Penalty upheld for failure to furnish audit report under Income Tax Act

The penalty under section 271B of the Income Tax Act was confirmed against the appellant, a primary agricultural credit society, for failure to furnish the audit report as required under section 44AB. Despite being unable to provide a valid reason for non-compliance, the appellant's appeal against the penalty was dismissed. The Tribunal found no grounds to exempt the appellant from the penalty, upholding the decision and dismissing the appeal along with the stay petition filed by the appellant.

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Issues: Appeal against confirmation of penalty under section 271B of Income Tax Act, 1961 for failure to furnish audit report under section 44AB.

Summary:
The appellant, a primary agricultural credit society, filed its return of income declaring nil income but failed to furnish the audit report as required under section 44AB of the Income Tax Act, 1961. The Assessing Officer disallowed a deduction claimed and assessed the interest income. Penalty was levied on the appellant for non-compliance. The penalty was confirmed in appeal based on a previous decision. The appellant appealed against the penalty.

Upon consideration of the contentions and evidence, it was established that the appellant did not furnish the audit report as required by the Act. The penalty under section 271B for failure to comply with section 44AB was justified unless a reasonable cause for the delay could be proven. Despite being a business organization with regular audits, the appellant failed to obtain and furnish the audit report under section 44AB, without providing any explanation for this lapse. The absence of a valid reason for non-compliance led to the confirmation of the penalty.

The appellant's argument that the accounts were audited under the Kerala Act was deemed legally untenable based on a previous court decision. The Tribunal found no grounds to exempt the appellant from the penalty. Therefore, the penalty was upheld, and the appeal was dismissed. Consequently, the stay petition filed by the appellant was also dismissed as a result of the appeal dismissal.

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