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

The appeal challenging the penalty under section 271B of the Income Tax Act, 1961 imposed by the National Faceless Appeal Centre for Assessment Year ... Penalty u/s 271B - late filing of Tax Audit Report in Form 3CA, i.e., from the Tax Auditor - whats the reasonable cause of delay? - HELD THAT:- There is nothing on record to exhibit the date on which the TAR was obtained by the assessee-bank, filed by it along with the return of income even as the law requires it to be obtained and furnished by the date specified u/s. 139(1) for furnishing the return of income, i.e., latest by 31.10.2019 (for that year), much less explain the delay in furnishing the same. No clear reply in this regard was also furnished by assessee during the hearing, who would rather admit to the statutory audit report from the Registrar of Societies, which is also to be filed by the date specified u/s. 44AB, to have been not furnished at all. The record shows the same to have been obtained on 26.2.2018. The question of explaining the delay by the assessee would arise only where it is furnished with a delay. In the instant case, it, though equally required to be furnished u/s. 44AB along with the TAR, has admittedly not been furnished even after being obtained. No reason for the same has been advanced, much less reasonable cause for the default proved, as the law, per s. 273B, requires for excluding penalty. Further, this is apart from the unexplained delay in obtaining and furnishing the TAR, filed only on 29/3/2018. No explanation, much less proving the reasonable cause for the delay, which in fact is a continuing one. We therefore find no reason to interfere with the impugned order - Decided against assessee. 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.