No section 271B penalty for Non fling of tax audit report due to Reasonable cause

Shetkari Sahakari Dudh Utpadak Sanstha Limited Vs ITO (ITAT Pune)

The only issue in the present appeal relates to validity of the order passed u/s 271B of the Act. The provisions of section 44AB of the Act provides that where a turnover of the assesse exceeds the prescribed limit, is required to obtain the audit report and file it along with the return of income, failure to do so, attracts levy of penalty u/s 271B of the Act. The provisions of section 271B provides that where the assessee is prevented by sufficient reasonable cause for obtaining a tax audit report the penalty shall not be levied. Therefore, the question that comes up for our consideration is whether the explanation offered in response to the show cause notice constitutes a reasonable cause for not obtaining the audit report. The explanation of the appellant is that it was under bona-fide belief that there is no requirement under law to obtain the audit report u/s 44AB as its income was exempt u/s 80P(2) of the Act and its books accounts were subject to audit by Government Auditor. This explanation was not found to be false by the lower authorities. The lower authorities merely rejected the explanation and proceed with levy of penalty. There is nothing on record to doubt the explanation offered by the appellant society. Therefore, when the assessee entertained bona-fide belief that its account were not subject to audit u/s 44AB, it would certainly constitute reasonable cause for not obtaining the audit report and, therefore, the question of imposing of the penalty u/s 271B does not arise. Further, we find audit report under the provisions of Maharashtra Co-operative Society was obtained only 27^th June, 2017 and, therefore, occasion for filing the tax audit report along with the return of income does not arise. In the circumstances, we find that the lower authorities was not justified in confirming the levy of penalty and accordingly we direct the Assessing Officer to delete the penalty levied u/s 271B of the Act.

FULL TEXT OF THE ORDER OF ITAT PUNE

These are the appeals filed by the assessee directed against the different orders of ld. Commissioner of Income Tax (Appeals)- 7, Pune (‘CIT(A)’ for short) commonly dated 29.06.2018 for the assessment years 2014-15 respectively.

2. Since the identical facts and issues are involved in all the appeals, we proceed to dispose of the same by this common order.

Please become a Premium member. If you are already a Premium member, login here to access the full content.