Statutory audit under another law can satisfy tax audit compliance, and auditor-caused delay may show reasonable cause.

The second proviso to section 44AB treats an audit under another law as sufficient compliance, reflecting a legislative intent to avoid duplicate audits where accounts are already subject to statutory scrutiny. In penalty proceedings, any ambiguity is to be construed in favour of the assessee. Where the assessee cooperated, paid the audit fee, and the delay in completing the statutory audit was admitted to be attributable to the auditors, the delay was beyond the assessee's control and constituted reasonable cause. On that basis, penalty under section 271B was not leviable and cancellation was warranted.

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Issues: Whether penalty under section 271B of the Income-tax Act, 1961 was leviable for failure to obtain tax audit report under section 44AB where the assessee, a co-operative society, was already required to have its accounts audited under section 81 of the Maharashtra Co-operative Societies Act, 1960 and the delay in statutory audit was attributable to the auditors.

Analysis: The second proviso to section 44AB treats audit under another law as sufficient compliance, so as to avoid duplication of audit where the assessee is already subject to a statutory audit. The provision is enabling in nature and is intended to spare special categories of assessees from being subjected to two audits for the same accounts. In a penalty matter, where two interpretations are possible, the construction favouring the assessee must prevail. On the facts, the assessee had paid the audit fee, cooperated with the auditors, and the delay was admitted by the auditors to be on their part. The delay was therefore beyond the assessee's control and constituted reasonable cause.

Conclusion: The penalty was not leviable and its cancellation was warranted. The assessee succeeded.

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