ARAMBAGH CO-OP AGRICULTURAL MARKETING SOCIETY LTD.,KOLKATA vs. ACIT, CIR-I,, HOOGHLY

The only ground that is to be decided is as to whether the ld. CIT-A correct in confirming the penalty imposed by the AO U/S 271B of the Act in the facts and circumstances of the case.

Since the Assessee and the issue raised therein are common and identical, both the appeals clubbed and heard together and disposed of the same by this common order for the sake of convenience. Therefore, the common facts as arrayed in ITA 804/Kol/2014 are discussed herein under for the same.

The Assessee is a Co-operative Society. The Tax Audit report as required by the provisions of section 44AB of the Act was filed by it along with its return of income for the year under consideration on 14-09-2009 as against the specified date of 30-09-2008. The Assessing Officer, therefore, initiated penalty proceedings under section 271B of the Act. In reply to the show-cause notice issued during the course of said proceedings, it was explained that the Assessee was ignorant about Income tax law and Rules therewith and not aware that penalty would be attracted for non-submission of TAR [Tax Audit Report] and urged to drop the penalty proceedings initiated u/s. 271B of the Act. This explanation of the assessee was not found acceptable by the Assessing Officer. The A.O held that the assessee-society could have appointed the Tax Auditor and could have got the tax audit done independently much before the specified date 30-09-2008 and the delay in appointment of statutory auditors under the Cooperative Act had no relevance with Income tax law. He rejected the explanation of the assessee on its failure to obtain and furnish the tax audit report by the specified date. He, therefore, proceeded to impose the penalty of Rs.1,00,000/- u/s. 271B of the Act. & 805/Kol/14-A-JM 2 M/s. Arambagh Co-op Agrl. Mktg. Society Ltd

The penalty imposed by the Assessing officer under section 271B of the Act was challenged by the assessee in the appeal before the CIT(A). The Assessee contended that the statutory Auditors were appointed by the Cooperative Department of Govt. of West Bengal to conduct statutory audit and could complete their audit only on 19-08-2008. It was submitted that the Assessee-society thereafter appointed Tax Auditor, who in turn submitted his audit report on 31-07-2009, which was filed on 14-09-2009 along with the return of income for the year under consideration. It was contended that there was sufficient cause for the delay in filing the Tax Audit Report before the specified date on 30-09-2008 and failure to furnish the same within the due date is not intentional and was beyond its control. The CIT(A), however, did not find merit in the same and proceeded to confirm the penalty imposed by the Assessing Officer for the following reasons given in paragraph 3.4 of his impugned order:-

Aggrieved by the order of the CIT(A), the assessee has preferred this appeal before the Tribunal. The Ld.AR relied on the order dt: 03-06- 2016 of ‘C’ Bench, Kolkata Tribunal in in the case of Singur Thana Large Sized Primary Agriculture Co-op Marketing Society Ltd for AY 2009-10 and submitted that under similar circumstances the penalty levied u/s. 271B was deleted by the I.T.A.T. He reiterated the arguments taken before the ld. CIT(A).

The Ld. DR submitted that during the course of hearing the AR of the assessee was asked to produce all correspondence made by the assessee with the Co-operative department to ensure that the audit is done within the specified date. However, the AR has been unable to & 805/Kol/14-A-JM 3 M/s. Arambagh Co-op Agrl. Mktg. Society Ltd provide any correspondence or other evidence to show that any effort was made by the assessee to ensure that the co-operative deptt. appoints auditors in time and that the audit was done by the specified date.

We heard rival submissions and perused the material available on record. As rightly pointed out by the ld. AR that this Tribunal decided the identical issue by holding that the delay caused in obtaining and filing the audit report was beyond the control of assessee. The relevant portion para no-4 of said order dated 03-06-2016 in the case of supra is reproduced herein below for useful reading: 4. We have heard both the sides and also perused the relevant material available on record. As submitted on behalf of the assessee before the authorities below as well as before us, its failure to obtain and furnish the tax audit report by the specified date of 30.09.2009 as per the requirement of section 44AB was due to delay in completion of statutory audit by the auditors appointed by the Cooperative Department. Since the statutory auditor under the Cooperative Act was to be appointed by the Cooperative Department and such appointment as well as conduct and completion of audit by the statutory auditor was beyond the control of the assessee, we find merit in the contention of the Id. counsel of the assessee that the delay in completion of statutory audit, which caused the failure of the assessee to obtain and furnish the tax audit report under section 4AB, was due to the reasons beyond the control of the assessee and the same constituted the sufficient cause for its failure to comply with the requirement of section 44AB. Moreover, the tax audit report obtaining belatedly was filed by the assessee along with its return of income for the year under consideration on 05.01.2010 and the same, therefore, was available to the Assessing Officer while making the assessment of the assessee for the year under consideration. The default on the part of the assessee in obtaining and furnishing the tax audit report by the specified date thus was technical or venial in nature. Having regard to all these facts and circumstances of the case, we are of the view that it is not a fit case to impose penalty under section 271B and cancelling the penalty so imposed by the Assessing Officer and confirmed by the ld. CIT(Appeals), we allow this appeal of the assessee.”

In the present case also the assessee could not obtain and file the tax audit report as required u/s. 44AB of the Act due to delay in appointment of auditors by the co-operative department for statutory audit. This appointment is not in the control of the assessee. It is only then after that the assessee appoints tax auditor. The assessee filed the tax audit report immediately after obtaining the same from its Tax Auditor in Form No.3CA on 14-09-2009. We find that the issue on hand is similar to that case decided by order dated 03-06-2016 by the Coordinate Bench of this Tribunal passed in in the case of supra. Following the same, we are of the view that it is not a fit case to impose & 805/Kol/14-A-JM 4 M/s. Arambagh Co-op Agrl. Mktg. Society Ltd the penalty of Rs.1,00,000/- u/s. 271B of the Act. Therefore, we cancel the penalty imposed by the AO and confirmed by the CIT(A). Therefore, the ground raised by the assessee is allowed.

Now, coming to other appeal filed for AY 2009-10 in ITA 805/Kol/ 2014, as discussed above, the facts are admittedly undisputed except the dates in respect of obtaining Statutory audit report etc… In this year the Statutory auditors appointed by the Government rendered their report to the Assessee on 18-08-2009 and the Tax auditor as appointed by the Assessee give their report on 04-11-2009. Immediately, thereafter, along with the same, the Assessee filed its return on 25-11-2009, therefore, there is a delay of 46 days in filing the TAR from the date specified U/sec 44AB of the Act. Since, we expressed our opinion in a similar issue in the aforementioned paras that the delay caused in obtaining and filing the audit report was beyond the control of assessee, by following the same, we cancel the penalty imposed by the AO U/Sec 271B of the Act and as confirmed by the CIT-A for the A.Y 2009-10. Accordingly, ground raised involving the same is allowed

In the result, the appeals of the assessee in ITA 804/Kol/ 2014 for AY 2008-09 and ITA 805/Kol/2014 for AY 2009-10 are allowed.