2023 (4) TMI 1239 - AT - Income Tax

Penalty levied u/s 271B - 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 - As argued by assessee 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 - HELD THAT - Before us, Asessee 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 explanation of the assessee has not been considered in the proceeding before the 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, 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.

Summary

Issues Involved:
1. Lack of knowledge of the Notices of fixation by the CIT(A), NFAC, Delhi.
2. Ex-parte order passed by CIT(A), NFAC, Delhi.
3. Confirmation of penalty levied under Section 271B by the AO.

Summary:

1. Lack of Knowledge of Notices:
The appellant argued that operating from a remote village, they were unaware of the Notices of fixation by the CIT(A), NFAC, Delhi, and thus could not attend the proceedings.

2. Ex-parte Order:
The appellant contended that the CIT(A), NFAC, Delhi erred in passing an ex-parte order without considering the explanations provided to the AO and quoted in the penalty order. The appellant emphasized that there was no delay on their part, and the delay in statutory audit was due to the late appointment of the statutory auditor by the Registrar of Cooperative Societies, which was beyond their control.

3. Confirmation of Penalty under Section 271B:
The AO found that the assessee society got its account audited under Section 44AB on 10.12.2014, after the due date of 30.09.2013, and levied a penalty of Rs. 1,09,440/- under Section 271B. The CIT(A) upheld this penalty, leading the appellant to appeal further.

Tribunal's Findings:
The Tribunal considered the appellant's submission that the delay was due to the late appointment of the statutory auditor by the Registrar of Cooperative Societies, which was beyond their control. The Tribunal noted that the statutory auditor was appointed on 17.10.2014, and the tax audit was completed subsequently. The Tribunal found that there was reasonable cause for the delay under Section 273B, and thus, the penalty should be deleted.

Case Laws Cited:
The Tribunal relied on several case laws, including:
- Kendrapara Credit Co-operative Society Ltd.
- M/s TPD 101 Uthangarai Mil Producers Co-operative Society Ltd.
- Arambagh Co-op Agricultural Marketing Society Ltd.
- Ahmedabad Co-operative Dept. Stores.
- Mathana Model Co-op Credit & Services Society Ltd.
- Iqbalpur Cooperative Cane Development Union Ltd.
- Hindustan Steel Ltd.

These cases supported the view that delays due to factors beyond the assessee's control, such as late appointment of statutory auditors by public agencies, constituted reasonable cause for not imposing penalties under Section 271B.

Conclusion:
The Tribunal concluded that the assessee had sufficient and reasonable cause for the delay in obtaining the audit report, and the penalty levied under Section 271B by the AO and confirmed by the CIT(A) should be deleted. The appeal of the assessee was allowed.

Order Pronounced:
The order was pronounced in the court on 21/04/2023.