2023 (11) TMI 590 - AT - Income Tax

Penalty u/s 271B - delayed submission of the audit report - assessee, a primary agricultural credit society (PACS) registered under Kerala Act filed it s audit report u/s. 44AB on 21.06.2014 as against the due date specified therein, i.e.,31.10.2013 - assessee s only case is that it was not aware of the requirement of law - HELD THAT - The law implies a State policy, and to which the citizen is subject. Would it, one may ask, possible for an assessee to contend that it was not aware of the Act, and that therefore income earned attracts tax thereon? This is particularly so in the instant case where the assessee is presumably (i.e., going by the nature and volume of its business) an assessee (i.e., under the Act) for long. The explanation is not valid on facts as well. The assessee could validly argue non-conduct of tax audit under the Act, stating to have obtained the said report for the first time, only where it had furnished the other audit report, i.e., under the Kerala Act, of which it was aware, by the due date, i.e., 31.10.2013. The requirement of filing both the audit reports emanates from s. 44AB. It could not thus possibly be that the assessee is aware of one requirement and not of the other. The explanation is accordingly not tenable either in law or on facts. We may next consider the assessee s argument of the audit report being available at the material time, i.e., at the time of assessment, which should thus be regarded as insufficient compliance of section 44AB. The furnishing of the audit report/s u/s. 44AB stands delinked from the obligation to file return a default where-under is subject to penalty under a separate provision, by Finance Act, 1995, w.e.f. 01.07.1995. Even if, therefore, the assessee is not required to as where he has no income for the relevant year, or otherwise does not his file return of income, he is yet obliged to furnish the audit report in time. Delinked thus from the obligation of filing the return, it is so from the ensuing assessment proceedings, if any, as well. Why, as posed by the Bench during hearing, to no answer by Shri Sivadas, the learned counsel for the assessee, there may be no assessment proceedings in a given case. For all we know, the information furnished through the audit report may be collated to furnish information that could guide policy framework for selecting and/or indeed the selection of returns for being subject to verification procedure under the Act, i.e., form the basis for initiating assessment proceedings. The argument is thus sans any basis in law as also on facts. Its observation, alluding to Hindustan Steel Ltd vs. State of Orissa 1969 (8) TMI 31 - SUPREME COURT that the explanation was not malafide and there was no conscious disregard of it s statutory obligation by the assessee, is in that context, and is to be therefore read accordingly and not divorced there-from. Independent of it, reference to the decision in Hindustan Steels Ltd. (supra) would amount overlooking the clear provisions of section 271B r/ws. 273B of the Act, impermissible under any cannon of interpretation of statutes. Section 273B provides for the necessary leeway to account for cases where, despite due care, the lapse occurs. It may also not be out of context to state that the decision in Hindustan Steel Ltd 1969 (8) TMI 31 - SUPREME COURT is premised on the consideration that penalty, which in that case was under the Sale Tax Act, is a result of quasi criminal proceedings. The Hon'ble Apex Court per it s decision in UoI v. Dharmendra Textile Processors 2008 (9) TMI 52 - SUPREME COURT has clarified the penalty under section 271(1)(c) of the Act to be a civil liability. The same would hold equally for penalty u/s. 271B, which is though subject to s. 273B. We confirm the levy of the impugned penalty. Decided against assessee.

Summary

Issues involved:
The judgment deals with an appeal against the confirmation of penalty under section 271B of the Income Tax Act, 1961 for Assessment Year 2013-14 by the Commissioner of Income Tax (Appeals), NFAC, Delhi.

Details of the Judgment:

Issue 1: Compliance with Section 44AB of the Act
The appellant, a primary agricultural credit society, filed its audit report after the due date specified under section 44AB of the Act, attracting penalty under section 271B. The appellant argued that the audit reports were filed before the assessing authority at the time of assessment, which should be considered sufficient compliance. However, the tribunal clarified that furnishing the audit report under section 44AB is mandatory, and failure to provide both audit reports as required does not constitute due compliance. The tribunal upheld the penalty, emphasizing that ignorance of the law is not an excuse, and the appellant failed to prove a reasonable cause for the delay.

Issue 2: Validity of Explanation for Delay
The appellant contended that it was not aware of the legal requirement for filing the tax audit report under the Act. The tribunal rejected this explanation, stating that the law implies a state policy to which citizens are subject, and ignorance of the law cannot be a valid excuse. The tribunal highlighted that the appellant's argument of the audit report being available at the time of assessment does not absolve it from the obligation to file the report on time, as it is delinked from the obligation to file the return of income.

Issue 3: Comparison with Previous Tribunal Decisions
The appellant relied on a previous tribunal decision where delayed furnishing of the audit report was accepted due to unforeseen circumstances. However, the tribunal differentiated this case, emphasizing that penalties under the Act are civil liabilities and not subject to malafide intent. The tribunal confirmed the penalty, stating that section 273B provides leeway for cases of inadvertent lapses, which was not applicable in the present case.

In conclusion, the tribunal confirmed the levy of the penalty under section 271B, dismissing the appellant's appeal and stay application. The decision was pronounced on November 14, 2023, under the Income Tax (Appellate Tribunal) Rules, 1963.