Delay in Tax Audit due to ongoing assessment in some other Act: Penalty u/s 271B to be deleted

The brief facts of the case is that the assessee filed return of income on 06.01.2016 which was scrutinized u/s 143(3). Since total turnover / gross receipts exceeded the threshold limit of Rs.1 Crore, the assessee was required to get his accounts audited u/s 44AB of the Act and to furnish the audit report before the time limit prescribed which, in this case, was 31.10.2015. Since the accounts were not audited within the time limit, Ld. AO initiated penalty u/s 271B and levied penalty of Rs.1,12,715/-.

Upon appeal, CIT(A) confirmed the penalty. Aggrrieved by the order, assessee preferred an appeal before the tribunal.

Before tribunal, the ld. AR submitted that there was sufficient cause for delay in the audit since the assessee being cooperative society, it was governed by the Tamil Nadu Cooperative Societies Act, 1983 and the relevant rules 1988. For the relevant AY, the accounts of the society could not be audited till the completion of the assessment. Since the delay in the completion of the audit was not due to any fault on the part of the assessee society in view of the fact that the assessee was not in control of the matters relating to the appointment and completion of the audit under the aforesaid Act and Rules. Therefore, this constitutes reasonable cause and the penalty was to be deleted.

The Ld. DR, on the other hand, justified the penalty on the ground that the same was levied in accordance with law. On hearing both the parties ITAT was of the view that there was sufficient cause for late filing of return of income and audit. The assessee was subjected to audit under Tamil Nadu Cooperative Societies Act, 1983 and the relevant rules made thereunder.

The matter of appointment of auditor and completion of audit was not in control of the assessee. It could also be noted that the audit was finally completed on 31.12.2015 and the assessee filed return immediately thereafter. Accordingly, ITAT deleted the penalty.

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