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Facts
The assessee, a co-operative society, failed to furnish audited financial statements and tax audit reports under Section 44AB of the Income Tax Act within the prescribed due date. Consequently, the Assessing Officer levied a penalty of Rs. 1,50,000 under Section 271B, which was subsequently confirmed by the CIT(A).
Held
The Tribunal determined that the delay in filing the tax audit report was attributable to the assessee's inability to timely obtain statutory audit certificates as required by the Kerala Co-operative Societies Act, which constituted a sufficient cause. Following a precedent set by the Kerala High Court in the case of Chavakkad Service Co-op. Bank Ltd., the Tribunal deleted the penalty imposed under Section 271B.
Key Issues
Whether the delay in furnishing the tax audit report, occasioned by a delay in obtaining statutory audit reports under the Kerala Co-operative Societies Act, constitutes a sufficient cause to waive the penalty imposed under Section 271B of the Income Tax Act.
Sections Cited
271B, 44AB
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI KESHAV DUBEY, JM
O R D E R Per: Inturi Rama Rao, AM These appeals filed by the assessee are directed against the orders of the National Faceless Appeal Centre, Delhi [CIT(A)], dated 25.07.2024 & 07.08.2024 for Assessment Years (AYs) 2016-17 & 2017-18, respectively.
Since identical issues are involved in these appeals, those are heard together and disposed of vide this common order. For the sake of & 847/Coch/2024 PWD Irrigation LSGD Employees Co-op. Society Ltd. convenience and clarity, the facts relevant to the appeal bearing for AY 2016-17 are stated herein. The discussions and findings are equally applicable to the other appeal also.
The only issue raised by the assessee is that the learned CIT(A) 3. erred in confirming the penalty levied by the Income Tax Officer, Ward- 2(1), Thiruvananthapuram (hereafter “the AO”) u/s 271B of the Income Tax Act, 1961 (the Act) amounting to Rs.1,50,000/-.
In the present case, the audited financial statements were not furnished by the assessee within the due date as specified u/s 44AB of the Act. Therefore, the AO levied penalty u/s 271B of the Act amounting to Rs. 1,50,000/- .
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us.
The learned A.R. before us submitted that the delay in getting the accounts audited under the Kerala co-operative Societies Act and consequently the tax audit report was furnished belatedly was on account of the delay in getting the accounts audited and obtaining the audit certificate under the Kerala Cooperative Societies Act. Thus, it was pleaded by the learned counsel for the assessee that there was sufficient cause for the delay in getting the account audited and consequently furnishing the audit report belatedly. As such the learned A.R. prayed for wavier of the penalty under the provisions of section 271B of the Act.
We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that the Hon'ble Jurisdictional High Court in the case of Chavakkad Service Co-op. Bank Ltd. [2024] 169 taxmann.com 45 (Kerala) has observed 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 facts of the case on hand are identical as discussed above. Thus, respectfully following the same, we delete the penalty imposed by the Revenue.
In the result, appeals filed by the assessee are allowed. Order pronounced in the open court on 18th March, 2025.