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Issues Involved:
1. Levy of penalty under section 271B for failure to get accounts audited as required under section 44AB. 2. Interpretation of the second proviso to section 44AB regarding audit requirements. 3. Determination of sufficient cause for delay in obtaining the audit report. Issue-wise Detailed Analysis: 1. Levy of Penalty under Section 271B: The primary issue in this appeal was the imposition of a penalty amounting to Rs. 1,00,000 under section 271B for the assessment year 1986-87. The assessee, a co-operative society, failed to get its accounts audited as mandated by section 44AB before the specified date. The assessee filed its return declaring a loss without the audit report, leading the Assessing Officer to initiate penalty proceedings. Despite the assessee's explanation that the statutory audit under the Maharashtra Co-operative Societies Act (MCSA) was pending, the Assessing Officer imposed the penalty, which was upheld by the Commissioner of Income-tax (Appeals). 2. Interpretation of the Second Proviso to Section 44AB: The crux of the dispute was the interpretation of the second proviso to section 44AB, which provides an alternative compliance mechanism for entities required to get their accounts audited under other laws. The assessee argued that since it was required to get its accounts audited under section 81 of the MCSA, this should suffice for compliance with section 44AB. The Tribunal noted that the second proviso aims to avoid redundant audits by recognizing audits conducted under other laws as sufficient compliance with section 44AB. This interpretation aligns with the intent to reduce the burden of multiple audits and was supported by the Gujarat High Court's decision in Rajkot Engg. Associations vs Union of India, which emphasized that the proviso is an enabling provision to prevent dual audits. 3. Determination of Sufficient Cause for Delay: The Tribunal examined whether there was sufficient cause for the delay in obtaining the audit report. The assessee had paid the statutory audit fee and cooperated with the auditors, but the audit was delayed due to the auditors' prioritization of other institutions. The Tribunal found that the delay was beyond the assessee's control, constituting a reasonable cause. Correspondence from the auditors confirmed the delay was on their part, not the assessee's. Consequently, the Tribunal held that the assessee had a valid reason for the delay and thus should not be penalized. Conclusion: The Tribunal concluded that the assessee, being a co-operative society, was not required to get its accounts audited separately by another chartered accountant under section 44AB if it was already required to do so under the MCSA. The delay in the statutory audit constituted a reasonable cause, and therefore, the penalty imposed by the Assessing Officer and sustained by the Commissioner of Income-tax (Appeals) was unjustified. The Tribunal set aside the penalty, allowing the appeal in favor of the assessee.
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