2016 (6) TMI 1169 - AT - Income Tax

Penalty u/s 271B - failure to obtain and furnish the tax audit report by the specified date of 30.09.2009 as per the requirement of sect ion 44AB - Held that - 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 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 44AB 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 sect ion 271B - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271B for failure to furnish Tax Audit Report by specified date.

Analysis:
The appeal was filed against the penalty imposed by the Assessing Officer under section 271B of the Income Tax Act, 1961. The assessee, a Cooperative Society, filed the Tax Audit Report after the specified date of 30.09.2009, leading to penalty proceedings. The assessee explained that the delay was due to the completion of statutory audit by auditors appointed by the Cooperative Department. The Assessing Officer rejected this explanation and imposed a penalty of ?1,00,000 under section 271B.

Before the ld. CIT(Appeals), the assessee reiterated its explanation, but the penalty was confirmed. The ld. CIT(Appeals) noted the lack of evidence showing efforts to ensure timely audit completion and highlighted the delay in obtaining Form No. 3CB & 3CD from a Chartered Accountant. Displeased with this decision, the assessee appealed to the Tribunal.

The Tribunal considered that the delay in obtaining the tax audit report was beyond the assessee's control due to the statutory audit process under the Cooperative Act. The delay was deemed a sufficient cause for non-compliance with the requirement of section 44AB. The Tribunal found the delay to be technical and not deliberate, as the tax audit report was eventually filed with the return of income. Consequently, the Tribunal concluded that it was not appropriate to impose a penalty under section 271B, overturning the decisions of the Assessing Officer and the ld. CIT(Appeals).

In the final judgment, the Tribunal allowed the appeal of the assessee, cancelling the penalty under section 271B. The order was pronounced in the open court on June 03, 2016.