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A. K. JAYASANKARAN NAMBIAR, K. V. JAYAKUMAR
Chavakkad Service Co-Operative Bank Ltd. – Appellant
Versus
Income Tax Officer – Respondent
JUDGMENT :
A.K. Jayasankaran Nambiar, J.
As all these I.T.Appeals that are preferred by Co-operative Societies raise common questions of law, they are taken up together for consideration and disposed by this common judgment.
2. The appellants/assessees are Co-operative Societies who had filed returns of income for the purposes of assessment under the Income Tax Act [hereinafter referred to as the “I.T. 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 under Section 271B of the I.T. Act for alleged breach of the procedure contemplated under Section 44AB of the I.T. Act.
3. 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. A
The court ruled that reasonable cause for delay in filing audit reports negates the imposition of penalties under the Income Tax Act, especially when no prejudice is caused to the Department.
Failure to timely e-file tax audit report under S.44AB attracts S.271B penalty unless reasonable cause under S.273B proven.
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