facts as coming out of the orders of the authorities below are that the assessee is a primary agricultural credit society, filed its return of income for the -1157/Coch/2024. Puduppadi SCB Limited. assessment year 2017-2018 on 06.11.2017 after claiming deduction u/s.80P of the Act. During the course of assessment proceedings, the AO observed that the turnover of the assessee exceeds the limit prescribed u/s.44AB of the Act. The AO further observed that the assessee has failed to get audit of its accounts and hence liable for penalty u/s.271B of the Act.
Aggrieved with the order of the AO, the assessee filed an appeal before the ld.CIT(A) and assailed the order of the AO levying penalty u/s.271B of the Act. However, the ld.CIT(A) could not find any force in the arguments of the assessee and affirmed the order of the AO.
Aggrieved with the order of the CIT(A), the assessee has come up in appeal before us and argued that since there was procedural delay vis-à-vis audit of account carried out by the Registrar in terms of provisions of sec.64 of the Kerala Co- operative Societies Act, the assessee could not be able to get the audit of its account in time and hence there was sufficient cause for delay.
The learned DR relied upon the orders of the authorities below.
We have heard the rival submissions and perused the material available on record. The learned Counsel for the assessee when asked by the Bench about the specific date on which the prescribed authority has finalized the audit of the assessee society, the learned Counsel for the assessee could -1157/Coch/2024. Puduppadi SCB Limited. not be able to give any reply. However, it is settled position of law that if there is a bonafide reason/ sufficient cause for belated audit of accounts, then penalty u/s.271B of the Act cannot be levied. Reference can be made in the judgment of the Hon’ble jurisdictional High Court in the case of PCIT v. Peroorkada Service Co-operative Bank Ltd. (2022) 442 ITR 141 (Ker). However, in this case, certain facts such as date of audit by the prescribed authority are not clear. Therefore, we restore this matter to the file of the AO with a direction to see the exact date of the audit conducted by the authority as per the provisions of section 64 of the Kerala State Co-operative Societies Act. Needless to say, the AO shall afford meaningful opportunity of being heard to the assessee before passing any order.
Our observation made in the above order would mutatis mutandis applied to the for assessment year 2022-2023.
In the result, the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced on this 20th day of May, 2025.