2019 (1) TMI 1335 - AT - Income Tax

Penalty imposed u/s 271B - assessee has not filed the Audit Report as mandated u/s 44AB - assessee is a Primary Agricultural Credit Society registered under the Kerala Co-operative Societies Act, 1969 claiming deduction u/s 80P(2)(a)(i) - Held that - In the instant case for the relevant assessment year the Co-operative Department had audited the assessee s case and submitted a report on 24.09.2014. The assessee had sufficient time to file audit report u/s 44AB of the I.T.Act within the specified date, which is 30th day of December, immediately following the financial year, i.e. 30.09.2014. However, for the relevant assessment year the Central Board of Direct Taxes vide its order dated 20.08.2014 had extended the due date of filing of the audit report from 30.09.2014 to 30.11.2014. The assessee had not filed the audit report in this case. The assessee was very casual and did not enter appearance for the show cause notice issued for imposition of penalty. The assessee has not made out a reasonable cause as mentioned u/s 273B for non-furnishing of audit report u/s 44AB. Hence, we are of the view that the penalty u/s 271B has been rightly imposed - decided against assessee.

Summary

Issues:
Whether the CIT(A) was justified in confirming the penalty imposed under section 271B of the Income Tax Act, amounting to ?1,50,000?

Analysis:
The case involved a Primary Agricultural Credit Society registered under the Kerala Co-operative Societies Act, 1969, engaged in banking. The assessee filed a return of income for the assessment year 2014-2015 declaring Nil income after claiming deductions under section 80P(2)(a)(i) of the Income Tax Act amounting to ?3,44,41,274. The assessment under section 143(3) of the Income Tax Act was completed, revealing that the assessee failed to file the Audit Report as required under section 44AB of the Income Tax Act, leading to the imposition of a penalty under section 271B amounting to ?1,50,000.

The assessee contended before the CIT(A) that as a Co-operative Society, its accounts were audited by the Co-operative Department of the Government of Kerala, and the audit under section 44AB of the Income Tax Act was not covered by the Kerala Co-operative Societies Act, 1969. However, the CIT(A) held that the assessee failed to provide a reasonable cause for non-compliance with section 44AB, leading to the imposition of the penalty under section 271B. The CIT(A) emphasized that the penalty is leviable for failure to get accounts audited or furnish reports before the specified date under section 44AB, subject to the provisions of section 273B, which require the assessee to prove a reasonable cause for non-compliance.

Upon appeal to the Tribunal, it was noted that the Co-operative Department had audited the assessee's case for the relevant assessment year, and the due date for filing the audit report was extended to 30.11.2014 by the Central Board of Direct Taxes. Despite this, the assessee failed to file the audit report and did not provide a reasonable cause for non-compliance. The Tribunal upheld the imposition of the penalty under section 271B, stating that the assessee had sufficient time to comply but was casual in its approach. Therefore, the appeal filed by the assessee was dismissed, and the penalty was upheld.

In conclusion, the Tribunal affirmed the penalty imposed under section 271B of the Income Tax Act, amounting to ?1,50,000, as the assessee failed to provide a reasonable cause for non-compliance with the audit report filing requirements under section 44AB, despite having sufficient time and opportunities to do so.