IMPORTANT POINT
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.

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. Act, by rejecting the explanations offered by the assessees for the delay in producing the audit reports. The orders of the Assessing Authority imposing penalty were upheld by the First Appellate Authority and thereafter by the Appellate Tribunal in appeals preferred by the assessees.

4. In the appeals before us, the appellants/assessees raise the following questions of law:

I.T.A.No.9 of 2023:

(i) Whether on the facts and circumstances of the case the imposition of penalty is justified or not ?

(ii) Whether in the facts and circumstances of the case and in view of the decision in Mavilayi Society's case, that the primary agricultural credit societies are entitled for exemption under Section 80P of the Act, and independent of an assessment of tax imposition of penalty is justified or not ?

(iii) Whether on the facts and circumstances of the case the assesse's explanation for not furnishing the audit report ought to have been accepted and the penalty imposed is one liable to be interfered with ?

(iv) Whether in the facts and circumstances of the case the Tribunal justified in holding that the imposition of penalty on the assesse is justified ?

(v) Whether the Tribunal is correct in not following the binding judgments of the coordinate benches in ITA Nos.601/2018 & ITA No.504/2018 ?

I.T.A.No.10 of 2023:

(i) Whether on the facts and circumstances of the case the imposition of penalty is justified or not ?

(ii) Whether in the facts and circumstances of the case and in view of the decision in Mavilayi Society's case, that the primary agricultural credit societies are entitled for exemption under Section 80P of the Act, and independent of an assessment of tax imposition of penalty is justified or not ?

(iii) Whether on the facts and circumstances of the case the assesse's explanation for not furnishing the audit report ought to have been accepted and the penalty imposed is one liable to be interfered with ?

(iv) Whether in the facts and circumstances of the case the Tribunal justified in holding that the imposition of penalty on the assesse is justified ?

(v) Whether the Tribunal is correct in not following the binding judgments of the coordinate benches in ITA Nos.601/2018 & ITA No.504/2018 ?

I.T.A.No.14 of 2023:

(i) Whether on the facts and circumstances of the case the imposition of penalty is justified or not ?

(ii) Whether in the facts and circumstances of the case and in view of the decision in Mavilayi Society's case, that the primary agricultural credit societies are entitled for exemption under Section 80P of the Act, and independent of an assessment of tax imposition of penalty is justified or not ?

(iii) Whether on the facts and circumstances of the case the assesse's explanation for not furnishing the audit report ought to have been accepted and the penalty impo