2022 (6) TMI 1418 - AT - Income Tax

Penalty u/s. 271B - Delay in submitting the audit report - HELD THAT - 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. 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 - As penalty levied by the AO u/s 271B of the Act and confirmed by the ld CIT(A) stands deleted. Decided in favour of assessee.

Summary

Issues Involved:
Appeal against order of CIT(A) regarding penalty under section 271B for assessment year 2016-17 - Delay in filing appeal - Condonation of delay - Justification for delay in obtaining audit report - Non-cooperation of assessee - Deletion of penalty.

Analysis:
The appeal filed by the assessee against the order of the CIT(A) regarding the penalty under section 271B for the assessment year 2016-17 was found to be barred by limitation by 87 days. The assessee submitted a condonation petition citing the shutdown and lockdown due to COVID-19 as the reason for the delay in filing the appeal. The delay was prayed to be condoned, and the LD CIT DR did not object to it. Upon reviewing the petition, the Tribunal found that the assessee had a reasonable cause for the delay and thus condoned the delay of 87 days, admitting the appeal for hearing.

The main ground of appeal raised by the assessee was the justification for the penalty imposed under section 271B. The assessee argued that the delay in submitting the audit report was due to receiving it belatedly from the statutory auditors appointed under the Co-operative Society Act, which was beyond their control. The LD AR contended that the penalty should be deleted. On the other hand, the LD CIT DR supported the order of the AO and CIT(A), alleging non-cooperation from the assessee and lack of compliance regarding the delayed audit accounts. However, the Tribunal noted that the delay was caused by the statutory auditors appointed by the Registrar of Co-operative Societies, not by the assessee. As the audit report was available before the AO during assessment, the Tribunal deemed it a fit case for the deletion of the penalty under section 271B, overturning the decision of the AO and the CIT(A).

In conclusion, the Tribunal allowed the appeal of the assessee, deleting the penalty imposed under section 271B. The decision was pronounced in the open court on 7/6/2022.