PATTOM SEVICE CO-OPERATIVE BANK LTD NO.T-1318,THIRUVANANTHAPURAM vs. DCIT, CENTRAL CIRCLE, THIRUVANATHAPURAM

Being aggrieved, an appeal was filed before the CIT(A) contending that the delay in getting the accounts audited under the Co- operative Societies Act constitutes reasonable cause placing reliance on the decision of the coordinate bench of this Tribunal in the case of T.T. Kuruvilla vs. DCIT, dated 22.01.2019. However, the CIT(A) confirmed the levy of penalty by holding that the Pattom Service Co-op. Bank Ltd. mere fact that the audit of the appellant was conducted under the provisions of Co-operative Societies Act cannot be sufficient reason for non compliance by placing reliance on the decision of the Hon'ble Jurisdictional High Court in the case of Peroorkkada Service Co- operative Bank Ltd. v. ITO [2020] 424 ITR 422.

Being aggrieved, the appellant is in appeal before us in the present appeal.

It is submitted that subsequent to the decision of Peroorkkada Service Co-op. Bank Ltd. (supra) the Hon'ble Jurisdictional High Court in the case of Chavakkad Service Co-op. Bank Ltd. v. ITO [2024] 169 taxmann.com 45 held that the delay in obtaining the audit report under the Kerala State Co-operative Societies Act constitute reasonable cause for delay in submission of audit report us 44AB of the Act and, therefore, no penalty was leviable.

On the other hand, the learned Sr. DR submits that no interference in the impugned order is called for.

We have heard the rival contentions of both the parties and perused the material available on record. The solitary issue that arises for our determination is that having regard to the explanation given by the appellant, whether there was sufficient and reasonable cause for delay in submission of the audit report as prescribed u/s. 44AB of the Act. There is no dispute as to the fact of delayed submission of the prescribed report u/s. 44AB of the Act. In Pattom Service Co-op. Bank Ltd. response to the show cause notice, the appellant submitted that the delay had occurred on account of the delay in obtaining the audit report under the Kerala State Co-operative Societies Act. The submission made by the appellant society remains uncontroverted by the department. The Hon'ble Jurisdictional High Court in the case of Chavakkad co-operative society (supra) held that the delay in obtaining the audit report under Kerala State Co-operative Societies Act constitutes reasonable cause for delay in submission of the audit report u/s. 44AB and, therefore, no penalty is leviable. The relevant portion of the order is extracted as under: - “Where assessee co-operative societies did not file audit report as mandated under section 44AB within time limit specified thereunder, however, audit reports were made available before Assessing Authority at time of finalization of assessments, since delay in obtaining audit reports from statutory auditors under Kerala Co-operative Societies Act and Rules could be seen as a reasonable cause for delayed submission of audit reports, no penalty under section 271B was to be imposed on assessee.”

The ratio of the above decision of the Hon'ble Jurisdictional High Court is squarely applicable to the facts of the present case. The ratio of the decision in the case of Peroorkkada Service Co- operative Bank Ltd. (supra) have not application to the facts of the present case, inasmuch as, it was a case where sufficient cause was shown for the delay in submission of audit report. Respectfully following the ratio laid down by the Hon'ble Jurisdictional High

In the result, the appeals filed by the assessee are allowed.