Court : HIGH COURT OF PUNJAB AND HARYANA
Brief : :
Citation : Commissioner of Income-tax, Karnal
Mathana Model Co-op. Credit & Service Society Ltd.
HIGH COURT OF PUNJAB AND HARYANA
Commissioner of Income-tax, Karnal
Mathana Model Co-op. Credit & Service Society Ltd.
SATISH KUMAR MITTAL AND RAKESH KUMAR GARG, JJ
IT APPEAL NOS. 476 TO 480 OF 2007
February 1, 2008
Section 271B read with section 273B of Income-tax Act, 1961 - Penalty - For failure to get account audited - Assessment year 2004-05 - Assessee-co-operative society failed to get its accounts audited within stipulated period and a show-cause notice under section 271B was issued against it - Assessee submitted copy of audit report along with its reply stating that it being a co-operative society was required to get its account audited by auditor appointed by registrar, co-operative society and since auditor was not appointed by Registrar within stipulated time, audit report could not be submitted in time - Assessing Officer rejected assessee explanation and imposed penalty upon it and same was upheld by Commissioner (Appeals) - However, Tribunal deleted penalty imposed holding that explanation given by assessee was satisfactory - Whether since delay took place because assessee had no control over appointment of auditor by Registrar, there was no illegality in conclusion arrived at by Tribunal - Held, yes
The assessee was a co-operative society governed by the provision of the Society Act. The assessee filed return of income declaring its income as nil after claiming exemption under section 80P. The said return was accompanied by trading account, profit and loss account and balance sheet which were not audited. As the total sale/gross receipts of the assessee were more than Rs.40 lakh the assessee was required to get its account audited by the Chartered Accountant and furnish the same in the prescribed form duly signed and verified as per the provisions of section 44AB before the stipulated date i.e. 31-10-2004. Since the assessee failed to get it accounts audited by stipulated date, a show cause notice under section 271B was issued against it for imposition of penalty. The assessee along with its rely submitted the copy of audit report. In its reply the assessee stated that it being a co-operative society was required to get its account audited by the auditor appointed by the Registrar co-operative society and since the auditor was not appointed by the Registrar within the stipulated time the audit report could not be submitted in time. The Assessing officer did not accept the explanation of the assessee and imposed penalty under section 271B. On appeal, the Commissioner (Appeals) upheld the order passed by the Assessing Officer. On second appeal the Tribunal held that the explanation given by the assessee was sufficient and therefore, in view of the provisions of section 273B no penalty was imposable on the assessee.
On appeal under section 260A:
In the instant case, the specified date as per Explanation to section 44AB was 31-10-2004. [Para 10]
It was undisputed that the assessee was registered under the Societies Act and it acted under the control of Registrar, co-operative societies. Under section 77 of the societies Act, the accounts of the Co-operative society shall be audited in such manner as the Registrar may specify from time to time. In the instant case, the assessee had given the explanation for not furnishing the required audit report within the stipulated time, as the auditor was not appointed by the Registrar by that time. The delay took place because the assessee had no control over the appointment of the auditors by the Registrar, co-operative societies. However, along with reply dated 15-9-2005 to the show cause notice, a copy of the audit report by the Sub Inspector (Audit) appointed by the Registrar, co-operative societies along with tax audit' report in Form No. 3CA and 3CD, was submitted by the assessee. Though the said explanation was not accepted by the Assessing Officer and Commissioner (Appeals), but the Tribunal found that the said explanation was satisfactory. In view of the provisions of section 271B, no penalty should have been imposed on the person or the assessee if he proved that there was a reasonable cause for delay in complying with the provisions under section 271B. There was no illegality in the conclusion arrived at by the Tribunal that the explanation given by the assessee was satisfactory. Once the explanation given by the assessee was found to be satisfactory, the benefit of section 273B was available to the assessee. The said finding was a pure finding of fact based on the material available on the record which did not require any interference in the instant appeals. The contention of the revenue that in the instant case when the assessee could not get its accounts audited from the auditor appointed by the Registrar, then it could have got its accounts audited from the chartered accountant and submit the report within the specified time could not be accepted. The contention of the revenue that the assessee was having an alternative which it could have availed of to avoid the penalty for violation of the provisions of section 44AB could not be accepted because the assessee was required to act under the control of the Registrar, co-operative societies under the provisions of the Societies Act and it was bound to get its accounts audited only from the auditor appointed by the Registrar, co-operative societies. Therefore, it could not be said that the assessee was having an alternative to get its accounts audited from the chartered accountant. [Para 11]
Therefore there was no illegality in the impugned order of the Tribunal. Thus, no substantial question of law arose for consideration. [Para 12]