2022 (6) TMI 411

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....e us the assessee has raised following grounds in this appeal; Ground No.I That the penalty order passed by the Learned Income Tax Officer ("the AO") is highly illegal, bad in law, unsustainable and not in accordance with the provisions of law. Ground No. II On the facts and in the circumstances of the case as well as in law, the Learned Commissioner of Income Tax (Appeals), Bilaspur [hereinafter referred to as "the Ld. CIT(A)"] has erred in confirming the Order of the AO imposing a Penalty of Rs. 1,00,000/- under section 271B of the Act which is highly illegal, unjustified, harsh unwarranted, not proper on facts and not in accordance with the provisions of law. The Ld. CIT(A) failed to appreciate that the accounts of the appellant society were required to be mandatorily audited by the Registrar of Co-operative Society and only after that the same could be subjected to tax audit under section 44AB of the Act hence, there existed a reasonable cause for delayed conduct of tax audit. Hence, it is prayed that the penalty of Rs. 1,00,000/- imposed under the provisions of section 271B of the Act may please be deleted. Ground No. III ....

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..../s 44AB not filed by the assessee society within time limit prescribed under the provisions of the IT Act. Thus, they were prevented by reasonable cause as aforesaid. We request you to kindly drop the penalty proceedings u/s 271B. ". In addition he has relied upon certain case laws. 6. The ld. AO vide para 5 of the penalty order observed that 5. I have gone through the submission of the assessee but do not find it in order. Even if Government audit was done only on 09.02.2010, the audit u/s 44AB could have easily been got done after that date. But that was not done and ultimately after giving this penalty notice and even after taking much more time, audit u/s 44AB was got conducted only on 24.12.2014. Thus, it can be said that there was no reasonable cause as per the requirement of section 273B of the Income Tax Act, 1961, which prevented assessee to get its books of accounts audited. Accordingly, benefit of section 273B of the I.T Act, 1961 could not be available to the assessee in this case since despite adequate and reasonable opportunities given, the assessee could not come up with any satisfactory explanation whatsoever. In other words the assessee had failed, in r....

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....as not done. The arguments of the ld.AR that it is a cooperative society, and the Department of Cooperative Societies appoints its own auditor to audit the accounts, hence in absence of official audit the assessee could not gets accounts audited till 09-02-2010. For audit the Income-tax had provided that the auditor should be as per section 288 of I.T. Act. Thus I do not find any role of official auditor to have any play in the audit and assessee was required to mandatorily get accounts audited by the Chartered Accountant. Thus the failure to get the accounts audited has been found by the Department. Hence I do not find any infirmity in the levy of penalty by the A.O. Penalty imposed by the A.O is hereby confirmed and the ground of appeal is dismissed." 8. We have heard the ld. authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 9. The only issue which the ld. AR has assailed is the levy of penalty by the assessing officer and confirmed by the ld. CIT(A). The ld.....

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....Rs.2,08,31,714/-. However, the Assessing Officer has not initiated penalty proceedings u/s 271B of the Act either during the course of initial assessment proceedings or thereafter. Only when the matter was set aside by the Tribunal to the file of the Assessing Officer that the Assessing Officer initiated the penalty proceedings u/s 271B of the IT Act by issue of notice on 24th August, 2016. Thus, the penalty notice was issued after more than 4 ½ years from the end of the original assessment. As per the provisions of section 275(1)(c), no order imposing a penalty under this Chapter shall be passed in any case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. As per the various decisions relied on by the ld. counsel for the assessee, penalty is not leviable where the penalty proceedings were not initiated long after the completion of the assessment and the assessment order was silent about the levy of penalty u/s 271B of the Act. Since the Ass....

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....lay, is liable to be created as in-valid in law. Admittedly, the assessments were completed in 1989 and penalty proceedings were initiated after about 43 months after the date of completion of the assessment and about 50 months from the date of obtaining the audit report. The subsequent incumbent Assessing Officer has initiating the penalty proceedings. To our mind, taking the limitation period prescribed in section 275 for initiation of penalty proceedings under the other sections of this Chapter and also by respectfully following the judgement of the jurisdictional High Court in the case reported in Bata Aliaa Batakrushna Behara's case (supra) maximum of two years from the end of the assessment year in which the assessment are completed, can be said to be a reasonable time within which the Assessing Officer could have initiated the penalty proceedings. As in the present case, the penalty proceedings have been initiated about 43 months after the completion of the assessment, we are of the opinion that the penalty proceedings are barred by limitation and consequently penalties levied under section 271B cannot be sustained." 13. Per contra the Ld. DR supported the orders of the l....