TaxTMI 
TaxTMI 
2010 (4) TMI 924
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....or the respondent. The assessee-respondent (hereinafter referred to as "the assessee") is a co-operative society. For the assessment year 1990-91, the assessee filed the return on December 26, 1990, showing the receipt of Rs. 26,35,99,400 in the status of co-operative society. The assessing authority levied the penalty under section 271B of the Act, vide order dated August 26, 1993, on the ground that the assessee could not get its accounts audited within the stipulated period as required under section 44AB of the Act. Being aggrieved by the penalty order, the assessee filed an appeal before the Commissioner of Income-tax (Appeals). It was pleaded before the Commissioner of Income-tax (Appeals) that the assessee was a co-operative society ....
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....ical and venial for which the rigours of the penal provision of section 271B of the Act should not have been invoked and, accordingly, set aside the penalty. Learned counsel for the appellant submitted that the explanation, which has been accepted by the Tribunal has not been made before the assessing authority and even before the Commissioner of Income-tax (Appeals), therefore, the Tribunal has erred in accepting the explanation and coming to the conclusion that there was a reasonable cause on the ground that the assessee had handed over its accounts for statutory audit well within specified time and the delay was on the part of the auditors in getting the accounts audited and, therefore, the Tribunal has erred in deleting the penalty. W....
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....if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AD or section 44AE or section 44AF, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year, get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed : Provided that this section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BB or section 44BBA....
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....er is less." "273B. Penalty not to be imposed in certain cases.-Notwithstanding anything contained in the provisions of clause (b) of section 271B, section 271BA, section 271, section 271A, section 271AA, section 271AE, section 271F, section 271G, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA or sub-section (1) of section 272BB or clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 272, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure." Section 273B of the Act provides that no penalty shall ....
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....ccept the reasonable cause and drop the proceedings. In this case, the tax return has been filed within time, but it is a defective return and it is only a partial failure on the part of the society in filing the audit report and such partial failure may not attract penalty. This is also an interpretation, which is permissible in law as has been held in Bangalore Steel Distributors v. ITO [1994] TLR 254 (ITAT-Bang). Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority and such discretion should be exercised judicially and on a consideration of all relevant circumstances. Learned counsel for the petitioner rightly relied upon the decision of the apex court in Hindustan S....