Primary agricultural credit society penalized for delayed audit report submission under section 271B despite claiming ignorance of legal requirement.

ITAT Cochin upheld penalty u/s 271B against a primary agricultural credit society (PACS) for delayed submission of audit report u/s 44AB. The assessee filed the audit report on 21.06.2014 against due date of 31.10.2013, claiming ignorance of legal requirement. The tribunal rejected this defense, stating law implies state policy to which citizens are subject, and the assessee being long-term taxpayer could not claim unawareness. The tribunal emphasized audit report obligation is delinked from return filing and assessment proceedings, serving policy framework purposes. The penalty was confirmed as civil liability under s. 271B.

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Issues involved:
The judgment deals with an appeal against the confirmation of penalty under section 271B of the Income Tax Act, 1961 for Assessment Year 2013-14 by the Commissioner of Income Tax (Appeals), NFAC, Delhi.

Details of the Judgment:

Issue 1: Compliance with Section 44AB of the Act
The appellant, a primary agricultural credit society, filed its audit report after the due date specified under section 44AB of the Act, attracting penalty under section 271B. The appellant argued that the audit reports were filed before the assessing authority at the time of assessment, which should be considered sufficient compliance. However, the tribunal clarified that furnishing the audit report under section 44AB is mandatory, and failure to provide both audit reports as required does not constitute due compliance. The tribunal upheld the penalty, emphasizing that ignorance of the law is not an excuse, and the appellant failed to prove a reasonable cause for the delay.

Issue 2: Validity of Explanation for Delay
The appellant contended that it was not aware of the legal requirement for filing the tax audit report under the Act. The tribunal rejected this explanation, stating that the law implies a state policy to which citizens are subject, and ignorance of the law cannot be a valid excuse. The tribunal highlighted that the appellant's argument of the audit report being available at the time of assessment does not absolve it from the obligation to file the report on time, as it is delinked from the obligation to file the return of income.

Issue 3: Comparison with Previous Tribunal Decisions
The appellant relied on a previous tribunal decision where delayed furnishing of the audit report was accepted due to unforeseen circumstances. However, the tribunal differentiated this case, emphasizing that penalties under the Act are civil liabilities and not subject to malafide intent. The tribunal confirmed the penalty, stating that section 273B provides leeway for cases of inadvertent lapses, which was not applicable in the present case.

In conclusion, the tribunal confirmed the levy of the penalty under section 271B, dismissing the appellant's appeal and stay application. The decision was pronounced on November 14, 2023, under the Income Tax (Appellate Tribunal) Rules, 1963.

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