Case Law Details

Case Name : M/s. The Vaikom Palliprethussery Service Cooperative Bank Limited Vs. ITO (ITAT Cochin)
Appeal Number : ITA No. 454/Coch/2018
Date of Judgement/Order : 22/01/2019
Related Assessment Year : 2014-2015
Courts : All ITAT (6435) ITAT Cochin (112)

M/s. The Vaikom Palliprethussery Service Cooperative Bank Limited Vs ITO (ITAT Cochin)

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 of the I.T.Act for non-furnishing of audit report u/s 44AB of the I.T.Act. Hence, we are of the view that the penalty u/s 271B of the I.T.Act has been rightly imposed. It is ordered accordingly.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal at the instance of the assessee is directed against CIT(A)’s order dated 24.07.2018. The relevant assessment year is 2014-2015.

2. The solitary issue that is raised is whether the CIT(A) is justified in confirming the penalty imposed u/s 271B of the I.T.Act, amounting to Rs.1,50,000?

3. The brief facts of the case are as follows:-

The assessee is a Primary Agricultural Credit Society registered under the Kerala Co-operative Societies Act, 1969. It is engaged in the business of banking. For the assessment year 2014-2015, the return of income was filed on 15.01.2016 declaring Nil income after claiming deduction u/s 80P(2)(a)(i) of the I.T.Act amounting to Rs.3,44,41,274. The assessment u/s 143(3) of the I.T.Act was completed vide order dated 06.12.2016. During the course of assessment proceedings it was noticed that the assessee has not filed the Audit Report as mandated u/s 44AB of the I.T.Act. Therefore, penalty notice was issued u/s 274 r.w.s. 271B of the I.T.Act (Notice dated 06.12.2016). There was no response to the show cause notice issued for imposition of penalty. The case was adjourned number of occasions since the assessee did not appear before the Assessing Officer. Finally the order imposing penalty u/s 271B was passed on 28.06.2017 wherein the minimum penalty amounting to Rs.1,50,000 was imposed.

4. Aggrieved by the imposition of penalty u/s 271B of the I.T.Act, the assessee preferred appeal before the first appellate authority. Before the first appellate authority it was contended that the assessee is a Society registered under the Kerala Co-operative Societies Act, 1969 and gets its accounts audited by the Co-operative Department of Government of Kerala, the Statutory Auditors of the Society. It was further submitted that audit u/s 44AB of the I.T.Act is not covered by the provisions of Kerala Co-operative Societies Act, 1969. It ws contended that mere failure to file the audit report in time, will not justify the imposition of penalty as section 271B of the I.T.Act is discretionary. The CIT(A), however, rejected the contention of the assessee and held that the assessee has not made out a reasonable cause for the failure to comply with the provisions of section 44AB of the I.T.Act. The CIT(A) concluded that since there is no reasonable cause as mentioned u/s 273B of the I.T.Act, the penalty u/s 271B of the I.T.Act was rightly imposed by the A.O. The relevant finding of the CIT(A) in dismissing the appeal of the assessee reads as follows:-

“4.2. The facts of the case, the grounds of appeal and the arguments of the Appellant have been considered. It is not the case of the Appellant that it is not covered by the provisions of section 44AB of the Act. It is also a fact that the Appellant has failed to comply with the provisions of section 44AB of the Act. As per section 271 B of the Act, penalty is leviable on failure to get account audited or furnish the report before the specified date under section 44AB i.e. due date for filing return of income u/s 139(1) of Income Tax Act, 1961. However, levy of such penalty is subject to the provisions of section 273B of Income Tax Act, 1961 and as per this section, it is for the Appellant to prove that there was reasonable cause for failure to get the account audited as required under section MAB.

4.3. The Appellant neither in the penalty proceedings nor in the appeal proceedings has explained the reasonable cause for failure to comply with the provisions of section MAB of the Act. The Appellant has only stated that the audit under section MAB of the Act is not covered by the provisions of the Kerala Co-operative Societies Act, 1969. The explanation of the Appellant cannot be considered as reasonable cause for the purpose of section 273B of the Act. Therefore, it is held that the Assessing Officer has correctly levied the penalty under section 271 B of the Act and there is no merit in the grounds raised by the Appellant. The grounds raised by the Appellant are dismissed.”

5. Aggrieved by the order of the CIT(A), the assessee has filed the present appeal before the Tribunal. The learned AR reiterated the submissions made before the Income-tax Authorities. The learned Departmental Representative, on the other hand, submitted that there is no reasonable cause as mentioned u/s 273B of the I.T.Act for non-furnishing of audit report u/s 44AB of the I.T.Act and hence the penalty was rightly imposed u/s 271B of the I.T.Act.

6. We have heard the rival submissions and perused the material on record. 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 30thday 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 of the I.T.Act for non-furnishing of audit report u/s 44AB of the I.T.Act. Hence, we are of the view that the penalty u/s 271B of the I.T.Act has been rightly imposed. It is ordered accordingly.

7. In the result, the appeal filed by the assessee is dismissed.

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