Chavakkad Service Co-Operative Bank Ltd Vs ITO (Kerala High Court)
Kerala High Court held that penalty under section 271B of the Income Tax Act, for non-compliance with provisions of section 44AB, not imposable since reasonable cause for belated filing of audit report established.
Facts- The appellants/assessees are Co-operative Societies who had filed returns of income for the purposes of assessment under the Income Tax Act. In breach of the provisions of Section 44AB of the I.T. Act, however, they did not file the audit report as mandated under the said provision within the time limit specified there under. However, the audit reports were made available before the Assessing Authority at the time of finalisation of the assessments. In fact, the Assessing Authority completed the assessments by relying on the said audit reports, but while passing the assessment orders, initiated penalty proposals u/s. 271B of the I.T. Act for alleged breach of the procedure contemplated u/s. 44AB of the I.T. Act.
In the penalty proceedings that ensued, the appellants/assessees were imposed with penalties of Rs.1.5 lakhs, which was the lesser of the two amounts mentioned in Section 271B of the I.T. Act, by rejecting the explanations offered by the assessees for the delay in producing the audit reports.
