Tax Tribunal Deletes Penalty for Co-op Society's Delayed Filing, Criticizes Revenue's Approach.

The ITAT Cochin ruled in favor of the Co-operative Society, determining that it had shown a reasonable cause for the 62-day delay in filing the tax audit report. Consequently, the tribunal directed the deletion of the penalty imposed under section 271B of the Income Tax Act, 1961, criticizing the Revenue's mechanical approach.

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Issues involved:
The appeal concerns the maintainability of penalty under section 271B of the Income Tax Act, 1961 for assessment year 2017-18, imposed on a Co-operative Society registered under the Kerala Co-operative Societies Act, 1969, due to a delay in filing the tax audit report.

Summary:
The Appellate Tribunal ITAT Cochin addressed the issue of penalty under section 271B of the Income Tax Act, 1961 in the context of a Co-operative Society's appeal against the order of the Commissioner of Income-tax (Appeals). The society had filed the tax audit report with a delay of 62 days, citing receipt of the audit report from the Joint Registrar after the specified date. The tribunal analyzed the facts and circumstances to determine if the society qualified for the saving of penalty under section 273B, which requires showing a reasonable cause for the delay.

The tribunal considered the case law and emphasized the need for an equitable interpretation of the law, avoiding a hyper-technical approach. It noted that the society had submitted its accounts for audit on time to the Joint Registrar and acted promptly upon receiving the audit report, demonstrating bona fides. The tribunal highlighted the unique audit requirements for cooperative societies under the Kerala Act, which limited the society's options in obtaining the audit report within the prescribed time frame.

While acknowledging the technical breach of law regarding the delay in filing the audit reports, the tribunal concluded that the society had established a reasonable cause for the delay and that the penalty was unjustified. It criticized the Revenue's mechanical approach and ruled in favor of the assessee, directing the deletion of the penalty. The tribunal allowed the assessee's appeal, emphasizing the existence of a reasonable cause for the delay in compliance with the provisions of section 44AB.

In conclusion, the Appellate Tribunal ITAT Cochin ruled in favor of the Co-operative Society, finding that it had demonstrated a reasonable cause for the delay in filing the tax audit report and directing the deletion of the penalty imposed under section 271B of the Income Tax Act, 1961.

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