Commissioner of Income Tax vs Sajuma Co-Op. Credit and Service Society Ltd.

Satish Kumar Mittal J.—The instant appeal filed by the Revenue u/s 260A of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), is directed against the order dated March 12, 2007, passed by the Income Tax Appellate Tribunal, Chandigarh Bench (A), Chandigarh (hereinafter referred to as "the HAT"), in I. T. A. No. 471/Chandi/2006 in the case of the respondent-assessee for the assessment year 2004-05 by raising the following substantial questions of law:

(i) Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was right in deleting the penalty imposed u/s 271B of the Income Tax Act without deliberating upon, discussing and analysing the reasons as spelt out and discussed in paragraph 3 of the penalty order and further ignoring the fact that there was no reasonable cause for the assessee for not furnishing the audit report by a chartered accountant with the specified period in view of the facts that the assessee was engaged in business activity and the gross turnover of the assessee which included the total sales and the interest income on account of business activity of the assessee exceeded Rs. 40 lakhs ?

(ii) Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was right in law in giving the benefit of Section 273B without discussing the reasonable cause for not furnishing the audit report by a chartered accountant within the specified period ?

The brief facts giving rise to file the present appeal are that the respondent-assessee is a co-operative credit and service society deriving income from fertilizer, pesticides seeds etc., to its members and also from interest, etc. For the assessment year 2004-05, the respondent-assessee filed a return declaring its income at nil after claiming exemption u/s 80P of the Act. The return was accompanied by trading account, profit and loss account and balance-sheet which were not audited.

During the course of assessment proceedings, it was noticed that the gross turnover of the assessee exceeded Rs. 40 lakhs, therefore, the assessee was required to get its accounts audited by a chartered accountant before the stipulated date, i.e., October 31, 2004, and furnished by that date the report of such audit in the prescribed form duly signed and verified as required u/s 44AB of the Act. Therefore, for failure to get the accounts audited by the chartered accountant within the specified period and furnished the audit report by the stipulated date as per the provisions of Section 44AB of the Act, penalty proceedings u/s 271B of the Act were initiated against the assessee.

Before the Assessing Officer, the assessee took the plea that the sales turnover of the assessee were much less than Rs. 40 lakhs, but after including receipts of interest, it exceeds Rs. 40 lakhs. Therefore, the assessee did not get its accounts audited as per the requirement of Section 44AB under a bona fide belief that its sales turnover were less than Rs. 40 lakhs and as such it was prevented from doing so by sufficient cause, therefore, it prayed that the penalty be not imposed on it. The Assessing Officer did not accept the contention of the assessee and imposed the penalty of Rs. 21,756.

Feeling aggrieved against the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) which was dismissed on March 14, 2006, while holding that the Assessing Officer was justified in imposing the penalty u/s 271B of the Act.

Aggrieved against the aforesaid order, the assessee filed an appeal before the Tribunal which was accepted and the impugned penalty levied by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeals) was ordered to be deleted while holding that the assessee under a bona fide belief did not get its accounts audited from the chartered accountant or from the inspector of co-operative societies because the sales turnover of the assessee were less than Rs. 40 lakhs excluding the receipts of interest. There is no material on the record on the basis of which it can be held that the said finding is illegal or perverse.

In our view, the Tribunal has recorded a finding of fact to the effect that in the facts and circumstances of the case, the assessee under a bona fide belief did not get its accounts audited from the chartered accountant or from the inspector of co-operative societies because the sales turnover of the assessee were less than Rs. 40 lakhs. Since a pure finding of fact has been recorded, which does not require any interference, therefore, in our opinion, no substantial question of law is arising from the impugned order passed by the Tribunal.

Dismissed.