2023 (8) TMI 219 - AT - Income Tax

Cooperative bank loses appeal over tax penalty for delayed audit reports.

Kayamkulam Co-operative Bank Ltd. Versus The Income Tax Officer Ward – 1, Alappuzha

Kayamkulam Co-operative Bank Ltd. Versus The Income Tax Officer Ward – 1, Alappuzha - TMI Issues Involved:The appeal challenges the penalty under section 271B of the Income Tax Act, 1961 imposed by the National Faceless Appeal Centre for Assessment Year 2017-18.Issue 1: Penalty under section 271BThe appellant, a cooperative bank, filed its return of income late, disclosing a turnover of Rs.12.87 crores. The Tax Audit Report (TAR) in Form 3CA was required to be filed by the due date of furnishing the return of income. The appellant explained the delay by citing the receipt of the audit report from the Cooperative Auditor. However, the Assessing Officer found this explanation invalid as it did not justify the late filing of the TAR. The appellant failed to provide the necessary details to substantiate their case during the first appeal. The penalty under section 271B was confirmed, leading to the second appeal.Issue 2: Lack of Explanation for DelayDuring the proceedings, it was noted that there was no evidence regarding when the TAR was obtained by the appellant and filed along with the return of income. The appellant's counsel did not provide a clear reply regarding the delay. The statutory audit report from the Registrar of Societies, also required to be filed under section 44-AB, was not submitted despite being obtained. The appellant failed to provide a reasonable cause for the delay, as required by the law to exclude penalties. The delay in obtaining and furnishing the TAR was not adequately explained. The Tribunal found no valid explanation or reasonable cause for the continuing delay, leading to the dismissal of the appeal.Separate Judgement:No separate judgment was delivered by the judges.