PERUCHETTIPALAYAM PACCS,COIMBATORE V. ITO, NCW-4(1), COIMBATORE

ITA 3256/CHNY/2024

AI Insights

The case involves Perurchettipalayam PACCS, a Primary Agricultural Co-operative Credit Society, which appealed against the penalty levied by the Assessing Officer (AO) for not filing the Tax Audit Report (TAR) by the due date. The society argued that the delay was due to the late completion of a statutory audit by the Tamil Nadu State Government, which was necessary before they could file the TAR. The AO and the Learned Commissioner of Income Tax (Appeals) upheld the penalty, leading to the appeal before the Income Tax Appellate Tribunal. The Tribunal found that the delay was reasonable given the circumstances and thus deleted the penalty.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312624 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Other Referred Cases: M/s.Balaji Logistics (ITA No.2248/Chny/2019 dated 07-09-2022), M/s T.P.D. 101, Uthangarai Milk Producer Co-operative Society Ltd. (ITA No.152/Chny/2021 dated 29-06-2022)
• Laws Referred To: Income Tax Act, 1961, Tamil Nadu Co-operative Societies Act, 1983
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOUTHAMI MANIVASAGAM
• Assessee Lawyers: S. MATHANGI
• Keywords: Reasonable cause; Co-operative Credit Society

Judgement Text

"आयकर अपीलीय अिधकरण, ‘बी’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी जगदीश, लेखा सद क े सम\u0015 BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.3256/Chny/2024 िनधा\u000eरणवष\u000e/Assessment Year: 2018-19 Perurchettipalayam PACCS, 177, Arumugagoundanur Perur Chettipalayam, Coimbatore-641 010. v. The ITO, NCW-4(1), Coimbatore. [PAN: AABAP 3228 M] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : Ms.S. Mathangi, Advocate (by virtual) \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : Ms.Gouthami Manivasagam, JCIT सुनवाईक\u001aतारीख/Date of Hearing : 10.03.2025 घोषणाक\u001aतारीख /Date of Pronouncement : 29.04.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 18.11.2024 for the Assessment Year (hereinafter referred to as \"AY”) 2018-19 confirming the penalty levied by the AO u/s.271B of the Income Tax Act, 1961 (hereinafter referred to as \"the Act”) by levying an amount of Rs.1.50 lakhs as penalty. ITA No.3256/Chny/2024 (AY 2018-19) Perurchettipalayam PACCS :: 2 :: 2. The brief facts are that the assessee is noted to be a Primary Agricultural Co-operative Credit Society, governed by the provisions of the Tamil Nadu Co-operative Societies Act, 1983; and objects of the Society is, inter-alia, noted to provide credit facility to the members of the society; and all the Co-operative Societies like assessee in the state of Tamil Nadu are subject to audit as provided under the Tamil Nadu Cooperative Societies Act, 1983; and the Auditors are appointed by the Director of Cooperative Audit/Registrar and not by the assessee Society. The assessee society is noted to have filed its return of income (RoI) on 13.02.2019 for AY 2018-19 which return was selected for scrutiny and the AO passed the assessment order on 09.04.2021 by assessing income of Rs.32,26,418/-. The AO noticing that the assessee didn’t file the Tax Audit Report (TAR) in Form No.3CD u/s.44AB of the Act before the due date for filing the ITR i.e. 15.10.2018, the AO issued notice to the assessee ‘as to why’ penalty u/s.271B of the Act should not be levied against the assessee for belated filing of the Audit Report on 13.02.2019. Pursuant to it, the assessee is noted to have brought to the notice of the AO that the belated filing of TAR was not deliberate and since, it is registered under the Tamil Nadu Cooperative Societies Act, 1983, statutory audit needs to be carried out by the Tamil Nadu State Government and thereafter only assessee could file the TAR in Form No.3CD. And accordingly, when the government audit was completed on ITA No.3256/Chny/2024 (AY 2018-19) Perurchettipalayam PACCS :: 3 :: 08.01.2019, the assessee got the TAR prepared on 06.02.2019 and filed its on 13.02.2019. It was pointed out to the AO that the TAR had been filed before the assessment order was passed on 09.04.2021. Therefore, it was pleaded that no penalty be levied on the assessee. However, the AO didn’t accept the explanation of the assessee and levied penalty of Rs.1.50 lakhs u/s.271B of the Act. On appeal, the Ld.CIT(A) confirmed the action of the AO. Aggrieved by the aforesaid action of the Ld.CIT(A), the assessee is before us. 3. We have heard both the parties and perused the material available on record. We note that the assessee is a co-operative society registered under the Tamil Nadu Co-operative Societies Act, 1983 and was subject to audit as per the Tamil Nadu Cooperative Societies Act, 1983 by the Auditor who are appointed by the Director of the Co-operative Audit or the Registrar of the Societies. The government auditor is noted to have conducted the statutory audit of the accounts of the assessee and given the report on 08.01.2019 and thereafter, the assessee’s auditor has completed the TAR on 06.02.2019 and filed Form No.3CD on 13.02.2019. The delay in filing of the Audit Report was due to the belated completion of statutory audit by the State / Co-operative Department which got completed on 08.01.2019 which led to the delay in filing of the TAR in Form No.3CD on 13.02.2019. The completion of statutory audit was beyond the control of the assessee as the matter related to the ITA No.3256/Chny/2024 (AY 2018-19) Perurchettipalayam PACCS :: 4 :: appointment and completion of audit by the State / Co-operative Department; and it is a fact that the assessee would not stand to gain anything by completing the audit belatedly. And it is a fact that the assessee would be able to get Tax Audit Report only after finalization of financial accounts and completion of audit by the State Co-operative Department. In such a scenario, the explanation of the assessee is accepted as a reasonable cause for belated filing of TAR. In this regard, we note that the coordinate bench in the case of M/s.Balaji Logistics (ITA No.2248/Chny/2019 dated 07-09-2022), which relied on another decision of Tribunal in M/s T.P.D. 101, Uthangarai Milk Producer Co-operative Society Ltd. (ITA No.152/Chny/2021 dated 29-06-2022) held that when Tax Audit Report was made available to the AO before completion of assessment proceedings, then mere venial technical breach without any mala fide intention would not call for levy of penalty u/s 271B. Similar are the other decisions as placed on record. Therefore, by following the same, we delete the impugned penalty and allow the appeal of the assessee. 4. In the result, appeal filed by the assessee is allowed. Order pronounced on the 29th day of April, 2025, in Chennai. Sd/- Sd/- (जगदीश) (JAGADISH) लेखा सद /ACCOUNTANT MEMBER (एबी टी. वक ) (ABY T. VARKEY) \u0001याियक सद\bय/JUDICIAL MEMBER ITA No.3256/Chny/2024 (AY 2018-19) Perurchettipalayam PACCS :: 5 :: चे ई/Chennai, !दनांक/Dated: 29th April, 2025. TLN आदेश क\u001a \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ\u0010/Appellant 2. \u0011\u0012थ\u0010/Respondent 3. आयकरआयु\u0018/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u0011ितिनिध/DR 5. गाड फाईल/GF "