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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM
O R D E R
Per Arun Khodpia, AM :
The assessee has filed this appeal against the order passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 12.12.2021 for the assessment year 2014-2015, on the following grounds:-
1. That the Appellant is functioning in a remote small village at Sakri. The Notices of fixation by the Ld. CIT (Appeals), NFAC, Delhi did not come to the knowledge of the Appellant, and therefore, proceeding could not be attended.
2. Without prejudice, That the Ld. CIT (Appeals), NFAC, Delhi erred in passing Order ex-parte. He further erred in not considering the explanation as filed before learned AO and quoted by the Ld. Assessing Officer in his penalty order.
3. That the Ld. CIT (Appeals), NFAC, Delhi erred in confirming the penalty levied u/s 271B by the Ld. Assessing Officer at Rs. 1,09,440/-. Prayed that there is no delay on the part of the Appellant. The statutory auditor was not appointed timely by the Register of Cooperative Society which was not in the hands of the Appellant only after completion of Statutory Audit, Tax audit was done. There is reasonable cause u/s 273B for delay, therefore, the penalty levied kindly be cancelled.
Brief facts of the case are that the assessee filed its return of income for AY 2013-14 on 21.02.2015 after the due date for filing of return of income under the provision of Section 139(1) of the Act declaring NIL income. The assessee is a Primary Agriculture Co-operative Society. Assessment in this case was completed on 22.03.2016 at an assessed income of Rs. 14,33,030/-. During the course of assessment proceedings, the AO found that the assessee society had got its account audited u/s 44AB on 10.12.2014, i.e. after the due date laid down in the Act i.e. 30.09.2013. Accordingly, the AO levied penalty u/s 271B of the Act amounting to Rs. 1,09,440/-.
Against the above order of AO, the assessee preferred appeal before the ld. CIT(A) and the ld. CIT(A) upheld the findings of the AO and dismissed the appeal of the assessee. 4. Now, the assessee is in further appeal before the Tribunal. 5. Ld. AR before us submitted that the CIT(A) has passed the impugned order without providing sufficient opportunity to the assessee to substantiate its claim. It was also submitted that there is no delay on part of the assessee. Since the statutory auditor was not appointed timely by the Registrar of Cooperative Societies, which was beyond the control of the assessee, therefore, the statutory audit and tax audit could have been completed only after appointment of the statutory auditor by the Registrar of Cooperative Societies. Copy of the letter dated 17.10.2014 issued by the Jila Sahkari Kendriya Bank Maryadit, Raipur was shown to us which is extracted as under :-
It was, therefore, the submission of the ld. AR that there was reasonable cause of delay in terms of Section 273B of the Act, and, thus, the penalty levied may kindly be cancelled. Reliance was placed on the following case laws :- i) Kendrapara Credit Co-operative Society Ltd., order dated 07.06.2022, wherein it is held as under :- 8. We have considered the rival submissions. A perusal of the facts as recorded by the AO shows that the delay in submitting the audit report was on account of delay in obtaining audit report from the statutory auditors. It is fairly admitted that the statutory auditors is appointed by the Registrar of Co-operative Societies and not by the assessee. This being so, we are of the view that the assessee has sufficient and reasonable cause for delay in obtaining the audit report. It is also an admitted fact that the audit report was available before the AO, when the assessment was done. This being so, we are of the view that it is a fit case for deletion of penalty u/s.271B of the Act. Consequently, the penalty levied by the AO U/S.271B of 4 the Act and confirmed by the ld CIT(A) stands deleted. ii) M/s TPD 101 Uthangarai Mil Producers Co-operative Society Ltd., ITA No.152/Chny/2021, order dated 29.06.2022, wherein it is held as under :- 7. We have heard both the parties and perused the materials available on record and gone through the orders of the authorities below. The assessee supposed to have been filed audit report as required u/s.44AB of the Act, on or before 31.10.2015. However, such audit report has been filed on 05.03.2016, which is before the date of completion of assessment proceedings u/s.143(3) of the Act. In other words, although the assessee has filed tax audit report beyond the stipulated period, but such tax audit report was made available to the AO before he completes assessment proceedings. The assessee has given reasons for delay in filing tax audit report. As per which, the audit of accounts of society done by the Dept. of Cooperative Audit, could not be completed on or before 31.10.2015 and said delay was not in the hands of the assessee. Therefore, there is a reasonable cause for not filing the tax audit report within prescribed time limit ad thus, penalty cannot be levied. We find merits in the submission of the assessee for the simple reason that non-filing of audit report within the due date is a venial technical breach without any mala fide intention on the part of the assessee. Because, completion of audit of books of accounts of the society is under the control of Dept. of Cooperative Audit and thus, unless the Dept. of Cooperative Audit completes audit, the assessee cannot file return of income along with tax audit report. Therefore, we are of the considered view that reasons given by the assessee for not filing tax audit report prescribed u/s.44AB of the Act, is neither intention nor any mala fide intention, but it is venial technical breach and for this reason, penalty u/s.271B of the Act, cannot be levied. This principle is supported by the decision of the Hon’ble jurisdictional High Court in the case of P.Senthil Kumar v. PCIT reported in 416 ITR 336, where an identical issue had been considered by the Court and held that for venial technical breach without any mala fide intention, penalty cannot be levied. The ITAT Cochin Bench in ITA No.411/Cochin/2018 vide order dated 05.02.2019 had held that once audit report has been made available before the AO, when the assessment proceedings were completed, then, there is no reason for levy of penalty.
8. In this view of the matter and considering the facts and circumstances of the case, we are of the considered view that reasons given by the assessee for not filing tax audit report within due date comes under reasonable cause as provided u/s.271B of the Act, and thus, the AO is erred in levying penalty u/s.271B of the Act. Hence, we direct the AO to delete penalty levied u/s.271B of Act. iii) Arambagh Co-op Agricultural Marketing Society Ltd., ITA No.804&8056/Kol/2014, order dated 28.02.2017, wherein the Tribunal has held as under :- 8. 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- 5 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."
9. 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 ITA No.2396/Kol/2013 in the case of supra. Following the same, we are of the view that it is not a fit case to impose ITA Nos. 804 & 805/Kol/14-A-JM M/s. Arambagh Co-op Agrl. Mktg. Society Ltd 4 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. iv) Ahmedabad Co-operative Dept. Stores, [2001]
73. TTJ 784 (Ahmedabad-ITAT), wherein the Tribunal has held as under :-
I have given careful thought to the rival submissions advanced before me. There is no dispute that assessee is a cooperative society and its activities are governed by Gujarat Cooperative Societies Act, 1960. The accounts of the assessee are required to be audited by a special auditor appointed by the Registrar of Cooperative Societies. It is well known that Government auditors audit accounts of such cooperative societies. They carry out audit as per the statutory requirements and the assessee can have no control or authority over such auditors. It is settled law that penalty is to be imposed for defiance of law or for not carrying out a statutory obligation. It cannot be imposed on the assessee for non- performance of duties by public agencies like Government auditors. The assessee right from beginning contended that delay is attributable to late auditing done by the statutory auditors. For the act of statutory auditor, the assessee cannot be held to be responsible under a provision like section 271B. It has been a settled law since the decision of Hindustan Steel Ltd. v. State Of Orissa†. [1972] 83 ITR 26 (SC) that the levy of penalty is discretionary and penalty is not to be imposed for technical or venial breach of a statutory provision. In the present case, statutory audit was completed only on 17-1-1990. The auditors raised some points in the audit report which were required to be looked into and complied with by the assessee. After complying with the various points the assessee submitted return on 26-2-1990. It is not a case in which the assessee did not take proper care to comply with various statutory provisions. No default is attributable to the act and conduct of the assessee. Therefore, in my opinion, it is not a fit case for levy of penalty under section 271B of the IT Act. The penalty levied is held to be unjustified and is cancelled. In the light of above finding I deem it unnecessary to go into several other legal issues raised by the learned counsel for the assessee. The penalty imposed is cancelled. v) Mathana Model Co-op Credit & Services Society Ltd., [2008] 299 ITR 70 (Punjab & Haryana), wherein the Hon’ble Punjab & Haryana High Court held as under :- Section 271B, read with section 273B, of the Income-tax Act, 1961 - Penalty - For failure to get accounts audited - Assessment year 2004-05 - As assessee-co-operative society failed to get its accounts audited within stipulated date, a show-cause notice under section 271B was issued to it - Assessee submitted copy of audit report along with its reply stating that it being a co-operative society was required to get its accounts audited by auditor appointed by Registrar, Co-operative Societies and since auditor was not appointed by Registrar within stipulated time, audit report could not be submitted in time - Assessing Officer rejected assessee's explanation and imposed penalty upon it - Whether any penalty could be levied upon assessee - Held, no 7 vi) Iqbalpur Cooperative Cane Development Union Ltd. [2013] 218 Taxman 70 (Uttarakhand)(Mag.), wherein the Hon’ble Uttarakhand High Court has held as under :- Section 44AB, read with sections 271B and 273B of the Income-tax Act, 1961 - Tax audit [Appointment of auditor] - Assessee was a co- operative society, registered under U.P. Co-operative Societies Act, 1965 - Accounts of assessee was required to be audited in accordance with section 64 of U.P. Co-operative Societies Act - Since assessee's account was not audited within stipulated date, penalty under section 271B was imposed on assessee - Tribunal granted relief to assessee under section 273B holding that assessee established that appointment of auditor was not within his domain and, it was also not within his domain to have auditor to be appointed by Registrar or such person as appointed by State Government, to complete audit within specified date - Whether on fact there was no scope of interference with this appeal - Held, yes [Para 2] [In favour of assessee] vii) Hindustan Steel Ltd., [1972] 83 ITR 26 (SC), wherein the Hon’ble Supreme Court has held as under :- Section 270 of the Income-tax Act, 1961 - Penalty - General - Penalty is not to be imposed if there is no conscious breach of law An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or guilty of conduct, contumacious or dishonest, or acted in conscious disregard to its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute.
On the other hand, ld, Sr. DR submitted that the assessee was provided with sufficient opportunities to represent its case before the ld. CIT(A), but the assessee failed to furnish any evidence in support of its contention. Accordingly, the ld. CIT(A) has rightly confirmed the penalty levied by the AO, and, therefore, the appeal of the assessee deserves to be dismissed.
We have considered the rival contentions and perused the orders of the authorities below along with the relevant documents placed on record. Before us, the ld. AR of the assessee has filed paper book containing the documents relating to the letter of Jila Sahakari Kendriya Bank Maryadit, Raipur dated 17.10.2014 appointing the Tax Auditor, audited accounts, tax audit report dated 14.02.2015 and copy of computation & acknowledgement. It was also submitted by the ld. AR that the explanation of the assessee has not been considered in the proceeding before the ld. CIT(A). It is fairly admitted that the statutory auditor is appointed by the Registrar of Co-operative Societies and not by the assessee. This being so, we are of the view that the assessee has sufficient and reasonable cause for delay in obtaining the audit report. Since the auditor was appointed by the Registrar of Cooperative Societies on 17.10.2014, therefore, there is no delay on the part of the assessee. Accordingly, respectfully following the various judicial pronouncements, referred to above, we are of the considered opinion that the penalty levied by the AO u/s.271B of the Act and confirmed by the ld. CIT(A) deserves to be deleted and we do so. Thus, appeal of the assessee is allowed.