The Cuttack Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the penalty where the assessee has sufficient and reasonable cause for delay in obtaining the audit report.
The two-member bench of George Mathan (Judicial Member) and Arun Khodpia (Accountant Member) has observed that the delay in submitting the audit report was on account of a delay in obtaining the audit report from the statutory auditors. The statutory auditors are appointed by the Registrar of Co-operative Societies and not by the assessee.
The assessee’s primary basis of appeal was that the CIT (A), NFAC was not justified in affirming the Assessing Officer’s penalty of Rs. 1,50,000 assessed under section 171B of the Income Tax Act.
The assessee submitted that the audit report of the assessee was not submitted on time because it was received belatedly from the statutory auditors, who were to do the audit of the assessee as per the Co-operative Society Act. It was the submission that the delay in getting the report of the audit done by the statutory auditors was beyond the control of the assessee. The penalty was levied by the AO and confirmed by the CIT (A).
The department contended that the assessee had been absolutely non-cooperative and there was no compliance before the AO in respect of the reasons for delayed audit accounts. The assessee has reasonable cause. He could have filed before the AO and CIT (A). The penalty was levied by the AO and confirmed by the CIT (A) and was liable to be upheld.
“We are of the view that it is a fit case for the deletion of the penalty under section 271B of the Act. Consequently, the penalty levied by the AO under section 271B of the Act and confirmed by the CIT (A) stands deleted,” the ITAT observed.
Case Title: Kendrapara Credit Co-operative Society Ltd Versus ITO
Source from: https://www.livelaw.in/news-updates/itat-income-tax-act-cit-a-assessing-officer-delayed-audit-report-penalty-201171
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