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2023 (8) TMI 916 - AT - Income TaxLevy of penalty u/s. 271B - non completion of audit within reasonable time - HELD THAT - As admitted fact that the Audit certificate was issued by the Tax Auditor on 20.02.2013, which was after the due date of completion of the audit u/s 44AB, which was contented by the assessee as beyond its control, and rightly so, we find merit in the submission of the assessee, however in the submissions of the assessee there was no whisper pertaining to delayed appointment of the Auditor, which could be the key fact or event justify the contention of the assessee that there was nothing on the part of assessee which makes assessee responsible for the delay. It is therefore necessary to verify when the statutory auditors and tax auditor were appointed by the regulatory authority i.e. registrar of cooperative society, thus, we are of the considered opinion that order of penalty levied by the Ld.AO u/s. 271B of the Act and confirmed by the Ld.CIT(A) is liable to be set aside with a direction to verify that the appointment of the statutory/tax auditor was done after the due date of completion of audit u/s 44AB of the Act, and if same is the case and audit was completed within a reasonable time of such appointment, then the penalty u/s 271B cannot be held as justified. We, therefore, set aside the order of the Ld.CIT(A) and restore the issue to the files of AO to verify the documents. Disallowance u/s 80P - Interest on the bank deposit - HELD THAT - As issue involved in the present appeal regarding allowability of assessee s claim pertaining to sec.80P(2)(a)(i) of the Act, on the interest on the bank deposit remain the same as were there 2022 (8) TMI 597 - ITAT RAIPUR as relied upon by the assessee, therefore, we respectfully following the same, direct the AO to allow the assessee s claim for deduction u/s. 80P(2)(a)(i).
Issues Involved:
1. Levy of penalty u/s 271B of the Income Tax Act, 1961. 2. Disallowance u/s 80P of the Income Tax Act, 1961. Summary: Issue 1: Levy of Penalty u/s 271B of the Income Tax Act, 1961 The appeals ITA Nos. 108, 109, 110, 118, 125 & 126/RPR/2022 pertain to the levy of penalty u/s 271B of the Act. The primary contention was that the statutory auditors were not appointed timely by the Registrar of Cooperative Society, which led to the delay in completing the audit. The assessee argued that there was a reasonable cause for the delay under section 273B, and thus, the penalty should be canceled. The Tribunal noted that the audit certificate was issued after the due date, and the delay was beyond the control of the assessee. The Tribunal referred to multiple case laws supporting the assessee's claim and concluded that the penalty u/s 271B was not justified. The Tribunal directed the AO to verify the appointment dates of the statutory auditors and, if found delayed, to vacate the penalty imposed. Issue 2: Disallowance u/s 80P of the Income Tax Act, 1961 The appeals ITA Nos. 111, 112, 113, 116 & 117/RPR/2022 addressed the disallowance of deductions claimed under section 80P. The Tribunal examined various grounds: 1. Interest Income from Deposits with Co-operative Banks: The Tribunal, following the precedent set in the case of Tumkur Merchants Souharda Cooperative Ltd., held that interest income earned on surplus funds deposited with co-operative banks is eligible for deduction u/s 80P(2)(a)(i). 2. Income from Paddy Procurement Business: The Tribunal remanded the matter to the AO to determine the extent of the assessee's facilitation of marketing agricultural produce grown by its members and to restrict the deduction u/s 80P(2)(a)(iii) accordingly. 3. Surplus from Public Distribution System (PDS) Business: The Tribunal directed the AO to allow the deduction u/s 80P(2)(c)(ii) only to the extent of net profit after considering proportionate expenses. 4. Dividend Income: The Tribunal vacated the disallowance of the deduction u/s 80P(2)(d) for dividend income received from shares of a co-operative bank, holding that such income is eligible for deduction. The Tribunal condoned the delays in filing the appeals and allowed the appeals partly for statistical purposes, remanding several issues back to the AO for fresh adjudication based on the Tribunal's observations.
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