Reasonable cause defeats section 271B penalty where audit delay arose from registrar-controlled appointment of auditor.

Penalty under section 271B was held not sustainable where delay in furnishing the audit report under section 44AB arose from circumstances beyond the assessee co-operative society's control. The society was required to have its audit conducted under the Haryana Co-operative Societies Act, and the delay resulted from the Registrar not appointing the auditor in time. The audit report was eventually furnished, and the Tribunal's acceptance of the explanation as reasonable cause was treated as a factual finding with no legal infirmity. Section 273B therefore protected the assessee from penalty.

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Issues: Whether penalty under section 271B of the Income-tax Act, 1961 was leviable for delay in furnishing the audit report when the assessee co-operative society failed to obtain the Registrar-appointed audit in time and claimed reasonable cause under section 273B.

Analysis: Section 44AB requires audit of accounts and furnishing of the audit report by the specified date, but section 273B protects an assessee from penalty where reasonable cause for the default is proved. The society was governed by the Haryana Co-operative Societies Act, 1984, under which its audit depended upon the Registrar's appointment of the auditor. The delay occurred because the auditor was not appointed within time and the society had no control over that appointment. The audit report was ultimately furnished, and the Tribunal accepted the explanation as satisfactory. That finding was treated as a factual finding based on the record, and no legal infirmity was found in applying section 273B to the case.

Conclusion: Penalty under section 271B was not exigible, and the assessee was entitled to the benefit of section 273B.

Ratio Decidendi: Where delay in compliance with section 44AB is occasioned by circumstances beyond the assessee's control and reasonable cause is established, penalty under section 271B cannot be sustained by virtue of section 273B.

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