2023 (6) TMI 638 - AT - Income Tax

Penalty u/s 271B - default u/s. 44AB - failure to get books of accounted audited and furnish the audit report - reasonable cause - Assessee plea that accounts having been audited under the Kerala Act - HELD THAT - The assessee is a business organization, maintaining regular accounts and, as it appears, for several years, which are regularly subject to audit under the Kerala Act and, perhaps, even under the Act. Why, then, one wonders, it, being serviced by professionals, did not get it s accounts for the relevant year audited, obtaining and furnishing the audit report u/s. 44AB of the Act. There is no explanation for the same at any stage. This becomes all the more intriguing as admittedly the accounts stand maintained and, in fact, duly audited, albeit under the governing Act, so that all that was required to be done was to obtain the audit report u/s. 4AB, which seeks factual information on various compliances under the Act, and furnishing it along with the statutory audit report under the Kerala Act. The facts are admitted, and no case for non-levy of penalty has been made out even before us. That apart, this very plea, i.e., of accounts having been audited under the Kerala Act, was found as untenable in law by the Hon'ble jurisdictional High Court in Peroorkkada Service Cooperative Bank 2020 (1) TMI 624 - KERALA HIGH COURT , upholding the levy of penalty under like situation. We have, under the circumstances, no hesitation in confirming the penalty. Decided against assessee.

Summary

Issues: Appeal against confirmation of penalty under section 271B of Income Tax Act, 1961 for failure to furnish audit report under section 44AB.

Summary:
The appellant, a primary agricultural credit society, filed its return of income declaring nil income but failed to furnish the audit report as required under section 44AB of the Income Tax Act, 1961. The Assessing Officer disallowed a deduction claimed and assessed the interest income. Penalty was levied on the appellant for non-compliance. The penalty was confirmed in appeal based on a previous decision. The appellant appealed against the penalty.

Upon consideration of the contentions and evidence, it was established that the appellant did not furnish the audit report as required by the Act. The penalty under section 271B for failure to comply with section 44AB was justified unless a reasonable cause for the delay could be proven. Despite being a business organization with regular audits, the appellant failed to obtain and furnish the audit report under section 44AB, without providing any explanation for this lapse. The absence of a valid reason for non-compliance led to the confirmation of the penalty.

The appellant's argument that the accounts were audited under the Kerala Act was deemed legally untenable based on a previous court decision. The Tribunal found no grounds to exempt the appellant from the penalty. Therefore, the penalty was upheld, and the appeal was dismissed. Consequently, the stay petition filed by the appellant was also dismissed as a result of the appeal dismissal.